ITV Annual Report & Accounts
More than TV.
ITV PLC ANNUAL REPORT & ACCOUNTS 2023
ITV plc Annual Report and Accounts 2023 1 S 1 T CONTENTS KEY FINANCIALS R A T E G I OUR purpose STRATEGIC REPORT Group external revenue Costsavings C R Key Financials 1 E P O We entertain and connect with An Introduction to ITV R millions of people in the UK and and its Business Model 2 £3,624m £24m T globally, reflecting and shaping InvestorProposition 4 -3% (2022: £3,728m) (2022:£23m) culture and building brands with Chair’s Statement 5 brilliant content and creativity. MORE Our Key Stakeholders 6 Group adjusted EBITA Net debt Market Review 7 Chief Executive’s Statement 8 OUR 2026 vision Our Strategy 10 £489m £553m Key Performance Indicators 14 -32% (2022: £717m) (2022: £623m) To be a leader in UK advertiser- Operating and Financial funded streaming and an expanding PerformanceReview 18 THAN global force in content. Social Purpose 32 Adjusted EPS Profit to cash conversion Our People 40 Alternative Performance Measures 42 7.8p 102% Finance Review 45 Non-Financial and Sustainability -41% (2022: 13.2p) (2022: 75%) InformationStatement 52 Risks and Uncertainties 55 Statutory operating profit Leverage Climate Related TV Financial Disclosures 65 £238m 1.0x Long-termViability StatementDisclosure 72 -54% (2022: £519m) (2022: 0.8x) GOVERNANCE trategy Chair’s Governance Statement 75 Statutory EPS Dividend OUR s Board of Directors 77 Our strategy is focused on three strategic pillars illustrated below. 2023 was ManagementBoard 79 the year of peak investment for Streaming, which together with the successful Corporate Governance 81 5.2p 5.0p execution of our strategy and the efficiencies delivered to date have made ITV more robust. ITV has a leading, scaled, global Studios business, a high growth expand StakeholderEngagement 84 -51% (2022: 10.7p) (2022: 5.0p) Streaming service and a cash generative linear advertising business. This ensures Our Commitment to Section 172(1) 92 that we are well placed to grow profits from here as we continue to drive STUDIOS Nominations Committee Report 103 material efficiencies, invest behind our Audit and Risk Committee Report 106 strategic priorities and deliver Further expanding by genre, FURTHER READING returns to shareholders. geography and customer and Remuneration Report 117 Read more growing faster than market Directors’ Report 143 on page 10 FINANCIALSTATEMENTS supercharge Financial Statements 148 STREAMING IndependentAuditor’sReport 149 Primary Statements 156 Driving digital viewing and ITV plc Company Financial Social Purpose Impact Report Pay Gap Report revenue through ITVX and Planet V, Statements 229 Read more at Read more at ITV’s leading addressable Subsidiary undertakings and advertising platform itvplc.com/socialpurpose itvplc.com/investors/governance investments 238 Vertically ADDITIONAL INFORMATION Integrated Glossary 243 ALTERNATIVEPERFORMANCE MEASURES Producer Broadcaster Strategic Report and Streamer The Strategic Report explains in detail how we have Company, of its position in the markets within which it performed this year and sets out, amongst other things, operates, and of its prospects. In setting out the Company’s a fair review of the business, a balanced and comprehensive main risks and uncertainties and throughout, this report analysis of our performance, the use of key performance and accounts contains statements that are based on indicators to explain the progress we have made, knowledge and information available at the date of a description of the principal risks and uncertainties preparation of the Strategic Report, and what are believed facing the Company, and an indication of potential to be reasonable judgements, and therefore cannot be future developments. considered as indications of likelihood or certainty. The Strategic Report is prepared in line with the relevant A wide range of factors may cause the actual outcomes and provisions of the Companies Act 2006 and the 2018 results to differ materially from those contained within, or Corporate Governance Code (Code) and the Company implied by, the various forward-looking statements in this optimise has had regard to the guidance issued by the Financial Annual Report and Accounts. None of these statements Reporting Council. It is intended to provide shareholders should be construed as a profit forecast. BROADCAST ONLINE and other stakeholders with a better understanding of the We maintain a corporate website 1. We use both statutory and adjusted measures in our Strategic Report. The latter, in management’s view, Digitally transforming as we continue to containing our financial results and a reflects the underlying performance of the business and provides a more meaningful comparison of how attract commercial broadcast audiences wide range of information of interest to the business is managed and measured day-to-day. A full reconciliation between our statutory and adjusted of unparalleled scale results is provided in our Alternative Performance Measures section. Our KPIs (which are based on adjusted all stakeholders, including institutional metrics) are set out in the KPIs section. and private investors: www.itvplc.com
ITV plc Annual Report and Accounts 2023 1 S 1 T CONTENTS KEY FINANCIALS R A T E G I OUR purpose STRATEGIC REPORT Group external revenue Costsavings C R Key Financials 1 E P O We entertain and connect with An Introduction to ITV R millions of people in the UK and and its Business Model 2 £3,624m £24m T globally, reflecting and shaping InvestorProposition 4 -3% (2022: £3,728m) (2022:£23m) culture and building brands with Chair’s Statement 5 brilliant content and creativity. MORE Our Key Stakeholders 6 Group adjusted EBITA Net debt Market Review 7 Chief Executive’s Statement 8 OUR 2026 vision Our Strategy 10 £489m £553m Key Performance Indicators 14 -32% (2022: £717m) (2022: £623m) To be a leader in UK advertiser-Operating and Financial funded streaming and an expanding PerformanceReview 18 THAN global force in content. Social Purpose 32 Adjusted EPS Profit to cash conversion Our People 40 Alternative Performance Measures 42 7.8p 102% Finance Review 45 Non-Financial and Sustainability -41% (2022: 13.2p) (2022: 75%) InformationStatement 52 Risks and Uncertainties 55 Statutory operating profit Leverage Climate Related TV Financial Disclosures 65 £238m 1.0x Long-termViability StatementDisclosure 72 -54% (2022: £519m) (2022: 0.8x) GOVERNANCE trategy Chair’s Governance Statement 75 Statutory EPS Dividend OUR s Board of Directors 77 Our strategy is focused on three strategic pillars illustrated below. 2023 was ManagementBoard 79 the year of peak investment for Streaming, which together with the successful Corporate Governance 81 5.2p 5.0p execution of our strategy and the efficiencies delivered to date have made ITV more robust. ITV has a leading, scaled, global Studios business, a high growth expandStakeholderEngagement84 -51% (2022: 10.7p) (2022: 5.0p) Streaming service and a cash generative linear advertising business. This ensures Our Commitment to Section 172(1)92 that we are well placed to grow profits from here as we continue to drive STUDIOSNominations Committee Report 103 material efficiencies, invest behind our Audit and Risk Committee Report 106 strategic priorities and deliver Further expanding by genre, FURTHER READING returns to shareholders.geography and customer and Remuneration Report 117 Read more growing faster than marketDirectors’ Report 143 on page 10 FINANCIALSTATEMENTS supercharge Financial Statements 148 STREAMING IndependentAuditor’sReport 149 Primary Statements 156 Driving digital viewing and ITV plc Company Financial Social Purpose Impact Report Pay Gap Report revenue through ITVX and Planet V, Statements 229 Read more at Read more at ITV’s leading addressable Subsidiary undertakings and advertising platform itvplc.com/socialpurpose itvplc.com/investors/governance investments 238 Vertically ADDITIONAL INFORMATION Integrated Glossary 243 ALTERNATIVEPERFORMANCE MEASURES Producer Broadcaster Strategic Report and Streamer The Strategic Report explains in detail how we have Company, of its position in the markets within which it performed this year and sets out, amongst other things, operates, and of its prospects. In setting out the Company’s a fair review of the business, a balanced and comprehensive main risks and uncertainties and throughout, this report analysis of our performance, the use of key performance and accounts contains statements that are based on indicators to explain the progress we have made, knowledge and information available at the date of a description of the principal risks and uncertainties preparation of the Strategic Report, and what are believed facing the Company, and an indication of potential to be reasonable judgements, and therefore cannot be future developments. considered as indications of likelihood or certainty. The Strategic Report is prepared in line with the relevant A wide range of factors may cause the actual outcomes and provisions of the Companies Act 2006 and the 2018 results to differ materially from those contained within, or Corporate Governance Code (Code) and the Company implied by, the various forward-looking statements in this optimise has had regard to the guidance issued by the Financial Annual Report and Accounts. None of these statements Reporting Council. It is intended to provide shareholders should be construed as a profit forecast. BROADCAST ONLINE and other stakeholders with a better understanding of the We maintain a corporate website 1. We use both statutory and adjusted measures in our Strategic Report. The latter, in management’s view, Digitally transforming as we continue to containing our financial results and a reflects the underlying performance of the business and provides a more meaningful comparison of how attract commercial broadcast audiences wide range of information of interest to the business is managed and measured day-to-day. A full reconciliation between our statutory and adjusted of unparalleled scale results is provided in our Alternative Performance Measures section. Our KPIs (which are based on adjusted all stakeholders, including institutional metrics) are set out in the KPIs section. and private investors: www.itvplc.com
2 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 3 S T AN INTRODUCTION TO ITV AND ITS BUSINESS MODEL R A T E G I C R E WHO WE ARE OUR STRATEGIC ASSETS AND COMPETITIVE ADVANTAGES P O R T ITV is a vertically integrated producer broadcaster and streamer, ITV’s business model is based on a unique set of strategic assets and competitive advantages which enable us to grow our diversified consisting of ITV Studios and Media & Entertainment (M&E). revenue streams and create value for our shareholders. ITV TOTAL REVENUE By developing, owning, managing and distributing the rights to content, ITV can maximise the value of its programme brands across ITV Studios, Streaming and Broadcast. This ensures ITV is a more diversified business and enables it to drive value from different revenue models. ITV Studios M&E* Group ITV Studios ITV Media & Entertainment £2,170m £2,090m 1 * I ncludes £490 million of digital revenues (2022: £411 million) • Integrated producer, broadcaster • Creates and owns the rights to • M&E is differentiated from global (2022: £2,096m) (2022: £2,249m) and streamer model creates world-class content streamers with primarily valuable synergies • Broad global customer base with uniquelyBritish content • Strong, trusted brand, products major networks, streamers and • Deep commercial relationships and culture broadcasters with advertisers ** ITV GROUP ADJUSTED EBITA • A high-performing, agile and • Owns Planet V, an intuitive diverseworkforce self-serveaddressable advertisingplatform ITV Studios M&E • Strong data capabilities with one of the largest first-party ** A full reconciliation between our adjusted and statutory datasets in the UK £286m £205m numbers is included in our APMs section (2022: £259m) (2022: £464m) USING OUR STRATEGIC ASSETS AND COMPETITIVE ADVANTAGES WE AIM TO GROW… 1. M&E digital revenue includes revenue from digital advertising, subscription, linear addressable advertising, digital sponsorship and commercial partnerships, ITV Win (digital competitions platform) and other revenues from digital business ventures OUR DIVERSIFIED REVENUE STREAMS OUR TWO DIVISIONS ITV Studios Media & Entertainment Originalproduction Advertising ITV Studios Media & Entertainment We create and produce original scripted and unscripted content ITVX and our free-to-air linear TV channels drive significant commissions for a diverse customer base of global streamers, digital and linear advertising revenues due to our ability to deliver ITV Studios is a scaled and global creator, owner and distributor ITV is the largest commercial broadcaster and streamer in the major networks and local free-to-air and pay TV broadcasters mass simultaneous audiences and targeted advertising at scale. of high-quality TV content. It operates in 13 countries, across over UK, delivering unrivalled audience scale and reach. M&E includes and operators across our production bases. 60 labels and has a global distribution network. It is diversified by Streaming and Broadcast through which we distribute content via Commercial and creative partnerships genre, geography and customer in the key creative markets ITVX, our free advertiser-funded streaming service, and via our Formats Using the power of our brands we help advertisers engage with around the world. free-to-air linear TV channels. Our content is also distributed on We create some of the world’s most successful unscripted audiences in different ways. We provide unique and innovative third-party partner platforms, such as Sky and Virgin. formats which we license globally to maximise the value from commercial and creative partnerships across ITVX and our ITV Studios is the largest producer in the UK, one of the largest our programme rights. free-to-air linear TV channels. These include sponsorship, unscripted producers in the US and one of the top three ITVX also includes a subscription tier, ITVX Premium, which product placement and advertiser-funded programming. producers in the majority of the international markets in which it provides subscribers with all of ITVX’s programming ad-free Distribution operates. ITV Studios has established relationships with key along with other exclusive content. We own the rights to a significant catalogue of programmes that Subscription, competitions and third-party revenues content buyers and leading creative talent in those markets; and we license to broadcasters and streamers internationally through In the UK, we generate streaming subscription revenue through with a combined content library of over 90,000 hours, it is also ITV offers advertisers a unique combination of mass our global distribution network. our ad-free tier, ITVX Premium. We monetise our consumer one of the pre-eminent global distributors. simultaneous reach, targeted advertising, and commercial and interactions through competitions associated with our creative partnerships, in a brand safe environment across ITVX programme brands. We also receive third-party revenue from and our linear TV channels. distributing our channels and streaming services to other platforms and services. Refer to the Operating and Financial Performance Review for further details on our divisions SUPPORTED BY OUR… 58% 19 12.5m 1,505m of revenue generated formats sold in 3+ monthly active users total streaming hours RISK MANAGEMENTFRAMEWORK outside the UK countries (2022: 10.5m) (2022: 1,192m) (2022: 60%) (2022: 19) ITV operates in an increasingly complex Management and the Board can adapt Our business model enables us to create business environment and our risk the strategy to ensure we are striking the value for all our key stakeholders, see page 32% 37% 91% 32.6% management framework provides the rightbalance between risk-takingandrisk 6 for further detail. business with the tools to identify, mitigation, that any underlying risks in the total revenue from of revenue from scripted of the top 1,000 commercial share of commercial assess, manage and continually review strategy are being appropriately managed st reamers productions broadcast TV programmes viewing our risks. and therefore enabling the successful (2022: 22%) (2022: 34%) (2022: 93%) (2022: 33.8%) delivery of the strategy.
2 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 3 S T AN INTRODUCTION TO ITV AND ITS BUSINESS MODEL R A T E G I C R E WHO WE ARE OUR STRATEGIC ASSETS AND COMPETITIVE ADVANTAGES P O R T ITV is a vertically integrated producer broadcaster and streamer, ITV’s business model is based on a unique set of strategic assets and competitive advantages which enable us to grow our diversified consisting of ITV Studios and Media & Entertainment (M&E). revenue streams and create value for our shareholders. ITV TOTAL REVENUE By developing, owning, managing and distributing the rights to content, ITV can maximise the value of its programme brands across ITV Studios, Streaming and Broadcast. This ensures ITV is a more diversified business and enables it to drive value from different revenue models. ITV Studios M&E* Group ITV Studios ITV Media & Entertainment £2,170m £2,090m 1 * Includes £490 million of digital revenues (2022: £411 million)• Integrated producer, broadcaster • Creates and owns the rights to • M&E is differentiated from global (2022: £2,096m)(2022: £2,249m) and streamer model creates world-class content streamers with primarily valuable synergies • Broad global customer base with uniquelyBritish content • Strong, trusted brand, products major networks, streamers and • Deep commercial relationships and culture broadcasters with advertisers ** ITV GROUP ADJUSTED EBITA • A high-performing, agile and • Owns Planet V, an intuitive diverseworkforce self-serveaddressable advertisingplatform ITV StudiosM&E • Strong data capabilities with one of the largest first-party ** A full reconciliation between our adjusted and statutory datasets in the UK £286m £205m numbers is included in our APMs section (2022: £259m)(2022: £464m) USING OUR STRATEGIC ASSETS AND COMPETITIVE ADVANTAGES WE AIM TO GROW… 1. M&E digital revenue includes revenue from digital advertising, subscription, linear addressable advertising, digital sponsorship and commercial partnerships, ITV Win (digital competitions platform) and other revenues from digital business ventures OUR DIVERSIFIED REVENUE STREAMS OUR TWO DIVISIONS ITV Studios Media & Entertainment Originalproduction Advertising ITV StudiosMedia & Entertainment We create and produce original scripted and unscripted content ITVX and our free-to-air linear TV channels drive significant commissions for a diverse customer base of global streamers, digital and linear advertising revenues due to our ability to deliver ITV Studios is a scaled and global creator, owner and distributor ITV is the largest commercial broadcaster and streamer in the major networks and local free-to-air and pay TV broadcasters mass simultaneous audiences and targeted advertising at scale. of high-quality TV content. It operates in 13 countries, across over UK, delivering unrivalled audience scale and reach. M&E includes and operators across our production bases. 60 labels and has a global distribution network. It is diversified by Streaming and Broadcast through which we distribute content via Commercial and creative partnerships genre, geography and customer in the key creative markets ITVX, our free advertiser-funded streaming service, and via our Formats Using the power of our brands we help advertisers engage with around the world. free-to-air linear TV channels. Our content is also distributed on We create some of the world’s most successful unscripted audiences in different ways. We provide unique and innovative third-party partner platforms, such as Sky and Virgin.formats which we license globally to maximise the value from commercial and creative partnerships across ITVX and our ITV Studios is the largest producer in the UK, one of the largest our programme rights. free-to-air linear TV channels. These include sponsorship, unscripted producers in the US and one of the top three ITVX also includes a subscription tier, ITVX Premium, which product placement and advertiser-funded programming. producers in the majority of the international markets in which it provides subscribers with all of ITVX’s programming ad-free Distribution operates. ITV Studios has established relationships with key along with other exclusive content. We own the rights to a significant catalogue of programmes that Subscription, competitions and third-party revenues content buyers and leading creative talent in those markets; and we license to broadcasters and streamers internationally through In the UK, we generate streaming subscription revenue through with a combined content library of over 90,000 hours, it is also ITV offers advertisers a unique combination of mass our global distribution network. our ad-free tier, ITVX Premium. We monetise our consumer one of the pre-eminent global distributors.simultaneous reach, targeted advertising, and commercial and interactions through competitions associated with our creative partnerships, in a brand safe environment across ITVX programme brands. We also receive third-party revenue from and our linear TV channels. distributing our channels and streaming services to other platforms and services. Refer to the Operating and Financial Performance Review for further details on our divisions SUPPORTED BY OUR… 58% 19 12.5m 1,505m of revenue generated formats sold in 3+ monthly active users total streaming hours RISK MANAGEMENTFRAMEWORK outside the UK countries (2022: 10.5m)(2022: 1,192m) (2022: 60%)(2022: 19) ITV operates in an increasingly complex Management and the Board can adapt Our business model enables us to create business environment and our risk the strategy to ensure we are striking the value for all our key stakeholders, see page 32%37% 91%32.6% management framework provides the rightbalance between risk-takingandrisk 6 for further detail. business with the tools to identify, mitigation, that any underlying risks in the total revenue from of revenue from scripted of the top 1,000 commercial share of commercial assess, manage and continually review strategy are being appropriately managed st reamers productions broadcast TV programmes viewing our risks. and therefore enabling the successful (2022: 22%)(2022: 34%)(2022: 93%)(2022: 33.8%) delivery of the strategy.
4 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 5 S T INVESTOR PROPOSITION CHAIR’S STATEMENT R A T E G I ITV is delivering long-term value for shareholders through: C R E P O R T Driving significant benefits Growing its leading, scaled 1 from our unique position: 2and diversified global • As a vertically integrated producer, Studios business: 2023 WAS A broadcaster and streamer • ITV will grow faster than the global content Refer to the Chief Executive’s Statement on market, at a margin of 13-15% CHALLENGING BUT page 8 for further details on these benefits Refer to Our More than TV Strategy on page 10 and Operating and Financial Performance PRODUCTIVE YEAR Review on page 18 for further details Driving strong momentum 3in streaming: Reasons • Delivering significant growth in digital viewing and digital advertising, providing data-driven targeted advertising at scale through Planet V (ITV’s addressable In a nutshell, 2023 was a challenging but have a clear strategy that is future focused ITV is a special organisation to be a part of advertising platform) in a trusted, brand productive year. Economic headwinds were and plays to our strengths. and it’s clear from the frequent engagement safe environment present throughout the year impacting our surveys we run and our high levels of financial performance but we made good Our ‘More Than TV’ strategy has three main colleague retention, that people like to work to INVEST Refer to our KPIs on page 14 and Operating and progress strengthening the internal objectives: here. They are proud of what we do, of the capabilities of the organisation and hitting lead we show on important issues whether Financial Performance Review on page 18 for • Expand Studios further details a number of key milestones on our strategic it’s mental health; diversity, equity and journey to be ‘More Than TV’, evolving from • Supercharge Streaming inclusion; or of the open and respectful way a legacy broadcaster to a more sustainable • Optimise Broadcast we try to treat each other. Nothing is ever media and entertainment business. perfect and we are eager to find opportunities Optimising Broadcast as we Increasing profit over the During the year we made good progress on to improve, but the values of this Company Taking the financials first. Total external each of the three. are sound. 4continue to attract mass 5 medium term: revenues were down 3% on the prior year as linear TV audiences: cost of living pressures affected household Studios grew revenue and profit to record There have been a number of changes to our • As we continue to rebalance the business demand for goods and services and led levels deploying its global scale and strength Board during the year. Anna Manz, Mary Harris • Which remain highly valuable to towards the growth drivers of ITV Studios advertisers to trim their marketing budgets. to win business across all major genres and and Duncan Painter stepped down and I would and advertiser funded streaming and 1 geographies. advertisers as they grow their businesses Adjusted EBITA declined 32% reflecting like to thank them sincerely for their efforts. and drives cash generation for the Group deliver further efficiencies both the drop in revenues and planned The Board and the wider Company have Refer to Our More than TV Strategy on page 10 investment in ITVX. Free cash flow was £361 In streaming, ITVX had a successful launch benefited enormously from their time with Refer to our KPIs on page 14 and Operating and million, up 29% vs 2022. The balance sheet year, proving technically robust and attracting us. In their place I am pleased to welcome Financial Performance Review on page 18 for and KPIs on page 14 for further details remains strong and the Board has proposed large cohorts of new viewers with the quality Dawn Allen and Marjorie Kaplan. Two highly further details a final dividend of 3.3p taking the dividend for and depth of its content. accomplished leaders who bring different the full year to 5.0p, in line with the prior year. experiences to the Board table and from This is a total return of around £200 million. And our linear broadcast business continued whom I am sure we will learn much. to demonstrate its extraordinary, continuing Delivering against our KPIs Maintaining a robust The Board has also announced a £235 million ability to generate mass, simultaneous 6across the Group: 7balance sheet, strong cash share buyback which will be completed audiences. In addition, innovations such as Finally my thanks to within the next 18 months. the upgraded iteration of Planet V reinforced C • On track to deliver our KPI targets in 2026 generation and disciplined ITV’s position as the clear leader for arolyn and the capital allocation framework: The media and entertainment industry advertisers in UK commercial television. leadership team for Refer to our KPIs on page 14 for further details continues to evolve rapidly. Technology their exceptional e orts • Invest organically in line with strategic advances are dramatically increasing the It is the blending of these three strategic priorities; manage financial metrics choices available, not just in terms of elements that makes ITV unique. Together during some challenging consistent with investment grade metrics content, but also how, when and where it can they form an integrated model that allows us times and to all my over the medium term; sustain a full year be consumed. The emergence of generative to consistently secure world-class content, ordinary dividend of at least 5.0p, which AI is a potential game changer in the world of provides outstanding flexibility and reach for ITV colleagues for will grow over the medium term; consider production while the competitor set is UK advertisers and attracts the best writers their continuing value-creating inorganic investment shifting, from national TV broadcasters to and producers to work with us. The model is against strict criteria when appropriate; international streamers and global tech strengthened by our long-standing status as commitment and and any surplus capital will be returned to corporations who are increasingly the a Public Service Broadcaster (PSB). A Media passion for the cause. shareholders gatekeepers to our audience. These Bill is progressing well through Parliament • £235 million share buyback to be structural shifts are material and require and its final adoption into law will completed within the next 18 months us to be on our mettle and take appropriate fundamentally update the current regulatory ANDREW COSSLETT CBE action. We need to ensure our internal ways framework and provide enhanced, welcome CHAIR OF THE BOARD See the Finance Review on page 45 for of working are as sharp and agile as they support to PSBs whose objective voice at a can be, that we are ready to take difficult time of such dynamic change has never been further details decisions to keep our cost base down and more important. 1. Refer to APMs section for the reconciliation between our adjusted and statutory numbers.
4 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 5 S T INVESTOR PROPOSITION CHAIR’S STATEMENT R A T E G I ITV is delivering long-term value for shareholders through: C R E P O R T Driving significant benefits Growing its leading, scaled 1 from our unique position: 2and diversified global • As a vertically integrated producer, Studios business:2023 WAS A broadcaster and streamer• ITV will grow faster than the global content Refer to the Chief Executive’s Statement on market, at a margin of 13-15% CHALLENGING BUT page 8 for further details on these benefits Refer to Our More than TV Strategy on page 10 and Operating and Financial Performance PRODUCTIVE YEAR Review on page 18 for further details Driving strong momentum 3in streaming: Reasons • Delivering significant growth in digital viewing and digital advertising, providing data-driven targeted advertising at scale through Planet V (ITV’s addressable In a nutshell, 2023 was a challenging but have a clear strategy that is future focused ITV is a special organisation to be a part of advertising platform) in a trusted, brand productive year. Economic headwinds were and plays to our strengths. and it’s clear from the frequent engagement safe environment present throughout the year impacting our surveys we run and our high levels of financial performance but we made good Our ‘More Than TV’ strategy has three main colleague retention, that people like to work to INVESTRefer to our KPIs on page 14 and Operating and progress strengthening the internal objectives: here. They are proud of what we do, of the capabilities of the organisation and hitting lead we show on important issues whether Financial Performance Review on page 18 for • Expand Studios further details a number of key milestones on our strategic it’s mental health; diversity, equity and journey to be ‘More Than TV’, evolving from • Supercharge Streaming inclusion; or of the open and respectful way a legacy broadcaster to a more sustainable • Optimise Broadcast we try to treat each other. Nothing is ever media and entertainment business. perfect and we are eager to find opportunities Optimising Broadcast as we Increasing profit over the During the year we made good progress on to improve, but the values of this Company Taking the financials first. Total external each of the three. are sound. 4continue to attract mass 5 medium term:revenues were down 3% on the prior year as linear TV audiences: cost of living pressures affected household Studios grew revenue and profit to record There have been a number of changes to our • As we continue to rebalance the business demand for goods and services and led levels deploying its global scale and strength Board during the year. Anna Manz, Mary Harris • Which remain highly valuable to towards the growth drivers of ITV Studios advertisers to trim their marketing budgets. to win business across all major genres and and Duncan Painter stepped down and I would and advertiser funded streaming and 1 geographies. advertisers as they grow their businesses Adjusted EBITA declined 32% reflecting like to thank them sincerely for their efforts. and drives cash generation for the Groupdeliver further efficienciesboth the drop in revenues and planned The Board and the wider Company have Refer to Our More than TV Strategy on page 10 investment in ITVX. Free cash flow was £361 In streaming, ITVX had a successful launch benefited enormously from their time with Refer to our KPIs on page 14 and Operating and million, up 29% vs 2022. The balance sheet year, proving technically robust and attracting us. In their place I am pleased to welcome Financial Performance Review on page 18 for and KPIs on page 14 for further details remains strong and the Board has proposed large cohorts of new viewers with the quality Dawn Allen and Marjorie Kaplan. Two highly further details a final dividend of 3.3p taking the dividend for and depth of its content. accomplished leaders who bring different the full year to 5.0p, in line with the prior year. experiences to the Board table and from This is a total return of around £200 million. And our linear broadcast business continued whom I am sure we will learn much. to demonstrate its extraordinary, continuing Delivering against our KPIs Maintaining a robust The Board has also announced a £235 million ability to generate mass, simultaneous 6across the Group:7balance sheet, strong cash share buyback which will be completed audiences. In addition, innovations such as Finally my thanks to within the next 18 months. the upgraded iteration of Planet V reinforced C • On track to deliver our KPI targets in 2026generation and disciplined ITV’s position as the clear leader for arolyn and the capital allocation framework: The media and entertainment industry advertisers in UK commercial television. leadership team for Refer to our KPIs on page 14 for further detailscontinues to evolve rapidly. Technology their exceptional e orts • Invest organically in line with strategic advances are dramatically increasing the It is the blending of these three strategic priorities; manage financial metrics choices available, not just in terms of elements that makes ITV unique. Together during some challenging consistent with investment grade metrics content, but also how, when and where it can they form an integrated model that allows us times and to all my over the medium term; sustain a full year be consumed. The emergence of generative to consistently secure world-class content, ordinary dividend of at least 5.0p, which AI is a potential game changer in the world of provides outstanding flexibility and reach for ITV colleagues for will grow over the medium term; consider production while the competitor set is UK advertisers and attracts the best writers their continuing value-creating inorganic investment shifting, from national TV broadcasters to and producers to work with us. The model is against strict criteria when appropriate; international streamers and global tech strengthened by our long-standing status as commitment and and any surplus capital will be returned to corporations who are increasingly the a Public Service Broadcaster (PSB). A Media passion for the cause. shareholders gatekeepers to our audience. These Bill is progressing well through Parliament • £235 million share buyback to be structural shifts are material and require and its final adoption into law will completed within the next 18 monthsus to be on our mettle and take appropriate fundamentally update the current regulatory ANDREW COSSLETT CBE action. We need to ensure our internal ways framework and provide enhanced, welcome CHAIR OF THE BOARD See the Finance Review on page 45 for of working are as sharp and agile as they support to PSBs whose objective voice at a can be, that we are ready to take difficult time of such dynamic change has never been further details decisions to keep our cost base down and more important. 1. Refer to APMs section for the reconciliation between our adjusted and statutory numbers.
6 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 7 S T OUR KEY STAKEHOLDERS MARKET REVIEW R A T E G I Our strategy is aligned with the requirements of each of our stakeholders The markets in which we operate are dynamic, increasingly competitive C R E P so that we are creating and delivering value for all. and rapidly changing. The global content market is large and aractive, O R with all platforms needing access to the best content to aract viewers T at scale. Ongoing changes in viewing habits, coupled with an ever-evolving CUSTOMERS VIEWERS AND SUBSCRIBERS PARTNERS advertising landscape, bring both challenges and opportunities to ITV. Including but not limited to the Our content offering is varied and We collaborate closely with our TREND ONE TREND TWO TREND THREE following: high quality, which audiences can partners and aim to cultivate watch and engage with, for free or strong working relationships. We Global demand for content Fragmentation in viewing The UK advertising market Agencies and advertisers through a subscription, across a ensure all suppliers understand The global content market is large and attractive and changing habits The UK advertising market is worth £36 billion, We deliver advertisers value variety of channels and platforms and adhere to our Supplier Code with all platforms needing a mix of content to While the average viewing time per person per day growing at 7% compound annual growth rate through a unique combination in a trusted, brand-safe of Conduct. succeed in a very competitive market. Going remains stable at 4.5-5 hours per day (Source: (CAGR) in the past decade. Growth slowed in 2023 environment. forward we expect to see growth in key segments Ofcom), the competitor set has become (forecast to be +3% in 2023 vs. +9% in 2022), with of mass simultaneous reach on of the global content market in which we operate, high inflation leading to reduced marketing our linear TV channels, targeted increasingly fragmented over time. From PSBs (e.g. including content licensing, streamers demand for BBC, ITV), to global streaming services (e.g. Netflix, budgets. There was also a decrease in venture digital advertising powered by unscripted content and cost effective premium Disney+), and user-generated video-sharing capital funding, which had funded significant Planet V – our proprietary scripted content. 2024 will be impacted by the platforms (e.g. YouTube, TikTok), viewers now have advertising activity in recent years from new adtech platform, and through 2023 US writers and actors strikes delaying an unparalleled level of choice and flexibility about market entrants. commercial and creative productions until 2025 and weaker demand from what, how, where and when they watch content. Total market growth has largely been driven by partnerships around our quality free-to-air broadcasters (FTA) in Europe who are online advertising, which is expected to be up 5% in holding back spend until they see more certainty 2023 and up 16% CAGR over the last ten years. programme brands on our linear in the advertising market. channels and ITVX. Online is the largest category of advertising spend (75% of the market) followed by TV advertising Broadcasters, networks and (14% of the market). (Source: AA WARC). streamers The TV advertising market is increasingly competitive, We deliver high-quality TV OUR COLLEAGUES, PROGRAMME CITIZENS with global streaming platforms (Amazon, Netflix, productions globally, across a PARTICIPANTS AND EVERYONE Disney+) having now launched, or shortly set to range of genres which WE WORK WITH launch, streaming advertising propositions. broadcasters and streamers can monetise through their own We protect, invest in and develop As a Public Service Broadcaster business models. our on and off-screen talent, (PSB) in the UK, ITV can help Size of global content market in 2023 Average viewing time per person per day 2023 UK advertising market and create a culture that shape culture for good. Our $226bn 4 hours 28 mins £36bn Platforms nurtures them to be productive, provision of free, universally We have strong relationships with commercial and creative. People, accessible, high-quality content (Source: Estimate from Ampere Analysis: (Source: Ofcom Media Nations. Previous 5-year (Source: AA WARC. 2022: £35 billion) aggregators who broadcast our and their physical and mental along with a trusted news service, Feb 2024 – excludes spend from film studios) average of 5 hours per day – incl. COVID-19 years) content and pay us for its health and safety, are our priority helps to inform citizens, shape inclusion on their platforms. at ITV. public sentiment, drive national How we are responding How we are responding How we are responding conversations and support Delivery of ITV Studios’ strategic priorities will As a commercial PSB in the UK, we provide the ITV offers our advertising clients something no democratic debate. ensure ITV gains share over the medium term. By nation with the flexibility to watch content streamer can – mass simultaneous reach, targeted expanding our scripted and unscripted business whenever and wherever, while maximising advertising at scale and commercial and creative Refer to the Refer to and further diversifying our customer base, ITV commercial value. partnerships in a brand-safe environment. This Our People section Social Purpose can capture the growth in content spend in key In December 2022, we launched ITVX which remains a considerable market differentiator along for further details. for further details. segments in which we operate including licensing provided a step-change in ITV’s streaming offering with our deep, established relationships with and demand from streaming platforms for and now has over 17,000 hours of free content. advertisers and agencies. unscripted content and cost-effective premium This has led to significant growth year-on-year in ITV’s FTA linear TV channels offer unique scale and scripted content. monthly active users of our streaming service, up reach and it remains a cost-efficient and important Growing our global formats ensures we have a 19% and streaming hours, up 26%. part of marketing campaigns. range of high-value formats which we can monetise Live viewing, whether via ITVX or on linear TV ITVX delivers the scale and breadth of digital SHAREHOLDERS, DEBT PROVIDERS LEGISLATORS AND REGULATORS See Our Commitment to Section internationally, through production, format sales channels, remains a major focus: ITV is home to audiences which provides inventory for Planet V, AND ANALYSTS and licensing. Our distribution business can also more commercial audiences of scale than any our addressable advertising platform, to create and 172 and the Stakeholder capitalise on the value of our extensive catalogue Engagement section for further of formats and scripted content. This contributes other broadcaster or streaming platform in the UK. deliver targeted advertising at scale. This details of ITV’s key to our higher overall ITV Studios margin relative to In 2024, we will invest around £1.275 billion in underpins our ability to compete for digital video Through the successful execution ITV takes its responsibilities and stakeholders and how we our industry peers. high-quality, trusted content across a wide range budgets and gain share in this growing addressable of genres, including large family entertainment advertising market, illustrated by our 19% growth in of our strategic priorities, we will obligations as a PSB seriously and engage with them. As a vertically integrated producer broadcaster and digital revenues in 2023. create value for and deliver conducts business in line with the streamer, ITV Studios also benefits from demand shows, sport, drama, and news which will drive returns for our investors (equity appropriate laws and regulations, for its content from ITV’s FTA linear TV channels both video on demand and live viewing on ITVX, and our free advertiser-funded streaming service, and mass audiences on linear TV channels. and debt). to ensure we operate ethically and responsibly. ITVX, providing M&E with a strong and secure content supply. Link to risk Link to strategy Link to risk Link to strategy Link to risk Link to strategy Refer to the 2 E 4 S O 3 S O Investment Proposition section Key E Expand Studios globally S Supercharge Streaming O Optimise Broadcast for further details. Refer to the Strategy section in the CEO’s Statement and to the Operating and Financial Performance Review for further details
6 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 7 S T OUR KEY STAKEHOLDERSMARKET REVIEW R A T E G I Our strategy is aligned with the requirements of each of our stakeholders The markets in which we operate are dynamic, increasingly competitive C R E P so that we are creating and delivering value for all.and rapidly changing. The global content market is large and aractive, O R with all platforms needing access to the best content to aract viewers T at scale. Ongoing changes in viewing habits, coupled with an ever-evolving CUSTOMERSVIEWERS AND SUBSCRIBERSPARTNERS advertising landscape, bring both challenges and opportunities to ITV. Including but not limited to the Our content offering is varied and We collaborate closely with our TREND ONETREND TWO TREND THREE following:high quality, which audiences can partners and aim to cultivate watch and engage with, for free or strong working relationships. We Global demand for contentFragmentation in viewing The UK advertising market Agencies and advertisersthrough a subscription, across a ensure all suppliers understand The global content market is large and attractive and changing habitsThe UK advertising market is worth £36 billion, We deliver advertisers value variety of channels and platforms and adhere to our Supplier Code with all platforms needing a mix of content to While the average viewing time per person per day growing at 7% compound annual growth rate through a unique combination in a trusted, brand-safe of Conduct.succeed in a very competitive market. Going remains stable at 4.5-5 hours per day (Source: (CAGR) in the past decade. Growth slowed in 2023 environment. forward we expect to see growth in key segments Ofcom), the competitor set has become (forecast to be +3% in 2023 vs. +9% in 2022), with of mass simultaneous reach on of the global content market in which we operate, high inflation leading to reduced marketing our linear TV channels, targeted increasingly fragmented over time. From PSBs (e.g. including content licensing, streamers demand for BBC, ITV), to global streaming services (e.g. Netflix, budgets. There was also a decrease in venture digital advertising powered by unscripted content and cost effective premium Disney+), and user-generated video-sharing capital funding, which had funded significant Planet V – our proprietary scripted content. 2024 will be impacted by the platforms (e.g. YouTube, TikTok), viewers now have advertising activity in recent years from new adtech platform, and through 2023 US writers and actors strikes delaying an unparalleled level of choice and flexibility about market entrants. commercial and creative productions until 2025 and weaker demand from what, how, where and when they watch content. Total market growth has largely been driven by partnerships around our quality free-to-air broadcasters (FTA) in Europe who are online advertising, which is expected to be up 5% in holding back spend until they see more certainty 2023 and up 16% CAGR over the last ten years. programme brands on our linear in the advertising market. channels and ITVX. Online is the largest category of advertising spend (75% of the market) followed by TV advertising Broadcasters, networks and (14% of the market). (Source: AA WARC). streamers The TV advertising market is increasingly competitive, We deliver high-quality TV OUR COLLEAGUES, PROGRAMME CITIZENS with global streaming platforms (Amazon, Netflix, productions globally, across a PARTICIPANTS AND EVERYONE Disney+) having now launched, or shortly set to range of genres which WE WORK WITH launch, streaming advertising propositions. broadcasters and streamers can monetise through their own We protect, invest in and develop As a Public Service Broadcaster business models.our on and off-screen talent, (PSB) in the UK, ITV can help Size of global content market in 2023Average viewing time per person per day2023 UK advertising market and create a culture that shape culture for good. Our $226bn 4 hours 28 mins £36bn Platforms nurtures them to be productive, provision of free, universally We have strong relationships with commercial and creative. People, accessible, high-quality content (Source: Estimate from Ampere Analysis: (Source: Ofcom Media Nations. Previous 5-year (Source: AA WARC. 2022: £35 billion) aggregators who broadcast our and their physical and mental along with a trusted news service, Feb 2024 – excludes spend from film studios) average of 5 hours per day – incl. COVID-19 years) content and pay us for its health and safety, are our priority helps to inform citizens, shape inclusion on their platforms.at ITV.public sentiment, drive national How we are respondingHow we are responding How we are responding conversations and support Delivery of ITV Studios’ strategic priorities will As a commercial PSB in the UK, we provide the ITV offers our advertising clients something no democratic debate. ensure ITV gains share over the medium term. By nation with the flexibility to watch content streamer can – mass simultaneous reach, targeted expanding our scripted and unscripted business whenever and wherever, while maximising advertising at scale and commercial and creative Refer to the Refer to and further diversifying our customer base, ITV commercial value. partnerships in a brand-safe environment. This Our People section Social Purpose can capture the growth in content spend in key In December 2022, we launched ITVX which remains a considerable market differentiator along for further details.for further details.segments in which we operate including licensing provided a step-change in ITV’s streaming offering with our deep, established relationships with and demand from streaming platforms for and now has over 17,000 hours of free content. advertisers and agencies. unscripted content and cost-effective premium This has led to significant growth year-on-year in ITV’s FTA linear TV channels offer unique scale and scripted content. monthly active users of our streaming service, up reach and it remains a cost-efficient and important Growing our global formats ensures we have a 19% and streaming hours, up 26%. part of marketing campaigns. range of high-value formats which we can monetise Live viewing, whether via ITVX or on linear TV ITVX delivers the scale and breadth of digital SHAREHOLDERS, DEBT PROVIDERS LEGISLATORS AND REGULATORSSee Our Commitment to Section internationally, through production, format sales channels, remains a major focus: ITV is home to audiences which provides inventory for Planet V, AND ANALYSTS and licensing. Our distribution business can also more commercial audiences of scale than any our addressable advertising platform, to create and 172 and the Stakeholder capitalise on the value of our extensive catalogue Engagement section for further of formats and scripted content. This contributes other broadcaster or streaming platform in the UK. deliver targeted advertising at scale. This details of ITV’s key to our higher overall ITV Studios margin relative to In 2024, we will invest around £1.275 billion in underpins our ability to compete for digital video Through the successful execution ITV takes its responsibilities and stakeholders and how we our industry peers. high-quality, trusted content across a wide range budgets and gain share in this growing addressable of genres, including large family entertainment advertising market, illustrated by our 19% growth in of our strategic priorities, we will obligations as a PSB seriously and engage with them.As a vertically integrated producer broadcaster and digital revenues in 2023. create value for and deliver conducts business in line with the streamer, ITV Studios also benefits from demand shows, sport, drama, and news which will drive returns for our investors (equity appropriate laws and regulations, for its content from ITV’s FTA linear TV channels both video on demand and live viewing on ITVX, and our free advertiser-funded streaming service, and mass audiences on linear TV channels. and debt).to ensure we operate ethically and responsibly. ITVX, providing M&E with a strong and secure content supply. Link to risk Link to strategy Link to risk Link to strategy Link to risk Link to strategy Refer to the 2 E 4 S O 3 S O Investment Proposition section Key E Expand Studios globally S Supercharge Streaming O Optimise Broadcast for further details. Refer to the Strategy section in the CEO’s Statement and to the Operating and Financial Performance Review for further details
8 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 9 S T CHIEF EXECUTIVE’S STATEMENT R A T E G I Our purpose remains unchanged, we ITV Studios We also continued to monetise our global C R entertain and connect with millions of people formats with 19 formats in 2023 sold in three E ITV Studios is a scaled and global creator, P in the UK and globally, reflecting and shaping or more countries (2022: 19). Supported by O owner and distributor of high-quality content R culture and building brands, with brilliant operating in 13 countries and across 60+ our integrated model the final priority is to T content and creativity. labels; diversified by genre, geography and attract and retain the leading talent in the customer in the key creative markets around industry. We have seen outstanding creative Our vision is that by 2026 ITV will be a leader the world. deliveries from recent talent deals and in UK advertiser-funded streaming, and an acquisitions including Fool Me Once and expanding global force in content. We are ITV Studios benefits from its scale as the After the Flood from Quay Street EXECUTING focused on three strategic pillars to deliver largest producer in the UK, one of the largest Productions, One Piece from Tomorrow this vision: unscripted producers in the US and one of Studios, and Big Beasts from Plimsoll • Expand our UK and the top three in the majority of the remaining Productions. OUR MORE global production business international markets in which it operates. The global content market is large and • Supercharge our ITV Studios is a trusted supplier with attractive, with all platforms needing a mix Streaming business, and well-established relationships with key of content to succeed in a very competitive • Optimise our content buyers and leading creative talent landscape to attract audiences. We expect THAN TV Broadcast business in those markets. to see growth in key segments in which we In 2023 we further delivered against our four operate – content licensing, demand from STRATEGY These pillars are underpinned by a number strategic priorities (as set out in the Strategy streaming platforms for unscripted content of priorities, and we have set key performance section on the following page) and we remain and cost effective premium scripted content. indicators and targets to deliver by 2026. on track to achieve all our 2026 KPI targets With the strong progress we have made to and deliver a 5% total organic revenue CAGR ITV Studios is very well positioned to take date, we are on track and confident we can target from 2021 to 2026 – ahead of the advantage of this growth and to grow our deliver against these targets. The following market, and operate at industry-leading market share over the medium term, driven page provides further detail on our strategic margins of 13 to 15%. by our scale and diversified position, our priorities, why they are important and what investment in development and creative they drive. We have grown our scripted business with talent and our high-quality IP. 316 hours of high-end scripted content As previously guided, 2024 will be impacted Integrated producer broadcaster delivered in 2023, an increase of 14% from and streamer the prior year. This has helped to further delays in production as a result of the writers’ diversify our customer base, with almost and actors’ strike in the US, combined with ITV has a unique market position as a global the continuation of weaker demand from FTA and diversified vertically integrated producer a third of Studios revenues coming from broadcasters in Europe who are holding back The successful execution of ITV’s strategy of investing in and growing both broadcaster and streamer with content streaming platforms in 2023, up from spend until they see more certainty in the TV production in ITV Studios, and ITVX in Media and Entertainment (M&E), is evident central to everything we do. This model 22% in 2022. advertising market. benefits both divisions and therefore through the robust financial and operating performance in 2023, despite a the Group: challenging macroeconomic environment. For ITV Studios it: • Provides a sustainable base of core commissions which gives stability ITV Studios delivered record revenues As expected, group adjusted EBITA was Our Purpose, Vision and More in a changeable industry; and profits as the business continued to down 32% at £489 million which reflects the than TV Strategy • Helps with attracting and retaining demonstrate its strong market position, decline in linear advertising revenue and the industry-leading talent which is key with outstanding creative deliveries globally. planned investment in ITVX. Adjusted EPS The strong operating performance in 2023 demonstrates that the strategy we started to a successful creative business; In Media and Entertainment, ITVX drove was down 41% at 7.8p. We have reached a significant growth in digital viewing and peak level of net investment in our streaming implementing in 2018, and evolved in 2022 • Provides a platform to make Studios’ advertising revenues, with the investment business in 2023 and we continue to expect with the launch of ITVX, is working. We have content famous and enables cross- on plan. It was the year’s biggest and most to grow profits from here. been able to withstand macroeconomic promotion, supporting the international successful streaming launch in the UK, headwinds because of the actions we have sale of our content and formats, and firmly establishing its place in the market, Statutory profit before tax was down 61% taken to reposition ITV towards higher, the monetisation of our IP across our and winning the award for Best On-Demand and statutory EPS decreased by 51% to 5.2p. sustainable growth areas in global business models Service at the Edinburgh TV Festival. production and digital. The business is There was strong cash generation in the year, demonstrably more balanced and has strong For M&E it: Financial highlights with 102% profit to cash conversion and a delivery momentum as we continue to drive • Provides access to world-class content for robust balance sheet, net debt of £553 our strategy. ITV’s linear TV channels and ITVX, driving 2023 was the second-highest revenue million and net debt to adjusted EBITDA outturn in ITV’s history. Total ITV group The media landscape continues to evolve viewing growth; revenue was down 2% and total external leverage of 1.0x. • Enables deeper and more creative and AN AUDIENCE rapidly and is more competitive for viewers revenue declined by just 3% in 2023 despite and advertising, with recent new entrants. productive partnerships with advertisers, WITH KYLIE aired on the severe decline in linear advertising. In line with ITV’s dividend policy, the Board driving revenue; ITV in December 2023. has declared a final dividend of 3.3p (2022: We are in a far stronger position than we were ITV’s growth drivers continued to perform in 2018, to focus on ITV’s value drivers and • Helps protect from content price inflation THE LONG SHADOW is well, with 4% growth in ITV Studios and 3.3p), giving an ordinary dividend of 5.0p per a true-crime drama and share for the full year 2023 (2022: 5.0p) competitive advantages and are confident was the most-watched 19% growth in digital revenues helping that we can compete, as evidenced by a very For the Group, this gives us a real competitive series of the year to substantially offset a 15% decline in strong programming slate: Mr Bates vs The advantage, providing attractive economics on ITVX. linear advertising due to the challenging As announced on 01 March 2024, ITV sold its 50% holding of BritBox International to BBC Post Office is the highest audience drama on as we operate across the entire value chain, advertising market. In total, M&E revenues Studios for a total consideration of £255 any platform for five years; Fool me Once by and benefit from diversification in a were down 7% in the year. million. The Board will return the entire net ITV Studios’ Quay Street Productions is in cyclical industry. proceeds to shareholders through a share Netflix’s top 10 English-language dramas of buyback of £235 million which we expect to all time, and ITV Commercial consistently complete within the next 18 months. outperforms the market.
8 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 9 S T CHIEF EXECUTIVE’S STATEMENT R A T E G I Our purpose remains unchanged, we ITV Studios We also continued to monetise our global C R entertain and connect with millions of people formats with 19 formats in 2023 sold in three E ITV Studios is a scaled and global creator, P in the UK and globally, reflecting and shaping or more countries (2022: 19). Supported by O owner and distributor of high-quality content R culture and building brands, with brilliant operating in 13 countries and across 60+ our integrated model the final priority is to T content and creativity. labels; diversified by genre, geography and attract and retain the leading talent in the customer in the key creative markets around industry. We have seen outstanding creative Our vision is that by 2026 ITV will be a leader the world. deliveries from recent talent deals and in UK advertiser-funded streaming, and an acquisitions including Fool Me Once and expanding global force in content. We are ITV Studios benefits from its scale as the After the Flood from Quay Street EXECUTING focused on three strategic pillars to deliver largest producer in the UK, one of the largest Productions, One Piece from Tomorrow this vision: unscripted producers in the US and one of Studios, and Big Beasts from Plimsoll • Expand our UK and the top three in the majority of the remaining Productions. OUR MORE global production business international markets in which it operates. The global content market is large and • Supercharge our ITV Studios is a trusted supplier with attractive, with all platforms needing a mix Streaming business, and well-established relationships with key of content to succeed in a very competitive • Optimise our content buyers and leading creative talent landscape to attract audiences. We expect THAN TV Broadcast business in those markets. to see growth in key segments in which we In 2023 we further delivered against our four operate – content licensing, demand from STRATEGY These pillars are underpinned by a number strategic priorities (as set out in the Strategy streaming platforms for unscripted content of priorities, and we have set key performance section on the following page) and we remain and cost effective premium scripted content. indicators and targets to deliver by 2026. on track to achieve all our 2026 KPI targets With the strong progress we have made to and deliver a 5% total organic revenue CAGR ITV Studios is very well positioned to take date, we are on track and confident we can target from 2021 to 2026 – ahead of the advantage of this growth and to grow our deliver against these targets. The following market, and operate at industry-leading market share over the medium term, driven page provides further detail on our strategic margins of 13 to 15%. by our scale and diversified position, our priorities, why they are important and what investment in development and creative they drive. We have grown our scripted business with talent and our high-quality IP. 316 hours of high-end scripted content As previously guided, 2024 will be impacted Integrated producer broadcaster delivered in 2023, an increase of 14% from and streamer the prior year. This has helped to further delays in production as a result of the writers’ diversify our customer base, with almost and actors’ strike in the US, combined with ITV has a unique market position as a global the continuation of weaker demand from FTA and diversified vertically integrated producer a third of Studios revenues coming from broadcasters in Europe who are holding back The successful execution of ITV’s strategy of investing in and growing both broadcaster and streamer with content streaming platforms in 2023, up from spend until they see more certainty in the TV production in ITV Studios, and ITVX in Media and Entertainment (M&E), is evident central to everything we do. This model 22% in 2022. advertising market. benefits both divisions and therefore through the robust financial and operating performance in 2023, despite a the Group: challenging macroeconomic environment. For ITV Studios it: • Provides a sustainable base of core commissions which gives stability ITV Studios delivered record revenues As expected, group adjusted EBITA was Our Purpose, Vision and More in a changeable industry; and profits as the business continued to down 32% at £489 million which reflects the than TV Strategy• Helps with attracting and retaining demonstrate its strong market position, decline in linear advertising revenue and the industry-leading talent which is key with outstanding creative deliveries globally. planned investment in ITVX. Adjusted EPS The strong operating performance in 2023 demonstrates that the strategy we started to a successful creative business; In Media and Entertainment, ITVX drove was down 41% at 7.8p. We have reached a significant growth in digital viewing and peak level of net investment in our streaming implementing in 2018, and evolved in 2022 • Provides a platform to make Studios’ advertising revenues, with the investment business in 2023 and we continue to expect with the launch of ITVX, is working. We have content famous and enables cross- on plan. It was the year’s biggest and most to grow profits from here. been able to withstand macroeconomic promotion, supporting the international successful streaming launch in the UK, headwinds because of the actions we have sale of our content and formats, and firmly establishing its place in the market, Statutory profit before tax was down 61% taken to reposition ITV towards higher, the monetisation of our IP across our and winning the award for Best On-Demand and statutory EPS decreased by 51% to 5.2p.sustainable growth areas in global business models Service at the Edinburgh TV Festival.production and digital. The business is There was strong cash generation in the year, demonstrably more balanced and has strong For M&E it: Financial highlightswith 102% profit to cash conversion and a delivery momentum as we continue to drive • Provides access to world-class content for robust balance sheet, net debt of £553 our strategy. ITV’s linear TV channels and ITVX, driving 2023 was the second-highest revenue million and net debt to adjusted EBITDA outturn in ITV’s history. Total ITV group The media landscape continues to evolve viewing growth; revenue was down 2% and total external leverage of 1.0x.• Enables deeper and more creative and AN AUDIENCE rapidly and is more competitive for viewers revenue declined by just 3% in 2023 despite and advertising, with recent new entrants. productive partnerships with advertisers, WITH KYLIE aired on the severe decline in linear advertising. In line with ITV’s dividend policy, the Board driving revenue; ITV in December 2023. has declared a final dividend of 3.3p (2022: We are in a far stronger position than we were ITV’s growth drivers continued to perform in 2018, to focus on ITV’s value drivers and • Helps protect from content price inflation THE LONG SHADOW is well, with 4% growth in ITV Studios and 3.3p), giving an ordinary dividend of 5.0p per a true-crime drama and share for the full year 2023 (2022: 5.0p)competitive advantages and are confident was the most-watched 19% growth in digital revenues helping that we can compete, as evidenced by a very For the Group, this gives us a real competitive series of the year to substantially offset a 15% decline in strong programming slate: Mr Bates vs The advantage, providing attractive economics on ITVX. linear advertising due to the challenging As announced on 01 March 2024, ITV sold its 50% holding of BritBox International to BBC Post Office is the highest audience drama on as we operate across the entire value chain, advertising market. In total, M&E revenues Studios for a total consideration of £255 any platform for five years; Fool me Once by and benefit from diversification in a were down 7% in the year. million. The Board will return the entire net ITV Studios’ Quay Street Productions is in cyclical industry. proceeds to shareholders through a share Netflix’s top 10 English-language dramas of buyback of £235 million which we expect to all time, and ITV Commercial consistently complete within the next 18 months.outperforms the market.
10 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 11 S CHIEF EXECUTIVE’S STATEMENT CONTINUED T R A T E G I Media & Entertainment (M&E) C R E P ITV M&E is the largest commercial OUR MORE THAN TV STRATEGY O R broadcaster and streamer in the UK, Our strategy is focused on three strategic pillars 1) Expand Studios; 2) Supercharge To support the successful delivery of the strategy, we have key The successful execution of our strategy to date has made ITV more T delivering unrivalled audience scale and Streaming; and 3) Optimise Broadcast. These pillars are underpinned by a number of performance indicators (KPIs) and related targets to be delivered robust. ITV has a leading, scaled, global Studios business, a high reach. It is underpinned by two strategic priorities (detailed below) to ensure that ITV is best placed to capitalise on the from 2021 to 2026 which we are on track to deliver. The key to growth Streaming service and a cash generative linear advertising pillars; Supercharge Streaming and opportunities presented by the rapidly changing viewing, content production and successfully delivering this strategy is digitally transforming business. This ensures that we are well placed to grow profits from Optimise Broadcast. advertising environments. These pillars are not independent. They work together – everything we do. here as we continue to drive material efficiencies, invest behind our reinforcing each other, creating synergies and delivering value. strategic priorities and deliver returns to shareholders. By Supercharging Streaming, we aim to drive digital revenues through ITVX and Planet V (ITV’s proprietary, self-service programmatic addressable advertising platform). We launched ITVX on time and our investment is on plan and on budget. In our first full year 2026 STUDIOS ITV Studios – STRATEGIC PRIORITIES AND KPI TARGETS of ITVX we delivered a step change in viewing TARGET Expanding UK and global productions is central to ITV’s strategy. ITV Studios’ ambition is to be a leading and digital revenues were up 19%. We Grow total organic force in the creation and ownership of intellectual property (IP), global content production and distribution. increased the number of monthly active users revenues by 5% on We are achieving this by focusing on our four strategic priorities to drive revenue and profit growth. by almost 20%, up to 12.5 million and those average per annum to 2026 – which is ahead users are spending more time engaging with of the market at a the platform with streaming hours up 26% PRIORITIES WHY IT’S IMPORTANT FY 2026 TARGET FY 2023 WHAT IT DRIVES margin of 13% to 15% to 1.5 billion hours. Brand awareness is now expand STU 1. Grow our To meet the growing 400 high-end scripted 316 hours Growth in total up to over 90% and we have seen a significant global demand for hours per annum scripted business organic revenue of 5% increase in streaming hours for light viewers STUDIOS D (2022: 276 hours) I scripted content who are harder to reach, up 65%, and our key O on average per annum Further expanding by genre, S particularly from 1 target audience of 25-54s which was up 47%. streaming platforms to 2026 which is geography and customer and ahead of the market growing faster than market To maximise international 20 formats sold in three or 19 formats The key focus of ITVX is our ad-funded 2. Grow our Delivers adjusted global formats monetisation of more countries (2022: 19 formats) proposition which is where we have EBITA2 business high-value formats margins of 13% channelled our efforts and resources in to 15% its launch year. In addition, we have ITVX 3. Further diversify To capture the growth in 30% of total revenues 32% Premium, a subscription service, which is supercharge our customer base content spend from local from streaming platforms primarily an ad-free offering for viewers. The (2022: 22%) In 2023, total organic Vertically and global streaming number of paid-for UK subscribers declined STREAMING Integrated platforms revenue grew 3% at marginally year on year as we started Driving digital viewing and Producer an adjusted EBITA transitioning subscribers from our standalone revenue through ITVX and Planet V, Broadcaster 4. Attract and retain Key to creative success N/A N/A margin of 13.2% ITV’s leading addressable and Streamer leading talent of a Studios business app, BritBox UK, into ITVX Premium, combined with the closure of the ITV Catch Up service advertising platform on Amazon Prime Video Channels. In 2024, the BritBox UK service on Amazon optimise MEDIA & ENTERTAINMENT – STRATEGIC PRIORITIES AND KPI TARGETS Prime Video Channels and the Britbox UK ITV’s M&E strategy is based on two core pillars: Supercharge Streaming and Optimise Broadcast, with standalone app will close as we further BROADCAST strategic priorities to drive growth in digital revenues and maintain strength in linear. simplify our offering. This will consolidate Digitally transforming as we all our subscribers under one ITVX Premium continue to attract commercial PRIORITIES WHY IT’S IMPORTANT FY 2026 TARGET FY 2023 WHAT IT DRIVES brand and will give us complete ownership broadcast audiences of unparalleled scale S of the subscriber base. The closure of these TR 1. Attract more monthly ITV’s reach is key to Grow monthly active 12.5 million Growth in digital retaining and attracting users to 20 million services is expected to impact subscriber E active users to ITVX (2022: 10.5 million) revenues to at least numbers and subscription revenues in 2024. A advertisers £750m by 2026 2026 M&E TARGET MI Grow digital revenues N 2. Increase the ITV’s scale is key to Grow total streaming 1,505 million hours Revenues from linear Planet V is the platform enabling the to at least £750m G time users spend retaining and attracting hours to 2 billion hours (2022: 1,192 million TV advertising, growth of ITV’s digital advertising – it is a across M&E on ITVX advertisers hours) market-leading addressable advertising commercial and platform which creates and delivers Increase UK Monetising ITV viewers Grow subscribers to 1.3 million creative partnerships, 3. targeted advertising at scale. subscriber base who are willing to pay for 2.5 million and sponsorship (2022: 1.4 million) ad-free and additional It enables us to create sophisticated content In 2023, total digital audience segments and serve ads directly B revenues were to them. All the major agencies are using R 4. Maintain our strength ITV’s mass linear Maintain a share of at 91% £490 million, up 19% Planet V and see it as an intuitive, easy-to- OA in delivering mass audiences remains very least 80% of the top (2022: 93%) year-on-year important to UK 1,000 programmes buy self-serve platform, allowing them to D linear audiences C advertisers streamline their approach to planning and A S buying. ITV has one of the largest first-party T 5. Maintain ITV’s position ITV’s scale remains very Maintain a share of 32.6% data sets in the UK, with over 40 million in UK broadcast important to UK commercial viewing of (2022: 33.8%) registered users on ITVX. Agencies and market advertisers 33% advertisers can make use of this alongside their own data and other first and third-party datasets, to create more precise addressable campaigns. Advertisers are prepared to pay 1. Average annual growth rate from 2021. more for this increasingly sophisticated and 2. Refer to APMs for detail on our adjusted measures. valuable ad inventory.
10 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 11 S CHIEF EXECUTIVE’S STATEMENT CONTINUED T R A T E G I Media & Entertainment (M&E) C R E P ITV M&E is the largest commercial OUR MORE THAN TV STRATEGY O R broadcaster and streamer in the UK, Our strategy is focused on three strategic pillars 1) Expand Studios; 2) Supercharge To support the successful delivery of the strategy, we have key The successful execution of our strategy to date has made ITV more T delivering unrivalled audience scale and Streaming; and 3) Optimise Broadcast. These pillars are underpinned by a number of performance indicators (KPIs) and related targets to be delivered robust. ITV has a leading, scaled, global Studios business, a high reach. It is underpinned by two strategic priorities (detailed below) to ensure that ITV is best placed to capitalise on the from 2021 to 2026 which we are on track to deliver. The key to growth Streaming service and a cash generative linear advertising pillars; Supercharge Streaming and opportunities presented by the rapidly changing viewing, content production and successfully delivering this strategy is digitally transforming business. This ensures that we are well placed to grow profits from Optimise Broadcast.advertising environments. These pillars are not independent. They work together – everything we do. here as we continue to drive material efficiencies, invest behind our reinforcing each other, creating synergies and delivering value. strategic priorities and deliver returns to shareholders. By Supercharging Streaming, we aim to drive digital revenues through ITVX and Planet V (ITV’s proprietary, self-service programmatic addressable advertising platform). We launched ITVX on time and our investment is on plan and on budget. In our first full year 2026 STUDIOS ITV Studios – STRATEGIC PRIORITIES AND KPI TARGETS of ITVX we delivered a step change in viewing TARGETExpanding UK and global productions is central to ITV’s strategy. ITV Studios’ ambition is to be a leading and digital revenues were up 19%. We Grow total organic force in the creation and ownership of intellectual property (IP), global content production and distribution. increased the number of monthly active users revenues by 5% on We are achieving this by focusing on our four strategic priorities to drive revenue and profit growth. by almost 20%, up to 12.5 million and those average per annum to 2026 – which is ahead users are spending more time engaging with of the market at a the platform with streaming hours up 26% PRIORITIES WHY IT’S IMPORTANT FY 2026 TARGET FY 2023 WHAT IT DRIVES margin of 13% to 15% to 1.5 billion hours. Brand awareness is now expandSTU1. Grow our To meet the growing 400 high-end scripted 316 hours Growth in total up to over 90% and we have seen a significant global demand for hours per annum scripted business organic revenue of 5% increase in streaming hours for light viewers STUDIOSD (2022: 276 hours) I scripted content who are harder to reach, up 65%, and our key O on average per annum Further expanding by genre, S particularly from 1 target audience of 25-54s which was up 47%. streaming platforms to 2026 which is geography and customer and ahead of the market growing faster than market To maximise international 20 formats sold in three or 19 formats The key focus of ITVX is our ad-funded 2. Grow our Delivers adjusted global formats monetisation of more countries (2022: 19 formats) proposition which is where we have EBITA2 business high-value formats margins of 13% channelled our efforts and resources in to 15% its launch year. In addition, we have ITVX 3. Further diversify To capture the growth in 30% of total revenues 32% Premium, a subscription service, which is superchargeour customer base content spend from local from streaming platforms primarily an ad-free offering for viewers. The (2022: 22%) In 2023, total organic Vertically and global streaming number of paid-for UK subscribers declined STREAMINGIntegrated platforms revenue grew 3% at marginally year on year as we started Driving digital viewing and Producer an adjusted EBITA transitioning subscribers from our standalone revenue through ITVX and Planet V, Broadcaster 4. Attract and retain Key to creative success N/A N/A margin of 13.2% ITV’s leading addressable and Streamer leading talent of a Studios business app, BritBox UK, into ITVX Premium, combined with the closure of the ITV Catch Up service advertising platform on Amazon Prime Video Channels. In 2024, the BritBox UK service on Amazon optimiseMEDIA & ENTERTAINMENT – STRATEGIC PRIORITIES AND KPI TARGETS Prime Video Channels and the Britbox UK ITV’s M&E strategy is based on two core pillars: Supercharge Streaming and Optimise Broadcast, with standalone app will close as we further BROADCASTstrategic priorities to drive growth in digital revenues and maintain strength in linear. simplify our offering. This will consolidate Digitally transforming as we all our subscribers under one ITVX Premium continue to attract commercial PRIORITIES WHY IT’S IMPORTANT FY 2026 TARGET FY 2023 WHAT IT DRIVES brand and will give us complete ownership broadcast audiences of unparalleled scale S of the subscriber base. The closure of these TR1. Attract more monthly ITV’s reach is key to Grow monthly active 12.5 million Growth in digital retaining and attracting users to 20 million services is expected to impact subscriber E active users to ITVX (2022: 10.5 million) revenues to at least numbers and subscription revenues in 2024.A advertisers £750m by 2026 2026 M&E TARGET MI Grow digital revenues N 2. Increase the ITV’s scale is key to Grow total streaming 1,505 million hours Revenues from linear Planet V is the platform enabling the to at least £750m Gtime users spend retaining and attracting hours to 2 billion hours (2022: 1,192 million TV advertising, growth of ITV’s digital advertising – it is a across M&Eon ITVX advertisers hours) market-leading addressable advertising commercial and platform which creates and delivers Increase UK Monetising ITV viewers Grow subscribers to 1.3 million creative partnerships, 3. targeted advertising at scale. subscriber base who are willing to pay for 2.5 million and sponsorship (2022: 1.4 million) ad-free and additional It enables us to create sophisticated content In 2023, total digital audience segments and serve ads directly B revenues were to them. All the major agencies are using R4. Maintain our strength ITV’s mass linear Maintain a share of at 91% £490 million, up 19% Planet V and see it as an intuitive, easy-to-OAin delivering mass audiences remains very least 80% of the top (2022: 93%) year-on-year important to UK 1,000 programmes buy self-serve platform, allowing them to D linear audiences C advertisers streamline their approach to planning and A S buying. ITV has one of the largest first-party T5. Maintain ITV’s position ITV’s scale remains very Maintain a share of 32.6% data sets in the UK, with over 40 million in UK broadcast important to UK commercial viewing of (2022: 33.8%) registered users on ITVX. Agencies and market advertisers 33% advertisers can make use of this alongside their own data and other first and third-party datasets, to create more precise addressable campaigns. Advertisers are prepared to pay 1. Average annual growth rate from 2021. more for this increasingly sophisticated and 2. Refer to APMs for detail on our adjusted measures. valuable ad inventory.
12 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 13 S CHIEF EXECUTIVE’S STATEMENT CONTINUED T R A T E G I This capability underpins our ability Cost and efficiency programme Our Social Purpose SHETLAND is a crime drama In May 2023, we submitted our application C R produced by Silverprint to now compete for online video budgets, to Ofcom for the renewal of our Channel 3 E Our existing cost saving programme of £150 We reach millions of viewers globally, Pictures (an ITV Studios P particularly budgets allocated to platforms licenses, which expire on 31 December 2024. O million between 2019 and 2026, has delivered through our content, and in the UK, label) for the BBC. R such as YouTube, and take share in this £130 million of annualised savings to date through our linear channels and ITVX. We are fully engaged in the process, which T growing addressable advertising market. THREE LITTLE BIRDS we expect to conclude in the first half of 2024. and we are on track to deliver the full £150 We are proud of our position as a Public is a drama written by million by 2025 – one year early. Service Broadcaster (PSB) in the UK, telling Sir Lenny Henry and inspired The progress we have made in Streaming and the stories that are at the heart of culture by his mother’s journey to Colleagues against our KPIs means that we are confident Britain in the late 1950s. of delivering at least £750 million of digital We are now in the early stages of a new and society. We have the opportunity to It aired on ITV1 and ITVX Our colleagues are central to everything that strategic restructuring and efficiency advocate for positive change from social in October 2023. we do and are fundamental to the success of revenues by 2026, with the focus continuing programme across the Group to reshape the issues to environmental matters and beyond, ITV. They have played a significant role in to be ad-funded. cost base, enhance profitability, and support providing the UK public with unbiased delivering our strategy effectively this year We have started 2024 really well and will the growth drivers of Studios and Streaming. information and diverse perspectives. and I am incredibly grateful for the hard work further enhance ITVX in 2024 building on We are building on the foundations we have and commitment all our colleagues show. the momentum we have. We will increase established in digital and data and the Our Social Purpose strategy has four focus I always appreciate how our people love the depth and breadth of content, deliver significant progress we have made in areas: Better Health; Diversity, Equity and collaborating with each other and with so continuous improvements in the product transforming ITV from a linear broadcaster to Inclusion; Climate Action and Giving Back. many partners externally, and how motivated and user experience, and expand its a multi-platform broadcaster and streamer. they are to be part of making great shows distribution and marketing. 2023 saw us reach the major milestone for that lift people and change people’s lives. Savings will come mainly from technology Better Health in surpassing our five-year goal Within Broadcast, we have now digitally and operational efficiencies, organisational which was to encourage audiences to take We have continued to invest in the transformed the business and will continue redesign across Group, M&E and ITV Studios over 200 million actions to support their development of our colleagues and in to do so as we become increasingly agile and and permanent reductions in discretionary mental or physical wellbeing. We hit an ensuring we have an inclusive culture where adapt to changing viewer habits. Internally spend across the Group. extraordinary 249 million actions by the everyone can be their authentic selves. I am this means we are always looking at ways to end of 2023 with our flagship mental health pleased that in our 2023 Engagement and increase our efficiency and productivity, By the end of 2024 we expect the programme campaign, Britain Get Talking, playing a Culture Survey, 75% of colleagues who whether that is through the operational use to have delivered incremental annualised significant role in achieving our target. responded, feel like they belong at ITV. of AI or ensuring our cost base is the right savings of at least £50 million gross per year, shape and size. Externally for viewers, it is giving a £30 million in year gross benefit in Our Giving Back activity in 2023 continued with In 2024 we will be running a series of ensuring we continue to engage our 2024. There will be c.£50 million of one-off our biggest fundraising event, Soccer Aid for Roadshows across ITV and I am really looking audiences through live content such as costs to deliver these savings. The ongoing UNICEF. Since its launch in 2006, over £90 forward to meeting many of our colleagues sports and successful entertainment shows programme is designed to deliver further million has been raised. As we move forward, from all areas of the business. With their to continue to deliver mass audiences which incremental material savings over a our Giving Back work will shift towards input, commitment and energy, ITV will are so valuable to advertisers, together with number of years which will further build supporting the next generation called continue to successfully execute our strategy. the personalisation and targeting that comes ITV’s resilience. We will provide further Better Futures. with ITVX. information as the programme progresses. Outlook We have made great progress towards ITV continues to be the best destination for our 2026 KPIs. 2023 was the year of peak advertisers to reach valuable mass investment for Streaming, which together audiences in the UK. Our share of those mass THE BAY returned for its fourth series on ITV in 2023. with the successful execution of our linear TV audiences continued with over 90% It is produced by Tall Story Pictures (an ITV Studios label). strategy and the efficiencies delivered to of the top 1,000 programmes appearing on Climate Action remains a priority across our communication, awareness and training date have made ITV more robust. ITV has ITV and our share of commercial viewing has whole organisation, ensuring we achieve Net of our speaking up channels for individuals a leading, scaled, global Studios business, also been broadly maintained at just under Zero by 2050 in how we make, broadcast and to register concerns, including our speaking a high growth Streaming service and a 33%. This robust performance demonstrates stream our shows, and use our reach to up hotline, SafeCall. I continue to chair the cash generative linear advertising business. ITV’s unique market-leading position in inform and inspire audiences to make Duty of Care Operating Board which This ensures that we are well placed to broadcast in the UK greener choices. Our first Climate Transition meets regularly. grow profits from here as we continue to Plan is published alongside this report. drive material efficiencies, invest behind What sets ITV apart from all its Following the outcome of the external KC our strategic priorities and deliver returns competitors commercially is the ability ITV continues to consolidate our Diversity, Review, which found that ITV’s handling of to shareholders. to deliver four things: Equity and Inclusion work. We have the case surrounding Phillip Schofield and championed diversity across our biggest This Morning was adequate and appropriate. CAROLYN MCCALL • Mass simultaneous reach, CHIEF EXECUTIVE shows introducing a range of new voices In 2024 we will focus on implementing the • Sophisticated targeted advertising on-screen and off-screen and have created recommendations arising from the review. • Commercial and creative partnerships new opportunities for under-represented This includes enhanced speaking up related • A brand-safe and trusted environment. groups to thrive in our business. training focused on different parts of the Group and further strengthening our All of this ensures that we can remain Refer to the Social Purpose section for complaints handling processes. highly competitive in an increasingly further details on the work we have done competitive market. in 2023. Regulation The Media Bill which is currently working its ITVX’s strong performance has continued Duty of Care way through Parliament, will update the legal into 2024. Total advertising revenue (TAR) is Supporting the mental and physical health and regulatory framework for television, expected to be up 3% in Q1 compared to the and safety of colleagues and others who particularly delivered online. This should help same period in 2023, with continued strong work with ITV and those participating in our ensure that content from PSBs, including ITV, growth in digital advertising revenues. productions remains a key priority. We are will be included and easily discoverable committed to addressing promptly, fairly and on all major streaming platforms, on fair Refer to the Operating and Financial confidentially all concerns and monitoring commercial terms. Once the Bill becomes Performance Review for further details of the channels we have in place to ensure they law, we will remain fully engaged with ITV Studios and M&E’s strategic priorities remain appropriate. During 2023 we Ofcom and the government throughout and how the divisions performed in the year. continued to strengthen our Speaking Up any subsequent processes necessary for programme by driving continuous its full implementation.
12 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 13 S CHIEF EXECUTIVE’S STATEMENT CONTINUED T R A T E G I This capability underpins our ability Cost and efficiency programmeOur Social Purpose SHETLAND is a crime drama In May 2023, we submitted our application C R produced by Silverprint to now compete for online video budgets, to Ofcom for the renewal of our Channel 3 E Our existing cost saving programme of £150 We reach millions of viewers globally, Pictures (an ITV Studios P particularly budgets allocated to platforms licenses, which expire on 31 December 2024. O million between 2019 and 2026, has delivered through our content, and in the UK, label) for the BBC. R such as YouTube, and take share in this £130 million of annualised savings to date through our linear channels and ITVX. We are fully engaged in the process, which T growing addressable advertising market. THREE LITTLE BIRDS we expect to conclude in the first half of 2024. and we are on track to deliver the full £150 We are proud of our position as a Public is a drama written by million by 2025 – one year early. Service Broadcaster (PSB) in the UK, telling Sir Lenny Henry and inspired The progress we have made in Streaming and the stories that are at the heart of culture by his mother’s journey to Colleagues against our KPIs means that we are confident Britain in the late 1950s. of delivering at least £750 million of digital We are now in the early stages of a new and society. We have the opportunity to It aired on ITV1 and ITVX Our colleagues are central to everything that strategic restructuring and efficiency advocate for positive change from social in October 2023. we do and are fundamental to the success of revenues by 2026, with the focus continuing programme across the Group to reshape the issues to environmental matters and beyond, ITV. They have played a significant role in to be ad-funded.cost base, enhance profitability, and support providing the UK public with unbiased delivering our strategy effectively this year We have started 2024 really well and will the growth drivers of Studios and Streaming. information and diverse perspectives. and I am incredibly grateful for the hard work further enhance ITVX in 2024 building on We are building on the foundations we have and commitment all our colleagues show. the momentum we have. We will increase established in digital and data and the Our Social Purpose strategy has four focus I always appreciate how our people love the depth and breadth of content, deliver significant progress we have made in areas: Better Health; Diversity, Equity and collaborating with each other and with so continuous improvements in the product transforming ITV from a linear broadcaster to Inclusion; Climate Action and Giving Back. many partners externally, and how motivated and user experience, and expand its a multi-platform broadcaster and streamer. they are to be part of making great shows distribution and marketing.2023 saw us reach the major milestone for that lift people and change people’s lives. Savings will come mainly from technology Better Health in surpassing our five-year goal Within Broadcast, we have now digitally and operational efficiencies, organisational which was to encourage audiences to take We have continued to invest in the transformed the business and will continue redesign across Group, M&E and ITV Studios over 200 million actions to support their development of our colleagues and in to do so as we become increasingly agile and and permanent reductions in discretionary mental or physical wellbeing. We hit an ensuring we have an inclusive culture where adapt to changing viewer habits. Internally spend across the Group. extraordinary 249 million actions by the everyone can be their authentic selves. I am this means we are always looking at ways to end of 2023 with our flagship mental health pleased that in our 2023 Engagement and increase our efficiency and productivity, By the end of 2024 we expect the programme campaign, Britain Get Talking, playing a Culture Survey, 75% of colleagues who whether that is through the operational use to have delivered incremental annualised significant role in achieving our target. responded, feel like they belong at ITV. of AI or ensuring our cost base is the right savings of at least £50 million gross per year, shape and size. Externally for viewers, it is giving a £30 million in year gross benefit in Our Giving Back activity in 2023 continued with In 2024 we will be running a series of ensuring we continue to engage our 2024. There will be c.£50 million of one-off our biggest fundraising event, Soccer Aid for Roadshows across ITV and I am really looking audiences through live content such as costs to deliver these savings. The ongoing UNICEF. Since its launch in 2006, over £90 forward to meeting many of our colleagues sports and successful entertainment shows programme is designed to deliver further million has been raised. As we move forward, from all areas of the business. With their to continue to deliver mass audiences which incremental material savings over a our Giving Back work will shift towards input, commitment and energy, ITV will are so valuable to advertisers, together with number of years which will further build supporting the next generation called continue to successfully execute our strategy. the personalisation and targeting that comes ITV’s resilience. We will provide further Better Futures. with ITVX. information as the programme progresses. Outlook We have made great progress towards ITV continues to be the best destination for our 2026 KPIs. 2023 was the year of peak advertisers to reach valuable mass investment for Streaming, which together audiences in the UK. Our share of those mass THE BAY returned for its fourth series on ITV in 2023. with the successful execution of our linear TV audiences continued with over 90% It is produced by Tall Story Pictures (an ITV Studios label). strategy and the efficiencies delivered to of the top 1,000 programmes appearing on Climate Action remains a priority across our communication, awareness and training date have made ITV more robust. ITV has ITV and our share of commercial viewing has whole organisation, ensuring we achieve Net of our speaking up channels for individuals a leading, scaled, global Studios business, also been broadly maintained at just under Zero by 2050 in how we make, broadcast and to register concerns, including our speaking a high growth Streaming service and a 33%. This robust performance demonstrates stream our shows, and use our reach to up hotline, SafeCall. I continue to chair the cash generative linear advertising business. ITV’s unique market-leading position in inform and inspire audiences to make Duty of Care Operating Board which This ensures that we are well placed to broadcast in the UK greener choices. Our first Climate Transition meets regularly. grow profits from here as we continue to Plan is published alongside this report. drive material efficiencies, invest behind What sets ITV apart from all its Following the outcome of the external KC our strategic priorities and deliver returns competitors commercially is the ability ITV continues to consolidate our Diversity, Review, which found that ITV’s handling of to shareholders. to deliver four things: Equity and Inclusion work. We have the case surrounding Phillip Schofield and championed diversity across our biggest This Morning was adequate and appropriate. CAROLYN MCCALL • Mass simultaneous reach, CHIEF EXECUTIVE shows introducing a range of new voices In 2024 we will focus on implementing the • Sophisticated targeted advertising on-screen and off-screen and have created recommendations arising from the review. • Commercial and creative partnerships new opportunities for under-represented This includes enhanced speaking up related • A brand-safe and trusted environment. groups to thrive in our business. training focused on different parts of the Group and further strengthening our All of this ensures that we can remain Refer to the Social Purpose section for complaints handling processes. highly competitive in an increasingly further details on the work we have done competitive market. in 2023. Regulation The Media Bill which is currently working its ITVX’s strong performance has continued Duty of Care way through Parliament, will update the legal into 2024. Total advertising revenue (TAR) is Supporting the mental and physical health and regulatory framework for television, expected to be up 3% in Q1 compared to the and safety of colleagues and others who particularly delivered online. This should help same period in 2023, with continued strong work with ITV and those participating in our ensure that content from PSBs, including ITV, growth in digital advertising revenues. productions remains a key priority. We are will be included and easily discoverable committed to addressing promptly, fairly and on all major streaming platforms, on fair Refer to the Operating and Financial confidentially all concerns and monitoring commercial terms. Once the Bill becomes Performance Review for further details of the channels we have in place to ensure they law, we will remain fully engaged with ITV Studios and M&E’s strategic priorities remain appropriate. During 2023 we Ofcom and the government throughout and how the divisions performed in the year.continued to strengthen our Speaking Up any subsequent processes necessary for programme by driving continuous its full implementation.
14 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 15 S T KEY PERFORMANCE INDICATORS R A T E G I Our KPIs and related targets for 2026 align our performance and accountability C R E EXPAND STUDIOS P with our strategic priorities. This is detailed further in the Strategy section of the UK AND GLOBAL PRODUCTION O R Chief Executive’s Statement. T ITV Studios total organic revenue growth2 ITV Studios total organic revenue growth Performance 2023 2021 31 measures the scale and success of our Total organic revenue was up 3% following a global studios business. It includes +3% on 2022 2022 14 All KPIs are reported on a six-month basis. The following are reported quarterly: ITV Studios total revenue growth, total digital revenue, strong 2022 which was up 14%. Organic total streaming hours, share of commercial viewing and share of top 1,000 commercial broadcast TV programmes. revenues from programmes sold to M&E, revenue excludes the benefit of our 2023 3 which as a vertically integrated producer, acquisitions of Plimsoll Productions and broadcaster and streamer, is an important Lingo Pictures in 2022, and the Note: 2020 was down 25% due to the Refer to the Operating and Financial Performance Review for further details on the performance of all our KPIs. part of our business. impact of the COVID-19 pandemic. unfavourable impact of a £15 million foreign exchange movement. 2026 Target ITV Studios total revenue grew 4% to ITV GROUP £2,170 million. Grow by 5% on average per annum (from 2021) Adjusted EPS1 2 ITV Studios adjusted EBITA margin % Adjusted EPS represents the adjusted Performance 2023 2020 10.9 1 This is the key profitability measure used Performance 2023 2020 11 profit after tax attributable to each equity Adjusted EPS decreased by 41% from 13.2p share in the year. It is an important measure 2021 15.3 across the ITV Studios business. The to 7.8p. Strong growth in ITV Studios 7.8p ITV Studios adjusted EBITA margin was 2021 12 as we aim to create long-term value for our 1 margin is calculated on ITV Studios total 13.2% (2022: 12.4%), which is restored 13.2% adjusted EBITA , up 10%, was offset by a 2022 13.2 shareholders. decline in total advertising revenues (TAR), -41% on 2022 revenue. within the targeted range. +0.8 basis points 2022 12.4 down 8%, and an increase in M&E costs 2023 7.8 on 2022 2023 13.2 from the planned investment in content for ITVX, higher streaming related costs and third-party commercial payaways. 2026 Target Deliver in the 13% to 15% range Cost savings Total high-end scripted hours Cost savings are permanent savings to the Performance 2023 business. Managing our cost base and Total high-end scripted hours is an Performance 2023 2020 112 We delivered £24 million of permanent important measure in assessing the mitigating the impact of inflation is key as cost savings in 2023, which is ahead of the £130m The number of high-end scripted hours success of our strategic priority, to grow our 2021 175 we aim to run our business as efficiently as £15 million in year target. To date, we have produced by ITV Studios increased by 14% 316hrs possible and fund investments in line with cumulative savings scripted business. High-end scripted hours delivered £130 million of our 2019 to 2026 to 316 hours in 2023 driven by titles such as +14% on 2022 2022 276 our strategic priorities. ince 2018 include new commissions or returning target of £150 million. s Big Beasts, Fool Me Once and Love Island franchises that have a higher cost per hour in the UK, and Twin Love and Physical 2023 316 We are now in the early stages of a new than continuing drama. in the US. strategic restructuring and efficiency 2026 Target programme across the Group which will 2026 Target deliver incremental annualised savings Deliver over £150 million of cumulative savings between 2018 and 2026 Grow to 400 hours of at least £50 million gross per year, giving a £30 million in year gross benefit in 2024. Number of formats sold in three or more countries3 The Studios business is focused on Performance 2023 2020 14 Profit to cash conversion1 maximising the international monetisation The number of formats sold in three or 2021 15 of high-value formats. A good measure of more countries was 19, which was flat 19 One of ITV’s strengths is its cash Performance 2023 2020 138 international success is when a format is generation, reflecting our ongoing tight year-on-year. Recent formats that have 2022 19 Profit to cash conversion was 102% in 2021 80 commissioned in three or more countries in sold in three or more countries include; formats management of working capital balances. the year. The strong outturn compared to 102% the year. 2023 19 Profit to cash conversion serves as a key My Mum, Your Dad; Pranked; and flat on 2022 2022 was due a favourable movement in 2022 75 Song of my Life. indicator in measuring our effectiveness. It working capital from the unwind of is calculated as our adjusted cash flow as a programme rights and inventory previously 2023 102 2026 Target proportion of adjusted EBITA1. built up for the launch of ITVX. In addition, Grow to 20 formats there has been a reduction in production inventories predominantly in the US as a 2026 Target result of the 2023 writers’ and actors’ strike. Maintain at around 85% % of ITV Studios total revenue from streaming platforms Over the medium term, the key driver of Performance 2023 2020 10 growth in the global content market is The percentage of ITV Studios total 1. A full reconciliation between our adjusted and statutory results is provided in the APMs section expected to be from streaming platforms. 32% 2021 13 revenue from streaming platforms grew to The percentage of ITV Studios total 32%, hitting the target three years early. +10 basis points 2022 22 revenue from streaming platforms is an Meeting this target is impacted by the important measure of delivering its phasing of deliveries and therefore our on 2022 2023 32 strategic priority of further diversifying its target is to maintain at least 30%. Notable customer base and meeting its 2026 total deliveries to streaming platforms in 2023 organic revenue growth target. included: Squid Games: The Challenge 2026 Target and One Piece for Netflix, and Franklin for Grow to 30% of ITV Studios total revenue Apple TV+. 2. Our APMs are defined within the APMs section of this report. It also includes a full reconciliation between our adjusted and statutory results 3. Spin-offs such as Love Island Games, are considered distinct from the original format (i.e. Love Island) for the purpose of this indicator
14 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 15 S T KEY PERFORMANCE INDICATORS R A T E G I Our KPIs and related targets for 2026 align our performance and accountability C R E EXPAND STUDIOS P with our strategic priorities. This is detailed further in the Strategy section of the UK AND GLOBAL PRODUCTION O R Chief Executive’s Statement. T 2 ITV Studios total organic revenue growth ITV Studios total organic revenue growth Performance 2023 2021 31 measures the scale and success of our Total organic revenue was up 3% following a global studios business. It includes +3% on 2022 2022 14 All KPIs are reported on a six-month basis. The following are reported quarterly: ITV Studios total revenue growth, total digital revenue, strong 2022 which was up 14%. Organic total streaming hours, share of commercial viewing and share of top 1,000 commercial broadcast TV programmes. revenues from programmes sold to M&E, revenue excludes the benefit of our 2023 3 which as a vertically integrated producer, acquisitions of Plimsoll Productions and broadcaster and streamer, is an important Lingo Pictures in 2022, and the Note: 2020 was down 25% due to the Refer to the Operating and Financial Performance Review for further details on the performance of all our KPIs.part of our business. impact of the COVID-19 pandemic. unfavourable impact of a £15 million foreign exchange movement. 2026 Target ITV Studios total revenue grew 4% to ITV GROUP £2,170 million. Grow by 5% on average per annum (from 2021) Adjusted EPS1 2 ITV Studios adjusted EBITA margin % Adjusted EPS represents the adjusted Performance2023202010.9 1 This is the key profitability measure used Performance 2023 2020 11 profit after tax attributable to each equity Adjusted EPS decreased by 41% from 13.2p share in the year. It is an important measure 202115.3across the ITV Studios business. The to 7.8p. Strong growth in ITV Studios 7.8p ITV Studios adjusted EBITA margin was 2021 12 as we aim to create long-term value for our 1margin is calculated on ITV Studios total 13.2% (2022: 12.4%), which is restored 13.2% adjusted EBITA , up 10%, was offset by a 202213.2 shareholders.decline in total advertising revenues (TAR), -41% on 2022revenue.within the targeted range. +0.8 basis points 2022 12.4 down 8%, and an increase in M&E costs 20237.8 on 2022 2023 13.2 from the planned investment in content for ITVX, higher streaming related costs and third-party commercial payaways. 2026 Target Deliver in the 13% to 15% range Cost savings Total high-end scripted hours Cost savings are permanent savings to the Performance2023 business. Managing our cost base and Total high-end scripted hours is an Performance 2023 2020 112 We delivered £24 million of permanent important measure in assessing the mitigating the impact of inflation is key as cost savings in 2023, which is ahead of the £130mThe number of high-end scripted hours success of our strategic priority, to grow our 2021 175 we aim to run our business as efficiently as £15 million in year target. To date, we have produced by ITV Studios increased by 14% 316hrs possible and fund investments in line with cumulative savings scripted business. High-end scripted hours delivered £130 million of our 2019 to 2026 to 316 hours in 2023 driven by titles such as +14% on 2022 2022 276 our strategic priorities.ince 2018include new commissions or returning target of £150 million. s Big Beasts, Fool Me Once and Love Island franchises that have a higher cost per hour in the UK, and Twin Love and Physical 2023 316 We are now in the early stages of a new than continuing drama. in the US. strategic restructuring and efficiency 2026 Target programme across the Group which will 2026 Target deliver incremental annualised savings Deliver over £150 million of cumulative savings between 2018 and 2026 Grow to 400 hours of at least £50 million gross per year, giving a £30 million in year gross benefit in 2024. Number of formats sold in three or more countries3 The Studios business is focused on Performance 2023 2020 14 Profit to cash conversion1maximising the international monetisation The number of formats sold in three or 2021 15 of high-value formats. A good measure of more countries was 19, which was flat 19 One of ITV’s strengths is its cash Performance20232020138international success is when a format is generation, reflecting our ongoing tight year-on-year. Recent formats that have 2022 19 Profit to cash conversion was 102% in 202180commissioned in three or more countries in sold in three or more countries include; formats management of working capital balances. the year. The strong outturn compared to 102%the year. 2023 19 Profit to cash conversion serves as a key My Mum, Your Dad; Pranked; and flat on 2022 2022 was due a favourable movement in 202275 Song of my Life. indicator in measuring our effectiveness. It working capital from the unwind of is calculated as our adjusted cash flow as a programme rights and inventory previously 2023102 2026 Target proportion of adjusted EBITA1. built up for the launch of ITVX. In addition, Grow to 20 formats there has been a reduction in production inventories predominantly in the US as a 2026 Target result of the 2023 writers’ and actors’ strike.Maintain at around 85%% of ITV Studios total revenue from streaming platforms Over the medium term, the key driver of Performance 2023 2020 10 growth in the global content market is The percentage of ITV Studios total 1. A full reconciliation between our adjusted and statutory results is provided in the APMs sectionexpected to be from streaming platforms. 32% 2021 13 revenue from streaming platforms grew to The percentage of ITV Studios total 32%, hitting the target three years early. +10 basis points 2022 22 revenue from streaming platforms is an Meeting this target is impacted by the important measure of delivering its phasing of deliveries and therefore our on 2022 2023 32 strategic priority of further diversifying its target is to maintain at least 30%. Notable customer base and meeting its 2026 total deliveries to streaming platforms in 2023 organic revenue growth target. included: Squid Games: The Challenge 2026 Target and One Piece for Netflix, and Franklin for Grow to 30% of ITV Studios total revenue Apple TV+. 2. Our APMs are defined within the APMs section of this report. It also includes a full reconciliation between our adjusted and statutory results 3. Spin-offs such as Love Island Games, are considered distinct from the original format (i.e. Love Island) for the purpose of this indicator
16 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 17 S KEY PERFORMANCE INDICATORS CONTINUED T R A T E G I C R E M&E M&E P SUPERCHARGE STREAMING OPTIMISE BROADCAST O R T Total digital revenue1 Share of top 1,000 commercial broadcast TV programmes5 Total digital revenue comprises all revenue Performance 2023 2020 248 Maintaining our strength in delivering mass Performance 2023 2020 93 streams from our digital businesses, Total digital revenue grew 19% to £490 commercial linear TV audiences enables Our 2023 share was 91%, which was down predominantly digital advertising. It is an £490m 2021 347 ITV to attract and retain advertisers and 91% 2021 93 million. The growth was driven by digital 2% points year-on-year, with 2022 important measure of the acceleration of 2022 411 command a premium from them. advertising revenue, which was up 21%. +19% on 2022 benefiting significantly from the FIFA World -2 basis points on 2022 93 our digital strategy as we supercharge This was marginally offset by a decline in Cup. In 2023, dramas such as Unforgotten streaming. 2023 490 022 2023 91 competition revenues through ITV Win. and The Bay, entertainment formats such 2 as Britain’s Got Talent and Saturday Night Takeaway and sporting events such as 2026 Target Rugby World Cup, helped to maintain ITV’s 2026 Target More than double (compared to 2021) to at least £750m strong commercial mass audience Maintain a share of at least 80% proposition. Total streaming hours2 Share of commercial viewing6 Increasing the time users spend streaming Performance 2023 2020 856 ITV content is a key strategic priority. It Total streaming hours increased 26% to 2021 1,048 Maintaining ITV’s number one position in Performance 2023 2020 32.8 drives scale which is important to attract 1,505 million hours. This growth reflects our 1,505m the UK broadcast market helps us attract and retain advertisers, and contributes to Share of commercial viewing decreased by 2021 33.1 high-quality content offering, along with 2022 1,192 and retain advertisers and is vital to 32.6% total digital revenue growth. our investment in ITVX to enhance the hrs 1.2% points to 32.6% in 2023, with strong maximising advertising revenues. viewing for the FIFA World Cup benefiting 2022 33.8 product and user experience and to expand 2023 1,505 -1.2 basis points on our distribution and marketing activity. This +26% on 2022 our share in 2022. 2022 2023 32.6 has helped retain and attract more users who have watched content for longer. 2026 Target Double (compared to 2021) to 2bn hours 2026 Target Maintain at 33% 3 Monthly active users (MAU) 5. The share of top 1,000 commercial broadcast TV programmes is measured by BARB based on viewing figures. This includes TV viewing from transmission and seven days Attracting more monthly active users to Performance 2023 2020 8.4 post-transmission on catch up, as well as six weeks prior to the transmission window. It excludes programmes with a duration of
16 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 17 S KEY PERFORMANCE INDICATORS CONTINUED T R A T E G I C R E M&E M&E P SUPERCHARGE STREAMINGOPTIMISE BROADCAST O R T Total digital revenue1Share of top 1,000 commercial broadcast TV programmes5 Total digital revenue comprises all revenue Performance20232020248Maintaining our strength in delivering mass Performance2023 2020 93 streams from our digital businesses, Total digital revenue grew 19% to £490 commercial linear TV audiences enables Our 2023 share was 91%, which was down predominantly digital advertising. It is an £490m2021347ITV to attract and retain advertisers and 91% 2021 93 million. The growth was driven by digital 2% points year-on-year, with 2022 important measure of the acceleration of 2022411command a premium from them. advertising revenue, which was up 21%. +19% on 2022 benefiting significantly from the FIFA World -2 basis points on 2022 93 our digital strategy as we supercharge This was marginally offset by a decline in Cup. In 2023, dramas such as Unforgotten streaming. 2023490 022 2023 91 competition revenues through ITV Win. and The Bay, entertainment formats such 2 as Britain’s Got Talent and Saturday Night Takeaway and sporting events such as 2026 Target Rugby World Cup, helped to maintain ITV’s 2026 Target More than double (compared to 2021) to at least £750m strong commercial mass audience Maintain a share of at least 80% proposition. Total streaming hours2 6 Increasing the time users spend streaming Performance20232020856Share of commercial viewing ITV content is a key strategic priority. It Total streaming hours increased 26% to 20211,048 Maintaining ITV’s number one position in Performance 2023 2020 32.8 drives scale which is important to attract 1,505 million hours. This growth reflects our 1,505m the UK broadcast market helps us attract and retain advertisers, and contributes to Share of commercial viewing decreased by 2021 33.1 high-quality content offering, along with 20221,192and retain advertisers and is vital to 32.6% total digital revenue growth. our investment in ITVX to enhance the hrs1.2% points to 32.6% in 2023, with strong maximising advertising revenues. viewing for the FIFA World Cup benefiting 2022 33.8 product and user experience and to expand 20231,505 -1.2 basis points on our distribution and marketing activity. This +26% on 2022 our share in 2022. 2022 2023 32.6 has helped retain and attract more users who have watched content for longer. 2026 Target Double (compared to 2021) to 2bn hours 2026 Target Maintain at 33% Monthly active users (MAU)3 5. The share of top 1,000 commercial broadcast TV programmes is measured by BARB based on viewing figures. This includes TV viewing from transmission and seven days Attracting more monthly active users to Performance202320208.4 post-transmission on catch up, as well as six weeks prior to the transmission window. It excludes programmes with a duration of
18 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 19 S T OPERATING AND FINANCIAL PERFORMANCE REVIEW R A T E G I ITV continued to successfully execute its strategy in 2023 despite the We are now in the early stages of a new At 31 December 2023 we had £361 million (2022: 5.0p). The Board remains committed C R strategic restructuring and efficiency of free cash flow (31 December 2022: to paying a full year ordinary dividend of at E P challenging macroeconomic environment. It delivered a robust financial programme across the Group to reshape the £280 million), our net debt was £553 million least 5.0p in 2024, which it expects to grow O R performance with ITV Studios recording its highest-ever revenues and profit, cost base, enhance profitability, and support (31 December 2022: £623 million) and our over the medium term, whilst balancing T the growth drivers of Studios and Streaming. net debt to adjusted EBITDA was 1.0x further investment in our strategy and our and within Media & Entertainment (M&E), ITVX drove a step change in key We are building on the foundations we have (31 December 2022: 0.8x). Refer to the commitment to investment grade metrics established in digital and data and the Finance Review for more detail. over the medium term. viewing metrics and delivered strong growth in digital advertising revenues. significant progress we have made in transforming ITV from a linear broadcaster to We have good access to liquidity. On 01 March 2024 ITV announced the sale of a multi-platform broadcaster and streamer. At 31 December 2023, we had cash and its 50% shareholding in BritBox International committed undrawn facilities totalling to BBC Studios for a cash consideration of Savings will come mainly from technology £1,240 million, including total cash of £340 £255 million. The Board intends to return the FINANCIAL HIGHLIGHTS1 and operational efficiencies, organisational million (31 December 2022: £1,098 million, entire net proceeds to shareholders through redesign across Group, M&E and ITV Studios, including total cash of £348 million). a £235 million share buyback which will be and permanent reductions in discretionary completed within the next 18 months. 2023 2022 Change Change spend across the Group. We have a clear capital allocation policy Twelve months to 31 December £m £m £m % and our priorities remain unchanged We remain focused on managing our cash ITV Studios 2,170 2,096 74 4 By the end of 2024 we expect the programme (see the Finance Review for further details). and costs while continuing to invest in M&E 2,090 2,249 (159) (7) to have delivered incremental annualised delivering our strategic priorities. Our robust Total revenue 4,260 4,345 (85) (2) savings of at least £50 million gross per year, The Board recognises the importance of the balance sheet allows us to do this while Internal supply (636) (617) (19) (3) giving a £30 million in year gross benefit in ordinary dividend to ITV shareholders. delivering returns to shareholders Total external revenue 3,624 3,728 (104) (3) 2024. There will be c.£50 million of one-off Reflecting its confidence in the business and ITV Studios adjusted EBITA 286 259 27 10 costs to deliver these savings. The ongoing its strategy, as well as the continued strong A range of scenarios reflecting ITV’s principal programme is designed to deliver further cash generation, the Board has declared a risks has been modelled and considered in M&E adjusted EBITA 205 464 (259) (56) incremental material savings over a number final dividend of 3.3p, giving a full year the assessment of ITV’s longer-term viability. Adjusted EBITA 491 723 (232) (32) of years which will further build ITV’s ordinary dividend of 5.0p per share for 2023, Refer to page 72 for further details. Unrealised profit in stock adjustment (2) (6) 4 67 resilience. We will provide further which is a total return of c.£200 million Group adjusted EBITA 489 717 (228) (32) information as the programme progresses. Group adjusted EBITA margin 13% 19% (6%) pts Statutory operating profit 238 519 (281) (54) Total operating exceptional items were £77 million (2022: £65 million) which included Profit before tax (adjusted) 396 672 (276) (41) £24 million of acquisition-related expenses Adjusted EPS (p) 7.8p 13.2p (5.4p) (41) and £25 million of restructuring and Statutory EPS (p) 5.2p 10.7p (5.5p) (51) transformation costs. This stems from the Group-wide commitment to reduce the overhead cost base, and includes KEY FINANCIALS1 restructuring and transformation programme costs to deliver our strategy (see note 2.2 to the financial statements Group external revenue Total ITV Studios revenue Total digital revenue Group adjusted EBITA for further detail). £3,624m £2,170m £490m £489m Adjusted financing costs were up year-on- -3% vs 2022 +4% vs 2022 +19% vs 2022 -32% vs 2022 year at £29 million (2022: £26 million) largely due to higher market interest rates at similar levels of debt. Statutory net financing costs Statutory operating profit Adjusted EPS Statutory EPS Net debt were £45 million, up year-on-year (2022: £26 £238m 7.8p 5.2p £553m million) due to charges related to acquisition- related put and call options. -54% vs 2022 -41% vs 2022 -51% vs 2022 31 Dec 2022: £623m Our adjusted effective tax rate was 21.5% (2022: 20.1%) and the statutory effective tax 1. We measure performance through a range of metrics, particularly through our APMs and KPIs, as well as statutory results, all of which are set out and defined in the rate was (8.3%) (2022: 13.2%). The lower APMs section statutory effective tax rate in the year was due to higher HETV tax credits relative to the tax charge, and a proportionally lower profit before tax in the year compared to 2022. Group financial overview Group adjusted EBITA decreased by 32%, savings from changes in our operating model 2023 was the second-highest total revenue reflecting the challenging advertising market in M&E, permanent operational efficiencies Adjusted EPS for the year was 7.8p (2022: outturn in ITV’s history. While total revenue and planned investment in ITVX. ITV Studios across ITV Studios and M&E, property 13.2p), with statutory EPS decreasing from decreased by 2% and total external revenue adjusted EBITA increased by 10%, with the savings from our US Studios business, 10.7p to 5.2p. See the Finance Review for was down by 3% in 2023, our growth drivers margin 13.2% restored to within our target and contractual renegotiations. further detail. continued to perform well. ITV Studios grew range. M&E adjusted EBITA decreased by 2 56% for the reasons noted above. Our existing cost saving target of £150 million Our profit to cash conversion (which is an by 4% and digital revenues grew by 19%, between 2019 and 2026, has delivered £130 APM) in 2023 was high at 102% (2022: 75%). both of which substantially offset a 15% We continue to focus on reducing costs and million of annualised savings to date and we Conversion in 2023 has been distorted by the decline in linear advertising due to the driving efficiencies. In the year, we exceeded are on track to deliver the full £150 million by writers’ and actors’ strike in the US, and it will challenging advertising market. Total our £15 million cost savings target, delivering 2025 – one year early. also impact 2024. In 2023 there was a release non-advertising revenue grew by 3%. £24 million of permanent cost savings across in working capital which will reverse in 2024 the business, which included headcount as we resume US scripted productions. Across the two years we expect profit to cash conversion to be at the normal levels of 2. Includes revenue from digital advertising, digital sponsorship and our subscription services around 80%. ARCHIE is a drama based on the life of Cary Grant. It was produced for ITVX by ITV Studios and Britbox International.
18 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 19 S T OPERATING AND FINANCIAL PERFORMANCE REVIEW R A T E G I ITV continued to successfully execute its strategy in 2023 despite the We are now in the early stages of a new At 31 December 2023 we had £361 million (2022: 5.0p). The Board remains committed C R strategic restructuring and efficiency of free cash flow (31 December 2022: to paying a full year ordinary dividend of at E P challenging macroeconomic environment. It delivered a robust financial programme across the Group to reshape the £280 million), our net debt was £553 million least 5.0p in 2024, which it expects to grow O R performance with ITV Studios recording its highest-ever revenues and profit, cost base, enhance profitability, and support (31 December 2022: £623 million) and our over the medium term, whilst balancing T the growth drivers of Studios and Streaming. net debt to adjusted EBITDA was 1.0x further investment in our strategy and our and within Media & Entertainment (M&E), ITVX drove a step change in key We are building on the foundations we have (31 December 2022: 0.8x). Refer to the commitment to investment grade metrics established in digital and data and the Finance Review for more detail. over the medium term. viewing metrics and delivered strong growth in digital advertising revenues. significant progress we have made in transforming ITV from a linear broadcaster to We have good access to liquidity. On 01 March 2024 ITV announced the sale of a multi-platform broadcaster and streamer. At 31 December 2023, we had cash and its 50% shareholding in BritBox International committed undrawn facilities totalling to BBC Studios for a cash consideration of Savings will come mainly from technology £1,240 million, including total cash of £340 £255 million. The Board intends to return the FINANCIAL HIGHLIGHTS1 and operational efficiencies, organisational million (31 December 2022: £1,098 million, entire net proceeds to shareholders through redesign across Group, M&E and ITV Studios, including total cash of £348 million). a £235 million share buyback which will be and permanent reductions in discretionary completed within the next 18 months. 20232022ChangeChange spend across the Group. We have a clear capital allocation policy Twelve months to 31 December£m£m £m % and our priorities remain unchanged We remain focused on managing our cash ITV Studios2,1702,096744 By the end of 2024 we expect the programme (see the Finance Review for further details). and costs while continuing to invest in M&E2,0902,249(159)(7) to have delivered incremental annualised delivering our strategic priorities. Our robust Total revenue4,2604,345(85)(2)savings of at least £50 million gross per year, The Board recognises the importance of the balance sheet allows us to do this while Internal supply(636)(617)(19)(3)giving a £30 million in year gross benefit in ordinary dividend to ITV shareholders. delivering returns to shareholders Total external revenue3,6243,728(104)(3)2024. There will be c.£50 million of one-off Reflecting its confidence in the business and ITV Studios adjusted EBITA2862592710costs to deliver these savings. The ongoing its strategy, as well as the continued strong A range of scenarios reflecting ITV’s principal programme is designed to deliver further cash generation, the Board has declared a risks has been modelled and considered in M&E adjusted EBITA205464(259)(56)incremental material savings over a number final dividend of 3.3p, giving a full year the assessment of ITV’s longer-term viability. Adjusted EBITA491723(232)(32)of years which will further build ITV’s ordinary dividend of 5.0p per share for 2023, Refer to page 72 for further details. Unrealised profit in stock adjustment(2)(6)467resilience. We will provide further which is a total return of c.£200 million Group adjusted EBITA489717(228)(32)information as the programme progresses. Group adjusted EBITA margin13%19%(6%) pts Statutory operating profit238519(281)(54)Total operating exceptional items were £77 million (2022: £65 million) which included Profit before tax (adjusted)396672(276)(41)£24 million of acquisition-related expenses Adjusted EPS (p)7.8p13.2p(5.4p)(41)and £25 million of restructuring and Statutory EPS (p)5.2p10.7p(5.5p)(51)transformation costs. This stems from the Group-wide commitment to reduce the overhead cost base, and includes KEY FINANCIALS1 restructuring and transformation programme costs to deliver our strategy (see note 2.2 to the financial statements Group external revenueTotal ITV Studios revenueTotal digital revenueGroup adjusted EBITAfor further detail). £3,624m£2,170m£490m£489m Adjusted financing costs were up year-on- -3% vs 2022+4% vs 2022 +19% vs 2022 -32% vs 2022year at £29 million (2022: £26 million) largely due to higher market interest rates at similar levels of debt. Statutory net financing costs Statutory operating profitAdjusted EPSStatutory EPSNet debtwere £45 million, up year-on-year (2022: £26 £238m7.8p5.2p£553m million) due to charges related to acquisition- related put and call options. -54% vs 2022 -41% vs 2022 -51% vs 202231 Dec 2022: £623m Our adjusted effective tax rate was 21.5% (2022: 20.1%) and the statutory effective tax 1. We measure performance through a range of metrics, particularly through our APMs and KPIs, as well as statutory results, all of which are set out and defined in the rate was (8.3%) (2022: 13.2%). The lower APMs section statutory effective tax rate in the year was due to higher HETV tax credits relative to the tax charge, and a proportionally lower profit before tax in the year compared to 2022. Group financial overview Group adjusted EBITA decreased by 32%, savings from changes in our operating model 2023 was the second-highest total revenue reflecting the challenging advertising market in M&E, permanent operational efficiencies Adjusted EPS for the year was 7.8p (2022: outturn in ITV’s history. While total revenue and planned investment in ITVX. ITV Studios across ITV Studios and M&E, property 13.2p), with statutory EPS decreasing from decreased by 2% and total external revenue adjusted EBITA increased by 10%, with the savings from our US Studios business, 10.7p to 5.2p. See the Finance Review for was down by 3% in 2023, our growth drivers margin 13.2% restored to within our target and contractual renegotiations. further detail. continued to perform well. ITV Studios grew range. M&E adjusted EBITA decreased by 256% for the reasons noted above.Our existing cost saving target of £150 million Our profit to cash conversion (which is an by 4% and digital revenues grew by 19%, between 2019 and 2026, has delivered £130 APM) in 2023 was high at 102% (2022: 75%). both of which substantially offset a 15% We continue to focus on reducing costs and million of annualised savings to date and we Conversion in 2023 has been distorted by the decline in linear advertising due to the driving efficiencies. In the year, we exceeded are on track to deliver the full £150 million by writers’ and actors’ strike in the US, and it will challenging advertising market. Total our £15 million cost savings target, delivering 2025 – one year early. also impact 2024. In 2023 there was a release non-advertising revenue grew by 3%.£24 million of permanent cost savings across in working capital which will reverse in 2024 the business, which included headcount as we resume US scripted productions. Across the two years we expect profit to cash conversion to be at the normal levels of 2. Includes revenue from digital advertising, digital sponsorship and our subscription servicesaround 80%. ARCHIE is a drama based on the life of Cary Grant. It was produced for ITVX by ITV Studios and Britbox International.
20 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 21 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I ITV Studios benefits from scale, being the Over the last six years ITV Studios revenue Growing our C R largest producer in the UK, one of the (excluding acquisitions) has grown by around E P largest unscripted producers in the US and 5% CAGR, faster than the market of around O scripted business R one of the top three in the majority of the 4% CAGR (Source: Ampere Analysis – based T remaining international markets in which it on the ITVS addressable market). Growing our scripted business is operates. ITV Studios is a trusted supplier ITV with well established relationships with ITV Studios’ ambition is to be a leading force one of our key strategic priorities key content buyers and leading creative in the creation and ownership of intellectual Scripted content plays a key role in attracting talent in those markets; and with a property (IP), global content production and and retaining viewers and subscribers on combined content library of over 90,000 distribution. We are achieving this by both FTA and streaming platforms. This hours, it is also one of the pre-eminent focusing on our four strategic priorities to together with the increase in the number of global distributors. drive revenue and profit growth: streaming platforms has led to an increase in original scripted commissions in the UK, US, STUDIOS The global content market is large, (c.$226 1. Growing our scripted business to meet the Australia and Europe. Furthermore, over billion in 2023) and attractive with all growth in global demand recent years there has been increasing platforms needing a mix of content to 2. Growing our global formats business to demand for locally produced non-English succeed in a very competitive market. Going maximise the monetisation of high-value language scripted content. With our global forward, we expect to see growth in the key formats production presence and a strong track segments in which ITV Studios operates, 3. Diversifying our customer base to capture record for delivering high-quality scripted including content licensing and demand from the growth in content spend from local content, ITV Studios is well-positioned to streaming platforms for unscripted content and global streaming platforms cater to this demand, and importantly grow and cost effective premium scripted content its share of the market. which we are well positioned to take 4. All of which is underpinned by our ability to advantage of. We are confident that we will attract and retain leading creative talent. ITV has a portfolio of scripted labels in the continue to grow our market share to 2026 UK and internationally, which creates and driven by our scale; our diversification by We have KPI targets for 2026 which reflect produces high-quality content with global customer; geography and genre; a strong the key drivers of growth and value. See the appeal for both FTA and streaming track record of high-quality content; a very Strategy section within the CEO Report for platforms. We continue to see good strong slate for 2024 and beyond; and our more details on our KPIs, why they are momentum in our creative pipeline with leading creative talent. important and how they will enable us to several of our 2023 deliveries, such as Mr deliver total organic revenue growth of 5% on Bates vs The Post Office, Fool Me Once and average per annum over the five years from One Piece gaining global attention and 2021 to 2026 – ahead of the market, at an driving significant audiences on their adjusted EBITA margin of 13% to 15%. respective platforms. In 2023, ITV Studios high‑end scripted hours increased by 14% FOOL ME ONCE is a thriller made by Quay Street Productions year‑on‑year to 316 hours (an ITV Studios label) for Netflix. It is one of Netflix’s all-time top ten English language dramas. Image courtesy of Netflix. (2022: 276 hours) and we remain on track to produce 400 hours of high‑end scripted content per annum by 2026. ITV Studios is a scaled and global creator, owner and distributor Global Partnerships (previously Global of high-quality TV content operating in 13 countries and across Formats and Distribution) plays a key role in 60+ labels; diversified by genre, geography and customer in the growing scripted value across the business. Global Partnerships invests around £70 key creative markets around the world. million annually to acquire the distribution rights (across both scripted and unscripted genres) in ITV Studios-produced content and selective third-party content. Having the integrated producer-distributor relationship enables Global Partnerships to make strategic investment decisions around content funding. By finding co-production partners and licensees around the world for our scripted catalogue (of more than 22,000 ONE PIECE is based on a hours), Global Partnerships maximises the Japanese manga series and value of these projects over a long-term produced by Tomorrow Studios in the US (a partnership with sales lifecycle. ITV Studios) for Netflix. It has been recommissioned for a second season. Image courtesy of Netflix.
20 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 21 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I ITV Studios benefits from scale, being the Over the last six years ITV Studios revenue Growing our C R largest producer in the UK, one of the (excluding acquisitions) has grown by around E P largest unscripted producers in the US and 5% CAGR, faster than the market of around O scripted business R one of the top three in the majority of the 4% CAGR (Source: Ampere Analysis – based T remaining international markets in which it on the ITVS addressable market). Growing our scripted business is operates. ITV Studios is a trusted supplier ITV with well established relationships with ITV Studios’ ambition is to be a leading force one of our key strategic priorities key content buyers and leading creative in the creation and ownership of intellectual Scripted content plays a key role in attracting talent in those markets; and with a property (IP), global content production and and retaining viewers and subscribers on combined content library of over 90,000 distribution. We are achieving this by both FTA and streaming platforms. This hours, it is also one of the pre-eminent focusing on our four strategic priorities to together with the increase in the number of global distributors. drive revenue and profit growth: streaming platforms has led to an increase in original scripted commissions in the UK, US, STUDIOS The global content market is large, (c.$226 1. Growing our scripted business to meet the Australia and Europe. Furthermore, over billion in 2023) and attractive with all growth in global demand recent years there has been increasing platforms needing a mix of content to 2. Growing our global formats business to demand for locally produced non-English succeed in a very competitive market. Going maximise the monetisation of high-value language scripted content. With our global forward, we expect to see growth in the key formats production presence and a strong track segments in which ITV Studios operates, 3. Diversifying our customer base to capture record for delivering high-quality scripted including content licensing and demand from the growth in content spend from local content, ITV Studios is well-positioned to streaming platforms for unscripted content and global streaming platforms cater to this demand, and importantly grow and cost effective premium scripted content its share of the market. which we are well positioned to take 4. All of which is underpinned by our ability to advantage of. We are confident that we will attract and retain leading creative talent. ITV has a portfolio of scripted labels in the continue to grow our market share to 2026 UK and internationally, which creates and driven by our scale; our diversification by We have KPI targets for 2026 which reflect produces high-quality content with global customer; geography and genre; a strong the key drivers of growth and value. See the appeal for both FTA and streaming track record of high-quality content; a very Strategy section within the CEO Report for platforms. We continue to see good strong slate for 2024 and beyond; and our more details on our KPIs, why they are momentum in our creative pipeline with leading creative talent. important and how they will enable us to several of our 2023 deliveries, such as Mr deliver total organic revenue growth of 5% on Bates vs The Post Office, Fool Me Once and average per annum over the five years from One Piece gaining global attention and 2021 to 2026 – ahead of the market, at an driving significant audiences on their adjusted EBITA margin of 13% to 15%. respective platforms. In 2023, ITV Studios high‑end scripted hours increased by 14% FOOL ME ONCE is a thriller made by Quay Street Productions year‑on‑year to 316 hours (an ITV Studios label) for Netflix. It is one of Netflix’s all-time top ten English language dramas. Image courtesy of Netflix. (2022: 276 hours) and we remain on track to produce 400 hours of high‑end scripted content per annum by 2026. ITV Studios is a scaled and global creator, owner and distributor Global Partnerships (previously Global of high-quality TV content operating in 13 countries and across Formats and Distribution) plays a key role in 60+ labels; diversified by genre, geography and customer in the growing scripted value across the business. Global Partnerships invests around £70 key creative markets around the world. million annually to acquire the distribution rights (across both scripted and unscripted genres) in ITV Studios-produced content and selective third-party content. Having the integrated producer-distributor relationship enables Global Partnerships to make strategic investment decisions around content funding. By finding co-production partners and licensees around the world for our scripted catalogue (of more than 22,000 ONE PIECE is based on a hours), Global Partnerships maximises the Japanese manga series and value of these projects over a long-term produced by Tomorrow Studios in the US (a partnership with sales lifecycle. ITV Studios) for Netflix. It has been recommissioned for a second season. Image courtesy of Netflix.
22 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 23 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I Growing our Further diversifying our The percentage of ITV Studios total revenues Attracting and retaining C R from streaming platforms increased to 32% E Global Formats business customer base leading talent P (2022: 22%) in 2023 and exceeds our 2026 O Unscripted content also remains important As the demand for content from streaming A key part of ITV Studios investment strategy R to ITV Studios. Through our Global platforms grows globally, this presents a target of 30%. This has been impacted by and its overall success is its ability to attract T the phasing of large deliveries in the year Partnerships business, we monetise our significant opportunity for ITV Studios to and therefore we are maintaining our target and retain the best creative talent. ITV portfolio of some of the world’s most further diversify its customer base and at 30%. Deliveries in 2023 included the Studios offers talent a unique combination of successful travelling entertainment formats, remains a key priority of ITV Studios strategy following for Netflix: Fool Me Once – one creative independence, an entrepreneurial as well as maximise commercial to grow its market share and meet its 2026 of their all-time top 10 English language culture, and the resources of a global studio opportunities from our brands. We are KPI targets. dramas, Squid Game: The Challenge, business. This includes access to ITV Studios focused on driving growth across our One Piece, and SUBURRÆTERNA; Playdate global distribution network, and in the UK, unscripted offering by monetising our In the US, we have well-established and for Disney+; Franklin, Physical and Big Beasts the benefit of being a vertically integrated existing high-value formats effectively trusted relationships with all the major for Apple TV+; Twin Love for Amazon; and producer broadcaster and streamer. We are as well as supporting the creation of new streaming platforms. We currently have Love Island US and Love Island Games proud to be able to continue to attract the global formats. scripted or unscripted projects either in for Peacock. best talent in the market, most recently development or commissioned by all of welcoming Plimsoll Productions, Lingo Our portfolio of world-class brands includes them. In 2023, over 40% of US unscripted Whilst further diversifying our customer base Pictures and Ben Stephenson, who set up our established formats such as The Voice revenues and nearly 100% of US scripted with streaming platforms is a key strategic a transatlantic scripted label, Poison Pen (one of the most successful unscripted revenues came from streaming platforms. priority for ITV Studios, it requires careful Studios, in ITV Studios. format brands in the world), Love Island, The management of our working capital as Chase, Come Dine With Me, Hell’s Kitchen streaming platforms typically expect ITV has successfully integrated its new and I’m A Celebrity…Get Me Out Of Here!. extended payment profiles. In some labels – many set up through recent talent These formats continue to sell in new instances, it may also limit our ability to deals – and they have delivered an territories and attract mass audiences for maintain all rights for high-value scripted impressive slate of programmes, including our clients. They are highly sought after by titles as streaming platforms usually seek A Year On Planet Earth and Big Beasts, both both traditional broadcasters and streaming worldwide distribution rights for original from Plimsoll Productions in the UK, Prosper platforms, offering cost-effective content commissions, in return for a premium fee from Lingo Pictures in Australia, Fool Me with a proven track record of audience on commissions. Once, Playdate and After the Flood from success. We also have several new formats Quay Street Productions in the UK, and Night that have been commissioned in our UK, US SQUID GAME: THE CHALLENGE is a reality competition in Paradise from Windlight Pictures in and international production bases, with the series produced by The Garden (an ITV Studios label) for Germany. This strong pipeline demonstrates potential to be future global hits. These Netflix. It was one of Netflix’s most-watched unscripted ITV Studios commitment and success in include My Mum, Your Dad (our first global originals in 2023. Image courtesy of Netflix. nurturing and leveraging top creative talent format to originate from the US); I Kissed A to deliver engaging and high-quality content. Boy; and Make Love Fake Love. As well as protecting our biggest brands, we ITV Studios 2023 financial performance are also focused on expanding our franchises by creating successful spin-offs that allow us 2023 2022 Change Change Organic Change* Twelve months to 31 December £m £m £m % % to evolve existing formats. Examples include ITV Studios UK 962 822 140 17 16 The Voice, which now has six spin-off versions; Love Island has two new spin-offs, ITV Studios US 395 467 (72) (15) (13) Love Island Games and Love Island All Stars; ITV Studios International 445 465 (20) (4) (8) and I’m A Celebrity…Get Me Out Of Here! Global Partnerships 368 342 26 8 8 South Africa is a new spin-off in the UK. Total ITV Studios revenue 2,170 2,096 74 4 3 Total ITV Studios costs (1,884) (1,837) (47) (3) (2) In 2023, across our Global Partnerships Total ITV Studios adjusted EBITA** 286 259 27 10 8 business, we sold 63 unique formats internationally (2022: 64), 19 of which were ITV Studios adjusted EBITA margin 13.2% 12.4% sold to three or more countries (2022: 19). * The organic change assumes exchange rates remain consistent with the comparative period and it removes the impact of acquisitions in the current or comparative period. By 2026, we expect to have 20 such formats, ** Includes the benefit of production tax credits. Refer to Alternative Performance Measures for key adjustments to EBITA and adjusted EBITA. with a view that one of these may be a significant new format like The Voice or 2023 2022 Change Change Love Island. Twelve months to 31 December £m £m £m % LOVE ISLAND Sales from ITV Studios to M&E 629 611 18 3 Our Global Partnerships business also ALL STARS is a External revenue 1,541 1,485 56 4 focuses on leveraging our vast content reality series and Total ITV Studios revenue 2,170 2,096 74 4 library and maximising the value of both is a spin-off from the globally successful primary and secondary windows with FTA format, Love Island. broadcasters, Pay TV and streaming platforms – a growth area for the business. SUBURRÆTERNA 2023 2022 Change Change is an Italian crime drama Twelve months to 31 December £m £m £m % Global Partnerships has recently launched produced by Cattleya 1 a collection of owned and operated FAST1 (an ITV Studios label) for Scripted 802 723 79 11 channels across the world which features Netflix. Image courtesy Unscripted 1,057 1,038 19 2 of Netflix. 2 our content, on platforms such as Pluto, Core ITV and Other 311 335 (24) (7) Samsung and Rakuten. This aligns with Total ITV Studios revenue 2,170 2,096 74 4 the business strategically positioning itself 1. Includes high-end scripted and other scripted revenues to adapt to the evolving media landscape, 2. Core ITV includes the soaps and daytime shows produced by ITV Studios for ITV1 taking advantage of various distribution channels and platforms to reach a global audience. 1. Free Ad-supported Streaming TV
22 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 23 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I Growing our Further diversifying our The percentage of ITV Studios total revenues Attracting and retaining C R from streaming platforms increased to 32% E Global Formats businesscustomer base leading talent P (2022: 22%) in 2023 and exceeds our 2026 O Unscripted content also remains important As the demand for content from streaming A key part of ITV Studios investment strategy R to ITV Studios. Through our Global platforms grows globally, this presents a target of 30%. This has been impacted by and its overall success is its ability to attract T the phasing of large deliveries in the year Partnerships business, we monetise our significant opportunity for ITV Studios to and therefore we are maintaining our target and retain the best creative talent. ITV portfolio of some of the world’s most further diversify its customer base and at 30%. Deliveries in 2023 included the Studios offers talent a unique combination of successful travelling entertainment formats, remains a key priority of ITV Studios strategy following for Netflix: Fool Me Once – one creative independence, an entrepreneurial as well as maximise commercial to grow its market share and meet its 2026 of their all-time top 10 English language culture, and the resources of a global studio opportunities from our brands. We are KPI targets.dramas, Squid Game: The Challenge, business. This includes access to ITV Studios focused on driving growth across our One Piece, and SUBURRÆTERNA; Playdate global distribution network, and in the UK, unscripted offering by monetising our In the US, we have well-established and for Disney+; Franklin, Physical and Big Beasts the benefit of being a vertically integrated existing high-value formats effectively trusted relationships with all the major for Apple TV+; Twin Love for Amazon; and producer broadcaster and streamer. We are as well as supporting the creation of new streaming platforms. We currently have Love Island US and Love Island Games proud to be able to continue to attract the global formats.scripted or unscripted projects either in for Peacock. best talent in the market, most recently development or commissioned by all of welcoming Plimsoll Productions, Lingo Our portfolio of world-class brands includes them. In 2023, over 40% of US unscripted Whilst further diversifying our customer base Pictures and Ben Stephenson, who set up our established formats such as The Voice revenues and nearly 100% of US scripted with streaming platforms is a key strategic a transatlantic scripted label, Poison Pen (one of the most successful unscripted revenues came from streaming platforms.priority for ITV Studios, it requires careful Studios, in ITV Studios. format brands in the world), Love Island, The management of our working capital as Chase, Come Dine With Me, Hell’s Kitchen streaming platforms typically expect ITV has successfully integrated its new and I’m A Celebrity…Get Me Out Of Here!. extended payment profiles. In some labels – many set up through recent talent These formats continue to sell in new instances, it may also limit our ability to deals – and they have delivered an territories and attract mass audiences for maintain all rights for high-value scripted impressive slate of programmes, including our clients. They are highly sought after by titles as streaming platforms usually seek A Year On Planet Earth and Big Beasts, both both traditional broadcasters and streaming worldwide distribution rights for original from Plimsoll Productions in the UK, Prosper platforms, offering cost-effective content commissions, in return for a premium fee from Lingo Pictures in Australia, Fool Me with a proven track record of audience on commissions. Once, Playdate and After the Flood from success. We also have several new formats Quay Street Productions in the UK, and Night that have been commissioned in our UK, US SQUID GAME: THE CHALLENGE is a reality competition in Paradise from Windlight Pictures in and international production bases, with the series produced by The Garden (an ITV Studios label) for Germany. This strong pipeline demonstrates potential to be future global hits. These Netflix. It was one of Netflix’s most-watched unscripted ITV Studios commitment and success in include My Mum, Your Dad (our first global originals in 2023. Image courtesy of Netflix. nurturing and leveraging top creative talent format to originate from the US); I Kissed A to deliver engaging and high-quality content. Boy; and Make Love Fake Love. As well as protecting our biggest brands, we ITV Studios 2023 financial performance are also focused on expanding our franchises by creating successful spin-offs that allow us 2023 2022 Change Change Organic Change* Twelve months to 31 December £m £m £m % % to evolve existing formats. Examples include ITV Studios UK 962 822 140 17 16 The Voice, which now has six spin-off versions; Love Island has two new spin-offs, ITV Studios US 395 467 (72) (15) (13) Love Island Games and Love Island All Stars; ITV Studios International 445 465 (20) (4) (8) and I’m A Celebrity…Get Me Out Of Here! Global Partnerships 368 342 26 8 8 South Africa is a new spin-off in the UK.Total ITV Studios revenue 2,170 2,096 74 4 3 Total ITV Studios costs (1,884) (1,837) (47) (3) (2) In 2023, across our Global Partnerships Total ITV Studios adjusted EBITA** 286 259 27 10 8 business, we sold 63 unique formats internationally (2022: 64), 19 of which were ITV Studios adjusted EBITA margin 13.2% 12.4% sold to three or more countries (2022: 19). * The organic change assumes exchange rates remain consistent with the comparative period and it removes the impact of acquisitions in the current or comparative period. By 2026, we expect to have 20 such formats, ** Includes the benefit of production tax credits. Refer to Alternative Performance Measures for key adjustments to EBITA and adjusted EBITA. with a view that one of these may be a significant new format like The Voice or 2023 2022 Change Change Love Island. Twelve months to 31 December £m £m £m % LOVE ISLAND Sales from ITV Studios to M&E 629 611 18 3 Our Global Partnerships business also ALL STARS is a External revenue 1,541 1,485 56 4 focuses on leveraging our vast content reality series and Total ITV Studios revenue 2,170 2,096 74 4 library and maximising the value of both is a spin-off from the globally successful primary and secondary windows with FTA format, Love Island. broadcasters, Pay TV and streaming platforms – a growth area for the business. SUBURRÆTERNA 2023 2022 Change Change is an Italian crime drama Twelve months to 31 December £m £m £m % Global Partnerships has recently launched produced by Cattleya 1 a collection of owned and operated FAST1 (an ITV Studios label) for Scripted 802 723 79 11 channels across the world which features Netflix. Image courtesy Unscripted 1,057 1,038 19 2 our content, on platforms such as Pluto, of Netflix.Core ITV2 and Other 311 335 (24) (7) Samsung and Rakuten. This aligns with Total ITV Studios revenue 2,170 2,096 74 4 the business strategically positioning itself 1. Includes high-end scripted and other scripted revenues to adapt to the evolving media landscape, 2. Core ITV includes the soaps and daytime shows produced by ITV Studios for ITV1 taking advantage of various distribution channels and platforms to reach a global audience. 1. Free Ad-supported Streaming TV
24 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 25 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I ITV Studios delivered its highest-ever Within ITV Studios America (scripted), 2023 ITV Studios International Deliveries expected in the first half of 2024 C R revenues and profits in 2023. Total revenue deliveries included Franklin for Apple TV+ include Comedy Camp in France, as well as E ITV Studios International produces original P was up 4%, and external revenue was up 4% which is ITV Studios America’s biggest key formats such as I’m A Celebrity…Get Me O scripted and unscripted content across our R driven predominantly by growth in the UK. scripted production to date, Physical S3 for production bases, as well as local versions of Out Of Here!, The Voice and The Chase being T Sales from ITV Studios to M&E were up 3%, AppleTV+, as well as executive producing key formats developed through our Global delivered across multiple countries. with several new dramas for ITV1 and ITVX. One Piece for Netflix – which was one of the Partnerships business. Growing our Total organic revenue at constant currency platform’s most-watched original scripted European scripted business allows us to Global Partnerships was up 3%, impacted by a £15 million productions globally in 2023. ITV America benefit from the demand for Global Partnerships saw good revenue unfavourable foreign exchange movement (unscripted) saw the delivery of new and locally-produced content with global appeal, growth in 2023, up 8% year-on-year to in the year and a £65 million inorganic returning titles such as Love Island and Love and we have scripted projects in production £368 million (2022: £342 million) and 8% to contribution from Plimsoll Productions Island Games for Peacock, The Prank Panel and development with Amazon, Netflix, £369 million on an organic basis when and Lingo Pictures which were both for ABC and Twin Love for Amazon. Paramount+, and Disney+, as well as local adjusted for the unfavourable impact of acquired in 2022. streaming platforms, such as Videoland in foreign currency. The business benefited In 2024, ITV Studios America will be the Netherlands, and Stan in Australia. from the international distribution of Reflecting our presence in key global impacted by the US writers’ and actors’ returning titles such as World On Fire and production markets, 58% of ITV Studios strikes in 2023 which delayed the Revenue within ITV Studios International Vigil, and has leveraged the breadth and revenue was generated outside the UK development of several projects which decreased by 4% to £445 million depth of its extensive catalogue with sales to (2022: 60%). were due for delivery in 2024. This will delay (2022: £465 million) in 2023, and by 8% to other broadcasters and streaming platforms around £80 million of revenue from 2024 £428 million on an organic basis when globally – which are a growth area for Global ITV Studios adjusted EBITA was up 10% QUEER EYE is a reality series to 2025. adjusted for the unfavourable impact of Partnerships. Finished programming sales of year-on-year, with our adjusted EBITA margin produced by ITV Studios foreign currency and the acquisition of Lingo unscripted formats were also good, including of 13.2% (2022: 12.4%) restored to within our America for Netflix and is in its In the first half of 2024, unscripted 13% to 15% target range. There was a £3 eighth season. Image courtesy deliveries from ITV America are expected Pictures in 2022. This decline reflects lower The Voice, Love Island and The Graham of Netflix. deliveries year-on-year, mainly in Italy and Norton Show, all delivering across multiple million unfavourable impact from foreign to include Queer Eye for Netflix and Alone Germany and some scripted deliveries being different territories. exchange. During the year, £13 million of MY MUM, YOUR DAD is an for History Channel. permanent cost savings were delivered unscripted format originating delayed to 2024. Deliveries in 2023 included in ITV America. It had its first I’m A Celebrity... Get Me Out Of Here! in 2024 and beyond should see an increased relating to operational efficiencies, our US series in the UK in 2023 and Germany and Australia, Love Island in pipeline of new content for Global property move and a permanent reduction has been sold to ten countries. in discretionary spend. Australia, as well as Diana and Partnerships . New titles expected to sell SUBURRÆTERNA from Cattleya in Italy, and internationally in 2024 include A Cruel Love: We continue to look at ways to drive Prosper from Lingo Pictures in Australia. The Ruth Ellis Story and After The Flood. efficiencies and improve margins over the medium term, including rationalising our property footprint, using technology and OUTLOOK data to drive cost and revenue efficiencies, ITV Studios remains on track to deliver utilising our production hubs for our key total organic revenue growth of 5% on global formats, taking further steps to average per annum from 2021 to 2026 digitise our production processes, as well as – ahead of the market, at an adjusted using remote editing more routinely and the EBITA margin of 13% to 15%. operational use of AI where possible. We remain committed to our adjusted EBITA ITV Studios UK saw strong revenue growth in ITV Studios US Going forward we expect to see growth margin guidance of 13% to 15%. 2023, up 17% to £962 million (2022: £822 ITV Studios US provides content to all the in key segments in which we operate – million) and up 16% to £920 million on an major networks and cable channels in the content licensing, demand from ITV Studios UK organic basis, which adjusts for the US, along with every major streaming streaming platforms for unscripted ITV Studios UK has a diverse range of acquisition of Plimsoll Productions in 2022. platform. It has a good foundation of core content and cost effective premium scripted and unscripted titles for It had an impressive slate of deliveries for a programmes, including unscripted titles with scripted content which we are well broadcasters and streaming platforms. The broad customer base, which included a Love multiple seasons and a high volume of positioned to take advantage of. business is built upon many long-running and Island winter and summer series, I’m a episodes, along with premium scripted recurring titles, the majority of which are sold Celebrity…Get Me Out Of Here! South Africa, content, which has enabled the business to We are confident that we will to the M&E business for transmission on After the Flood, and Grace, all for ITV; as well grow its presence significantly and develop continue to grow our market share ITV’s family of linear TV channels and ITVX. as The Completely Made-Up Adventures of deep client relationships, in a highly to 2026 driven by our scale; our The core portfolio includes daytime Dick Turpin for AppleTV+, Squid Game: The competitive market. diversification by customer; geography programmes such as Good Morning Britain, Challenge for Netflix – which was one of their and genre; a strong track record of This Morning, Loose Women, and Lorraine; most watched unscripted original In 2023, ITV Studios US total revenue high-quality content; a very strong the soaps: Coronation Street and productions globally in 2023, Vigil, World On declined by 15% to £395 million (2022: £467 slate for 2024 and beyond; and our Emmerdale; and entertainment programmes Fire, The Outlaws, and Shetland for the BBC, million) and by 13% to £405 million on an leading creative talent. such as The Voice, The Chase, Love Island and Dinner With The Parents for FreeVee. organic basis when adjusted for the and I’m A Celebrity…Get Me Out Of Here! 61% of revenue was derived from sales to the unfavourable foreign exchange impact. The LOOSE WOMEN is a As previously guided, 2024 will be M&E business (2022: 65%). decrease in revenue year-on-year reflects daytime panel programme impacted by the 2023 US writers’ and produced by ITV Studios actors’ strikes which will delay around Deliveries expected in the first half of 2024 the phasing of large, unrepeated scripted Daytime. It has been on and unscripted deliveries year-on-year, ITV since 1999. £80 million revenue from 2024 to 2025. include internal sales to M&E of new and including Snowpiercer, Let The Right One In In addition, we are seeing weaker returning entertainment programmes such CORONATION STREET demand from FTA broadcasters in as Love Island All Stars, Saturday Night and Hell’s Kitchen, combined with lower is the UK’s largest Soap demand from networks. and has been on ITV Europe who are holding back spend Takeaway, and the Chase, and returning since 1960. until there is more certainty in the dramas, The Bay and Vera. External sales advertising market. include The Reluctant Traveller for Apple TV+, Missing You for Netflix and The Gathering for Channel 4.
24 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 25 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I ITV Studios delivered its highest-ever Within ITV Studios America (scripted), 2023 ITV Studios International Deliveries expected in the first half of 2024 C R revenues and profits in 2023. Total revenue deliveries included Franklin for Apple TV+ include Comedy Camp in France, as well as E ITV Studios International produces original P was up 4%, and external revenue was up 4% which is ITV Studios America’s biggest key formats such as I’m A Celebrity…Get Me O scripted and unscripted content across our R driven predominantly by growth in the UK. scripted production to date, Physical S3 for production bases, as well as local versions of Out Of Here!, The Voice and The Chase being T Sales from ITV Studios to M&E were up 3%, AppleTV+, as well as executive producing key formats developed through our Global delivered across multiple countries. with several new dramas for ITV1 and ITVX. One Piece for Netflix – which was one of the Partnerships business. Growing our Total organic revenue at constant currency platform’s most-watched original scripted European scripted business allows us to Global Partnerships was up 3%, impacted by a £15 million productions globally in 2023. ITV America benefit from the demand for Global Partnerships saw good revenue unfavourable foreign exchange movement (unscripted) saw the delivery of new and locally-produced content with global appeal, growth in 2023, up 8% year-on-year to in the year and a £65 million inorganic returning titles such as Love Island and Love and we have scripted projects in production £368 million (2022: £342 million) and 8% to contribution from Plimsoll Productions Island Games for Peacock, The Prank Panel and development with Amazon, Netflix, £369 million on an organic basis when and Lingo Pictures which were both for ABC and Twin Love for Amazon.Paramount+, and Disney+, as well as local adjusted for the unfavourable impact of acquired in 2022. streaming platforms, such as Videoland in foreign currency. The business benefited In 2024, ITV Studios America will be the Netherlands, and Stan in Australia. from the international distribution of Reflecting our presence in key global impacted by the US writers’ and actors’ returning titles such as World On Fire and production markets, 58% of ITV Studios strikes in 2023 which delayed the Revenue within ITV Studios International Vigil, and has leveraged the breadth and revenue was generated outside the UK development of several projects which decreased by 4% to £445 million depth of its extensive catalogue with sales to (2022: 60%). were due for delivery in 2024. This will delay (2022: £465 million) in 2023, and by 8% to other broadcasters and streaming platforms around £80 million of revenue from 2024 £428 million on an organic basis when globally – which are a growth area for Global ITV Studios adjusted EBITA was up 10% QUEER EYE is a reality series to 2025.adjusted for the unfavourable impact of Partnerships. Finished programming sales of year-on-year, with our adjusted EBITA margin produced by ITV Studios foreign currency and the acquisition of Lingo unscripted formats were also good, including of 13.2% (2022: 12.4%) restored to within our America for Netflix and is in its In the first half of 2024, unscripted 13% to 15% target range. There was a £3 eighth season. Image courtesy deliveries from ITV America are expected Pictures in 2022. This decline reflects lower The Voice, Love Island and The Graham of Netflix. deliveries year-on-year, mainly in Italy and Norton Show, all delivering across multiple million unfavourable impact from foreign to include Queer Eye for Netflix and Alone Germany and some scripted deliveries being different territories. exchange. During the year, £13 million of MY MUM, YOUR DAD is an for History Channel. permanent cost savings were delivered unscripted format originating delayed to 2024. Deliveries in 2023 included in ITV America. It had its first I’m A Celebrity... Get Me Out Of Here! in 2024 and beyond should see an increased relating to operational efficiencies, our US series in the UK in 2023 and Germany and Australia, Love Island in pipeline of new content for Global property move and a permanent reduction has been sold to ten countries. in discretionary spend. Australia, as well as Diana and Partnerships . New titles expected to sell SUBURRÆTERNA from Cattleya in Italy, and internationally in 2024 include A Cruel Love: We continue to look at ways to drive Prosper from Lingo Pictures in Australia. The Ruth Ellis Story and After The Flood. efficiencies and improve margins over the medium term, including rationalising our property footprint, using technology and OUTLOOK data to drive cost and revenue efficiencies, ITV Studios remains on track to deliver utilising our production hubs for our key total organic revenue growth of 5% on global formats, taking further steps to average per annum from 2021 to 2026 digitise our production processes, as well as – ahead of the market, at an adjusted using remote editing more routinely and the EBITA margin of 13% to 15%. operational use of AI where possible. We remain committed to our adjusted EBITA ITV Studios UK saw strong revenue growth in ITV Studios US Going forward we expect to see growth margin guidance of 13% to 15%.2023, up 17% to £962 million (2022: £822 ITV Studios US provides content to all the in key segments in which we operate – million) and up 16% to £920 million on an major networks and cable channels in the content licensing, demand from ITV Studios UKorganic basis, which adjusts for the US, along with every major streaming streaming platforms for unscripted ITV Studios UK has a diverse range of acquisition of Plimsoll Productions in 2022. platform. It has a good foundation of core content and cost effective premium scripted and unscripted titles for It had an impressive slate of deliveries for a programmes, including unscripted titles with scripted content which we are well broadcasters and streaming platforms. The broad customer base, which included a Love multiple seasons and a high volume of positioned to take advantage of. business is built upon many long-running and Island winter and summer series, I’m a episodes, along with premium scripted recurring titles, the majority of which are sold Celebrity…Get Me Out Of Here! South Africa, content, which has enabled the business to We are confident that we will to the M&E business for transmission on After the Flood, and Grace, all for ITV; as well grow its presence significantly and develop continue to grow our market share ITV’s family of linear TV channels and ITVX. as The Completely Made-Up Adventures of deep client relationships, in a highly to 2026 driven by our scale; our The core portfolio includes daytime Dick Turpin for AppleTV+, Squid Game: The competitive market. diversification by customer; geography programmes such as Good Morning Britain, Challenge for Netflix – which was one of their and genre; a strong track record of This Morning, Loose Women, and Lorraine; most watched unscripted original In 2023, ITV Studios US total revenue high-quality content; a very strong the soaps: Coronation Street and productions globally in 2023, Vigil, World On declined by 15% to £395 million (2022: £467 slate for 2024 and beyond; and our Emmerdale; and entertainment programmes Fire, The Outlaws, and Shetland for the BBC, million) and by 13% to £405 million on an leading creative talent. such as The Voice, The Chase, Love Island and Dinner With The Parents for FreeVee. organic basis when adjusted for the and I’m A Celebrity…Get Me Out Of Here!61% of revenue was derived from sales to the unfavourable foreign exchange impact. The LOOSE WOMEN is a As previously guided, 2024 will be M&E business (2022: 65%). decrease in revenue year-on-year reflects daytime panel programme impacted by the 2023 US writers’ and produced by ITV Studios actors’ strikes which will delay around Deliveries expected in the first half of 2024 the phasing of large, unrepeated scripted Daytime. It has been on and unscripted deliveries year-on-year, ITV since 1999. £80 million revenue from 2024 to 2025. include internal sales to M&E of new and including Snowpiercer, Let The Right One In In addition, we are seeing weaker returning entertainment programmes such CORONATION STREET demand from FTA broadcasters in as Love Island All Stars, Saturday Night and Hell’s Kitchen, combined with lower is the UK’s largest Soap demand from networks. and has been on ITV Europe who are holding back spend Takeaway, and the Chase, and returning since 1960. until there is more certainty in the dramas, The Bay and Vera. External sales advertising market. include The Reluctant Traveller for Apple TV+, Missing You for Netflix and The Gathering for Channel 4.
26 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 27 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I ITV’s M&E strategy recognises and Supercharge • Attracted a larger audience – total C R capitalises on the change in viewer streaming hours were up 26% to 1,505 E P 1 O behaviour and the evolving needs of million (2022: 1,192 million ) Streaming R advertisers. It is based on two strategic • Increased viewing by our target audience T MEDIA & pillars: Supercharge Streaming and Growing and enhancing our – streaming hours amongst light viewers Optimise Broadcast. Our focus is to retain who are harder to reach, increased by 65%, our existing viewers and advertisers while streaming service ITVX and streaming hours among the 25-54 age also attracting new ones. ITV offers viewers We successfully launched ITVX in December group demographic increased by 47% the choice to watch whenever and however 2022 (which combined our previous offerings • Increased engagement and content they wish, with a strong reputation for ITV Hub, ITV Hub+ and BritBox UK) to discovery – streaming hours per viewer, brilliant content suited to British audiences. transform our streaming service from a catch was up 27% and 90% of users that ENTERTAINMENT ITV offers advertisers a unique combination up service to a content destination and to watched an ITVX exclusive, went on to of mass simultaneous reach, targeted deliver the inventory to fulfil the growing watch other content on the platform advertising at scale, and commercial and demand for our digital advertising. Although creative partnerships in a brand-safe and the main focus of ITVX is the free ad-funded • Increased brand awareness – growing 2 reliably measured environment. offering, there is also a subscription tier, from around 60% at launch to over 90% ITVX Premium. in 2023 Our strategic pillars have KPIs and 2026 targets which reflect the key drivers of ITVX’s strong performance in its first year is This increased reach and frequency of growth and value. See the Strategy section evident by the step change in our KPIs and viewers provide advertisers with valuable within the CEO’s Report for more details on other viewing metrics as we attract more addressable audiences at scale in a these KPIs, why they are important and how users who are engaging for longer across our brand-safe and measured environment. Our they will enable us to grow digital revenues to streaming platforms year-on-year. In 2023, robust data and analytics capabilities enable at least £750 million by 2026, and drive the service: us to offer high-value, data-driven inventory revenues from linear TV advertising, and to generate higher digital revenues, commercial and creative partnerships, • Attracted more users – monthly active which was up 19% year-on-year. and sponsorship. users (MAUs) increased by 19% to 12.5 million year-on-year (2022: 10.5 million) To deliver and maintain this strong performance we focus our ITVX investment on enhancing the depth and breadth of content, continuous improvements in the product and user experience, and expanding the distribution and marketing of ITVX. Content: There are over 25,000 hours of content available (including over 7,000 hours exclusively on the premium ad-free tier), including on-demand content from our five linear TV channels, FAST channels, exclusive ITVX content (such as anime, true crime and US box sets), ITVX Kids, and over 300 films creating one of the UK’s largest free film libraries. Programmes which contributed significantly to the year-on-year increase in streaming hours include: Love Island, Rugby World Cup, The Only Way Is Essex and Big Brother. We are constantly testing, learning and evolving our content proposition and Media & Entertainment (M&E) is the largest commercial windowing strategy between ITVX and our linear TV channels to optimise viewing and broadcaster and streamer in the UK, delivering unrivalled monetisation. We are implementing many of the insights gained during 2023 and utilising audience scale and reach. It includes Streaming and Broadcast, THE RUGBY WORLD CUP aired the data we have, particularly around how exclusively on ITV and ITVX in 2023. we window exclusives, such as dramas, distributing content through ITVX, our free advertiser-funded The semi-final between England and on our platforms. South Africa was ITV1’s biggest peak streaming service, and our free-to-air linear TV channels. audience of the year. ITV NEWS ITV has been News is an important driver of viewing and providing trusted and impartial our ITV News proposition is now fully news for more than 60 years. embedded within ITVX, with News streaming hours up 20% year-on-year and we have launched exclusive 90-second ITV News bulletins, a new News category page on the service and regional short and long-form catch up. MR BATES VS THE POST OFFICE is a drama series based on true events. It was produced by ITV Studios and was ITV’s biggest new drama 1. The full year 2022 comparative for total streaming hours has been restated from 1,139 million due to it including some in over a decade. estimates of total streaming viewing from third-party data providers. This has since been updated to accurately reflect the actual outcome 2. ITV / YouGov – base: 4,659 Nat Rep UK Adults – Dec 2023
26 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 27 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I ITV’s M&E strategy recognises and Supercharge • Attracted a larger audience – total C R capitalises on the change in viewer streaming hours were up 26% to 1,505 E P 1 O behaviour and the evolving needs of million (2022: 1,192 million ) Streaming R advertisers. It is based on two strategic • Increased viewing by our target audience T MEDIA & pillars: Supercharge Streaming and Growing and enhancing our – streaming hours amongst light viewers Optimise Broadcast. Our focus is to retain who are harder to reach, increased by 65%, our existing viewers and advertisers while streaming service ITVX and streaming hours among the 25-54 age also attracting new ones. ITV offers viewers We successfully launched ITVX in December group demographic increased by 47% the choice to watch whenever and however 2022 (which combined our previous offerings • Increased engagement and content they wish, with a strong reputation for ITV Hub, ITV Hub+ and BritBox UK) to discovery – streaming hours per viewer, brilliant content suited to British audiences. transform our streaming service from a catch was up 27% and 90% of users that ENTERTAINMENT ITV offers advertisers a unique combination up service to a content destination and to watched an ITVX exclusive, went on to of mass simultaneous reach, targeted deliver the inventory to fulfil the growing watch other content on the platform advertising at scale, and commercial and demand for our digital advertising. Although creative partnerships in a brand-safe and the main focus of ITVX is the free ad-funded • Increased brand awareness – growing 2 reliably measured environment. offering, there is also a subscription tier, from around 60% at launch to over 90% ITVX Premium. in 2023 Our strategic pillars have KPIs and 2026 targets which reflect the key drivers of ITVX’s strong performance in its first year is This increased reach and frequency of growth and value. See the Strategy section evident by the step change in our KPIs and viewers provide advertisers with valuable within the CEO’s Report for more details on other viewing metrics as we attract more addressable audiences at scale in a these KPIs, why they are important and how users who are engaging for longer across our brand-safe and measured environment. Our they will enable us to grow digital revenues to streaming platforms year-on-year. In 2023, robust data and analytics capabilities enable at least £750 million by 2026, and drive the service: us to offer high-value, data-driven inventory revenues from linear TV advertising, and to generate higher digital revenues, commercial and creative partnerships, • Attracted more users – monthly active which was up 19% year-on-year. and sponsorship. users (MAUs) increased by 19% to 12.5 million year-on-year (2022: 10.5 million) To deliver and maintain this strong performance we focus our ITVX investment on enhancing the depth and breadth of content, continuous improvements in the product and user experience, and expanding the distribution and marketing of ITVX. Content: There are over 25,000 hours of content available (including over 7,000 hours exclusively on the premium ad-free tier), including on-demand content from our five linear TV channels, FAST channels, exclusive ITVX content (such as anime, true crime and US box sets), ITVX Kids, and over 300 films creating one of the UK’s largest free film libraries. Programmes which contributed significantly to the year-on-year increase in streaming hours include: Love Island, Rugby World Cup, The Only Way Is Essex and Big Brother. We are constantly testing, learning and evolving our content proposition and Media & Entertainment (M&E) is the largest commercial windowing strategy between ITVX and our linear TV channels to optimise viewing and broadcaster and streamer in the UK, delivering unrivalled monetisation. We are implementing many of the insights gained during 2023 and utilising audience scale and reach. It includes Streaming and Broadcast, THE RUGBY WORLD CUP aired the data we have, particularly around how exclusively on ITV and ITVX in 2023. we window exclusives, such as dramas, distributing content through ITVX, our free advertiser-funded The semi-final between England and on our platforms. South Africa was ITV1’s biggest peak streaming service, and our free-to-air linear TV channels. audience of the year. ITV NEWS ITV has been News is an important driver of viewing and providing trusted and impartial our ITV News proposition is now fully news for more than 60 years. embedded within ITVX, with News streaming hours up 20% year-on-year and we have launched exclusive 90-second ITV News bulletins, a new News category page on the service and regional short and long-form catch up. MR BATES VS THE POST OFFICE is a drama series based on true events. It was produced by ITV Studios and was ITV’s biggest new drama 1. The full year 2022 comparative for total streaming hours has been restated from 1,139 million due to it including some in over a decade. estimates of total streaming viewing from third-party data providers. This has since been updated to accurately reflect the actual outcome 2. ITV / YouGov – base: 4,659 Nat Rep UK Adults – Dec 2023
28 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 29 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I Product: Throughout 2023, we have Optimise Broadcast largely offset the decline in linear viewing, Strong linear and online C R implemented a series of enhancements to however November and December 2023 E advertising proposition P improve ITVX’s product and user experience. were impacted by the strong viewing O While the advertising market is getting more R This included the integration of deeper Continuing to deliver comparatives of the FIFA World Cup in 2022. competitive, ITV is in a good position to be T personalisation in Q4, driving content unrivalled audiences with Total broadcaster viewing (broadcaster recommendations specific to users. We have high-quality programming viewing across all devices) declined by able to compete for advertising in a long- started to see positive results with an uplift 3% in the year and total broadcaster and term growing advertising market with its in MAUs and streaming hours, and an Within our Broadcast business, we operate subscription streaming service viewing unique combination of mass simultaneous increase in repeat visits by lighter users, who the largest family of free-to-air commercial (viewing of all broadcaster and subscription reach, targeted advertising and commercial are harder to reach and a key target for us to television channels in the UK. These streaming servicecontent across all devices) and creative partnerships. ITV has deep attract to the service. In addition, ITVX Kids channels provide unparalleled audience declined by 1% (Source: ITV, BARB). relationships with agencies and advertisers; launched in the second half of 2023 as a fully scale and reach, as well as targeted brand-safe and measured advertising and a digital experience; and over 90% of our demographics demanded by advertisers. Despite the challenging linear viewing strong track record of commissioning and content on ITVX is now subtitled. Despite the growth in streaming viewing, landscape, our share of the top 1,000 producing content which appeals to UK linear TV remains important for both our commercial broadcast TV programmes was audiences. In the first half of 2024, we will continue to viewers and advertisers. 91% in 2023 (2022: 93%) and our share of 3 Mass simultaneous reach integrate personalisation across the user To optimise Broadcast and maintain our USP commercial viewing was 32.6% (2022: experience and utilise it as a driver for 33.8%) and we continue to have the largest Television continues to be a highly effective marketing. We will further monetise our of delivering mass audiences for advertisers, share of commercial viewing versus our and efficient medium for advertisers to inventory, by introducing features such as I’M A CELEBRITY…GET ME OUT we will continue to invest in live content, such commercial competitors. Content such achieve mass scale and reach. As the viewing Pause Ads, which seamlessly play ads when OF HERE! returned in 2023 for its as sports and large entertainment shows, as as I’m A Celebrity…Get Me Out Of Here!, and advertising landscape becomes more 23rd series in the UK. It was the well as dramas, factual and news. In total ITV a user pauses content, and roll-out new ways year’s most-watched programme Love Island, Unforgotten, The Bay and the fragmented, the scale and reach provided by for clients to sponsor collections of content for 16-34s on any channel. invests over £1.2 billion annually in our Rugby World Cup, all contributed to our television, and particularly ITV, becomes across the service. We will also be content budget across all our linear TV viewing KPIs remaining ahead of our even more valuable to advertisers. With UNFORGOTTEN is a UK crime channels and ITVX in order to drive these introducing subtitles on adverts, something drama. It returned for its fifth 2026 targets, in the year. global steaming platforms entering the that is extremely important to our series in 2023 with the final mass audiences on our linear TV channels, advertising market and introducing ad- advertising clients. episode being the most-watched and live and on demand viewing on ITVX. We have an exciting schedule for 2024 to supported tiers to their subscription plans, programme on ITVX. ITV’s USP as the largest commercial public Over the last few years, linear TV audiences keep our audiences informed and Distribution: The integration of ITVX into entertained. This includes entertainment service broadcaster in the UK remains third-party platforms substantially in the UK have gradually declined with shows Celebrity Big Brother and Wheel of incredibly important. The advertising and increased in 2023, with over 40 new ways audiences spending an increasing amount Fortune, new dramas Breathtaking, viewing proposition ITV provides to clients is for a user to access the service. We have of time on streaming platforms, both Protection and Ruth Ellis, along with sporting unparalleled, and something that no improved the discoverability of ITVX on ad-funded and paid. In 2023, total ITV events including UEFA Euros and both men’s streamer can match. third-party platforms which has helped viewing (which includes viewing of all ITV and women’s international football qualifiers. drive bigger audiences to our content and content, across all devices) was down 5% to Targeted advertising – Planet V the service is now available in almost 100% 13.1 billion hours. For the first ten months of the year, the growth of ITV’s digital viewing Planet V is ITV’s wholly-owned, scaled of UK households. programmatic addressable advertising platform with an intuitive self-service The introduction of ITVX on Sky Q in Q1 2023, interface that allows agencies and combined with stronger partnerships with THE FIFA WOMEN’S WORLD CUP took place in July 2023 with the tournament advertisers to seamlessly and cost- both Sky and Virgin has resulted in streamed, reaching 22 million viewers and having over 16 million streams on ITVX. effectively buy highly targeted video on demand viewing with targeted advertising, Marketing: Our marketing strategy following ITVX Premium offers users the opportunity advertising on ITVX. Planet V is the replacing viewing recorded by users which ITVX’s launch has been focused on driving to enjoy all ITVX programming ad-free plus second-largest programmatic video cannot be monetised. We can now deliver awareness, consideration and viewing to the exclusive content and access to BritBox UK advertising platform in the UK after Google targeted advertising across all our channels service to support the delivery of our KPIs. (content from the ITV and BBC libraries). and utilises ITV’s extensive data assets and on mobile and web, enabling better We have seen awareness for both adults and Although the main focus of ITVX’s launch has capabilities to provide compelling advertising monetisation opportunities across light viewers grow strongly and our been to promote the ad-funded service, we products for advertisers. ITVX has over these platforms. campaigns have helped contribute to the have improved the premium offering by 40 million registered users, giving ITV and its increase in MAUs and streaming hours incorporating additional content from our advertisers one of the largest first party data In 2024, ITVX will roll-out on PlayStation 4 during the year. partnership with StudioCanal and worked sets in the UK. Being wholly owned ensures and 5. We will further improve the with third-party platforms to enable greater that all the returns generated by the platform discoverability of ITVX on third-party Marketing is an important tool to continue to prominence on device interfaces. We are go directly to ITV without any value leakage platforms through creating additional links attract users and viewing on ITVX, and also now simplifying our viewer proposition for through third-party commissions. that bring users directly into ITVX on our linear TV channels. We see an ITVX Premium and taking ownership of the programmes from the main screens of their opportunity to adopt a more responsive relationship with the subscribers. As a result, The platform is used by over 2,000 users in devices. The launch of Freely, the new TV approach helping highlight popular programs in 2023, UK streaming subscriptions declined the UK and offers agencies and advertisers streaming service which combines live TV to commercial valuable audiences. The marginally to 1.3 million (2022: 1.4 million) as access to over 20,000 data-targeting options and catch up of the FTA broadcasters will 4 opportunity and returns from this area are we transitioned users from our standalone to create sophisticated audience segments. also help make ITV, along with the other very attractive. In 2024 we will increase our app, BritBox UK, to ITVX Premium, combined They can also incorporate their own PSB’s, more accessible. All of this will further marketing spend by £15 million to drive both with the closure of the Amazon ITV catch up first-party data in a GDPR-compliant expand our distribution footprint, making our streaming and linear viewing. This will include channel. environment using InfoSum (an identity content more widely available. investing in data and on the prominence of infrastructure provider) and monitor their our content on third-party platforms; In addition, in 2024 the BritBox UK service on campaigns through a custom-built user campaigns to engage more 25-54 year-old Amazon Prime Video Channels and the interface. Advertisers are prepared to pay light viewers – who are highly valuable to BritBox UK standalone app will also close as more for this increasingly sophisticated and advertisers – showcasing the breadth and we further simplify our offering. This will valuable ad inventory. depth of our quality content; along with consolidate all our subscribers under one continuous focus on measurement and ITVX Premium brand, and will give us optimisation of our investment. We will complete ownership of the subscriber base. continue to evaluate content and marketing The closure of these services is expected to 3. ITV’s share of viewing as a proportion of all commercial ROI and adjust as necessary. impact subscriber numbers and subscription ad-funded channels in the UK revenues in 2024. 4. The accuracy of our Video-On-Demand audience data has been subject to independent verification by PwC.
28 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 29 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I Product: Throughout 2023, we have Optimise Broadcast largely offset the decline in linear viewing, Strong linear and online C R implemented a series of enhancements to however November and December 2023 E advertising proposition P improve ITVX’s product and user experience. were impacted by the strong viewing O While the advertising market is getting more R This included the integration of deeper Continuing to deliver comparatives of the FIFA World Cup in 2022. competitive, ITV is in a good position to be T personalisation in Q4, driving content unrivalled audiences with Total broadcaster viewing (broadcaster recommendations specific to users. We have high-quality programming viewing across all devices) declined by able to compete for advertising in a long- started to see positive results with an uplift 3% in the year and total broadcaster and term growing advertising market with its in MAUs and streaming hours, and an Within our Broadcast business, we operate subscription streaming service viewing unique combination of mass simultaneous increase in repeat visits by lighter users, who the largest family of free-to-air commercial (viewing of all broadcaster and subscription reach, targeted advertising and commercial are harder to reach and a key target for us to television channels in the UK. These streaming servicecontent across all devices) and creative partnerships. ITV has deep attract to the service. In addition, ITVX Kids channels provide unparalleled audience declined by 1% (Source: ITV, BARB). relationships with agencies and advertisers; launched in the second half of 2023 as a fully scale and reach, as well as targeted brand-safe and measured advertising and a digital experience; and over 90% of our demographics demanded by advertisers. Despite the challenging linear viewing strong track record of commissioning and content on ITVX is now subtitled. Despite the growth in streaming viewing, landscape, our share of the top 1,000 producing content which appeals to UK linear TV remains important for both our commercial broadcast TV programmes was audiences. In the first half of 2024, we will continue to viewers and advertisers.91% in 2023 (2022: 93%) and our share of 3 Mass simultaneous reach integrate personalisation across the user To optimise Broadcast and maintain our USP commercial viewing was 32.6% (2022: experience and utilise it as a driver for 33.8%) and we continue to have the largest Television continues to be a highly effective marketing. We will further monetise our of delivering mass audiences for advertisers, share of commercial viewing versus our and efficient medium for advertisers to inventory, by introducing features such as I’M A CELEBRITY…GET ME OUT we will continue to invest in live content, such commercial competitors. Content such achieve mass scale and reach. As the viewing Pause Ads, which seamlessly play ads when OF HERE! returned in 2023 for its as sports and large entertainment shows, as as I’m A Celebrity…Get Me Out Of Here!, and advertising landscape becomes more 23rd series in the UK. It was the well as dramas, factual and news. In total ITV a user pauses content, and roll-out new ways year’s most-watched programme Love Island, Unforgotten, The Bay and the fragmented, the scale and reach provided by for clients to sponsor collections of content for 16-34s on any channel.invests over £1.2 billion annually in our Rugby World Cup, all contributed to our television, and particularly ITV, becomes across the service. We will also be content budget across all our linear TV viewing KPIs remaining ahead of our even more valuable to advertisers. With UNFORGOTTEN is a UK crime channels and ITVX in order to drive these introducing subtitles on adverts, something drama. It returned for its fifth 2026 targets, in the year. global steaming platforms entering the that is extremely important to our series in 2023 with the final mass audiences on our linear TV channels, advertising market and introducing ad- advertising clients.episode being the most-watched and live and on demand viewing on ITVX. We have an exciting schedule for 2024 to supported tiers to their subscription plans, programme on ITVX. ITV’s USP as the largest commercial public Over the last few years, linear TV audiences keep our audiences informed and Distribution: The integration of ITVX into entertained. This includes entertainment service broadcaster in the UK remains third-party platforms substantially in the UK have gradually declined with shows Celebrity Big Brother and Wheel of incredibly important. The advertising and increased in 2023, with over 40 new ways audiences spending an increasing amount Fortune, new dramas Breathtaking, viewing proposition ITV provides to clients is for a user to access the service. We have of time on streaming platforms, both Protection and Ruth Ellis, along with sporting unparalleled, and something that no improved the discoverability of ITVX on ad-funded and paid. In 2023, total ITV events including UEFA Euros and both men’s streamer can match. third-party platforms which has helped viewing (which includes viewing of all ITV and women’s international football qualifiers. drive bigger audiences to our content and content, across all devices) was down 5% to Targeted advertising – Planet V the service is now available in almost 100% 13.1 billion hours. For the first ten months of the year, the growth of ITV’s digital viewing Planet V is ITV’s wholly-owned, scaled of UK households. programmatic addressable advertising platform with an intuitive self-service The introduction of ITVX on Sky Q in Q1 2023, interface that allows agencies and combined with stronger partnerships with THE FIFA WOMEN’S WORLD CUP took place in July 2023 with the tournament advertisers to seamlessly and cost- both Sky and Virgin has resulted in streamed, reaching 22 million viewers and having over 16 million streams on ITVX. effectively buy highly targeted video on demand viewing with targeted advertising, Marketing: Our marketing strategy following ITVX Premium offers users the opportunity advertising on ITVX. Planet V is the replacing viewing recorded by users which ITVX’s launch has been focused on driving to enjoy all ITVX programming ad-free plus second-largest programmatic video cannot be monetised. We can now deliver awareness, consideration and viewing to the exclusive content and access to BritBox UK advertising platform in the UK after Google targeted advertising across all our channels service to support the delivery of our KPIs. (content from the ITV and BBC libraries). and utilises ITV’s extensive data assets and on mobile and web, enabling better We have seen awareness for both adults and Although the main focus of ITVX’s launch has capabilities to provide compelling advertising monetisation opportunities across light viewers grow strongly and our been to promote the ad-funded service, we products for advertisers. ITVX has over these platforms. campaigns have helped contribute to the have improved the premium offering by 40 million registered users, giving ITV and its increase in MAUs and streaming hours incorporating additional content from our advertisers one of the largest first party data In 2024, ITVX will roll-out on PlayStation 4 during the year. partnership with StudioCanal and worked sets in the UK. Being wholly owned ensures and 5. We will further improve the with third-party platforms to enable greater that all the returns generated by the platform discoverability of ITVX on third-party Marketing is an important tool to continue to prominence on device interfaces. We are go directly to ITV without any value leakage platforms through creating additional links attract users and viewing on ITVX, and also now simplifying our viewer proposition for through third-party commissions. that bring users directly into ITVX on our linear TV channels. We see an ITVX Premium and taking ownership of the programmes from the main screens of their opportunity to adopt a more responsive relationship with the subscribers. As a result, The platform is used by over 2,000 users in devices. The launch of Freely, the new TV approach helping highlight popular programs in 2023, UK streaming subscriptions declined the UK and offers agencies and advertisers streaming service which combines live TV to commercial valuable audiences. The marginally to 1.3 million (2022: 1.4 million) as access to over 20,000 data-targeting options and catch up of the FTA broadcasters will 4 opportunity and returns from this area are we transitioned users from our standalone to create sophisticated audience segments. also help make ITV, along with the other very attractive. In 2024 we will increase our app, BritBox UK, to ITVX Premium, combined They can also incorporate their own PSB’s, more accessible. All of this will further marketing spend by £15 million to drive both with the closure of the Amazon ITV catch up first-party data in a GDPR-compliant expand our distribution footprint, making our streaming and linear viewing. This will include channel. environment using InfoSum (an identity content more widely available. investing in data and on the prominence of infrastructure provider) and monitor their our content on third-party platforms; In addition, in 2024 the BritBox UK service on campaigns through a custom-built user campaigns to engage more 25-54 year-old Amazon Prime Video Channels and the interface. Advertisers are prepared to pay light viewers – who are highly valuable to BritBox UK standalone app will also close as more for this increasingly sophisticated and advertisers – showcasing the breadth and we further simplify our offering. This will valuable ad inventory. depth of our quality content; along with consolidate all our subscribers under one continuous focus on measurement and ITVX Premium brand, and will give us optimisation of our investment. We will complete ownership of the subscriber base. continue to evaluate content and marketing The closure of these services is expected to 3. ITV’s share of viewing as a proportion of all commercial ROI and adjust as necessary.impact subscriber numbers and subscription ad-funded channels in the UK revenues in 2024. 4. The accuracy of our Video-On-Demand audience data has been subject to independent verification by PwC.
30 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 31 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I With the expansion of ITVX’s online inventory Commercial and creative partnerships nearly 400 digital-only advertisers to ITV in Partnerships and other revenue declined by C R and reach, ITV is well positioned to meet the 2023. For example: 2% in the year mainly driven by lower E ITV’s Commercial team delivers strategic P increasing demand for targeted advertising. competition revenue. O commercial and creative partnerships with • ITV AdVentures Ignite: Encouraging R We have a significant opportunity to partake advertisers who highly value ITV’s large and digitally native brands to advertise on T in the addressable market of around £6.8 targeted audiences to establish and grow television for the first time We expect Partnerships and other revenues billion in 2023 (Source: AA/WARC Q3 2023 their own brands. This includes product to decline in 2024 following our decision to Expenditure Report), and have the placement, ad-funded programming and • ITV AdVentures Invest: Through our Media revise our partnership agreements to allow foundations in place to successfully other partnerships that leverage the for Equity program, we take minority ITVX viewers to watch in HD, and allow ITV to compete for the long tail of advertisers within strength of our programme brands to help stakes in direct-to-consumer businesses target ads to a much larger proportion of the online video market which were advertisers connect with audiences in in return for advertising inventory across those viewers, using Planet V. previously inaccessible to ITV due to their unique ways. As a vertically integrated ITV’s linear TV channels and ITVX, for scale and targeting requirements. Since we producer broadcaster and streamer, we example, Flarin, a pain relief brand, and BritBox International launched Planet V we have attracted in have the advantage of having editorial, Resi, an architectural design company excess of 1,000 new advertisers to ITV. • ITV Ad Labs: This brings together all On 01 March 2024, ITV announced the sale of commercial, creative, and production teams its 50% shareholding in BritBox International working together, creating valuable innovations under one proposition and to the BBC Studios for £255 million. ITV ITVX and Planet V have helped drive opportunities for advertisers. includes data solutions which can Studios will continue to receive an ongoing growth in digital advertising revenue in the securely match client data with ITV’s revenue stream from BritBox International year, up 21%. Our Commercial team also has various existing registered first-party audience similar to current levels for the use of ITV initiatives to attract and engage advertisers, and Boots’ Advantage Card and Tesco’s content under new extended licensing attracting over 250 new brands to TV and Dunnhumby Clubcard databases. agreements. Prior to this date, BritBox International was THE MASKED SINGER continues to drive mass audiences ITV’s joint venture with the BBC, providing and returned for its fifth series in January 2024. an ad-free subscription streaming service M&E 2023 financial performance offering the most comprehensive collection of British content available in the US, 2023 2022 Change Change Total advertising revenue (TAR) Subscription revenue Canada, Australia, South Africa and the Twelve months to 31 December £m £m £m % Total advertising revenue 1,778 1,931 (153) (8) TAR was down 8% year-on-year in 2023 Subscription revenue is generated directly Nordics (made up of Sweden, Finland, Subscription revenue 59 54 5 9 which was in line with our expectations. from the premium tier of ITVX, our Denmark and Norway). Subscribers on standalone BritBox UK app, and BritBox UK 31 December 2023 were 3.7 million. SDN 48 55 (7) (13) (31 December 2022: 3.0 million). BritBox Partnerships and other revenue 205 209 (4) (2) The start of 2023 saw TAR down 10% in Q1 and ITV Catch Up services on Amazon Prime and down 11% in Q2 against tough Video Channels. It does not include BritBox International revenue and profit or loss, M&E non-advertising revenue 312 318 (6) (2) comparatives and the challenging International, which is included within JVs is included in share of profits/losses on Total M&E revenue 2,090 2,249 (159) (7) macroeconomic environment. Q3 was up 1% and Associates. JVs and not within M&E adjusted EBITA. Content costs (1,293) (1,216) (77) (6) and Q4 was down 9% with October up 2%, Variable costs (153) (130) (23) (18) November down 15% and December down In 2023, subscription revenue increased by M&E infrastructure and overheads (439) (439) – – 14% against strong comparatives in 2022 9% due to the annualisation of subscribers in OUTLOOK Total M&E costs (1,885) (1,785) (100) (6) from the FIFA World Cup. 2022, combined with new ITVX Premium We remain on track to deliver at least subscribers. This was partly offset by a £750 million of digital revenues by 2026. Total M&E adjusted EBITA* 205 464 (259) (56) As expected, most TAR categories were reduction in subscribers on our BritBox UK Total adjusted EBITA margin 10% 21% down year-on-year, with the largest being standalone app and the closure of ITV Catch We have had a good start to 2024 and * Refer to APMs for key adjustments to EBITA Finance, down 31% driven by online and retail Up on Amazon Prime Video Channels. will build on ITVX’s successful launch banks and insurance companies. Publishing year through continuous improvements and Broadcasting was down 28% with In 2024 the BritBox Amazon and the BritBox in content, product, distribution and 2023 2022 Change Change decreases from streaming platforms and direct to consumer service will close, which marketing. Twelve months to 31 December £m £m £m % Digital advertising revenue 415 343 72 21 social media sites, and Entertainment and will impact our number of subscribers and Leisure was down 18% with declines from subscription revenues in 2024. ITVX’s strong performance in 2023 has Subscription revenue 59 54 5 9 gaming, music and film companies. shown us that we can grow viewing Other 16 14 2 14 SDN significantly with slightly lower overall Total digital revenue 490 411 79 19 Categories that increased spend during the content spend. Therefore we expect to year included FMCGs, who used brand SDN generates revenue by licensing video streams to broadcast channels, radio stations marginally reduce our content cost in advertising to help push through price and data providers on digital terrestrial 2024 to around £1,275 million as we increases to consumers. Airlines and Travel television (DTT) or Freeview. SDN customers further optimise linear, evolve our Total M&E revenue was down 7% in 2023 Total M&E costs were up 6% in the year and ITVX, offset by a reduction in the employee were up 3%, driven by online holiday windowing strategy and improve with the decrease predominantly driven by within this, content costs was up 6% bonus payout and permanent cost savings of companies and overseas tourism boards. include ITV and third parties. SDN’s current licence has been renewed until 2034. personalisation. At the same time we the expected decline in total advertising reflecting the additional planned investment £11 million delivered in the year relating to will increase our marketing spend by revenue which was down 8% to £1,778 in content for ITVX which was partially offset the renegotiation of transmission contracts After many years of double digit growth, £15 million to drive both streaming and million. Digital revenue5, an important by a reduction in content amortisation to and property savings. e-commerce companies, excluding gambling, In 2023, external revenue (non-ITV) declined as expected by 13%. This decrease is linear viewing. We will continue to Streaming KPI, was up 19% in the year and reflect the windowing of content between decreased 29% driven by online car and retail evaluate content and marketing ROI within this, digital advertising revenues were linear and streaming, as previously guided. M&E adjusted EBITA was down 56% with a brands, as a result of the reduced availability primarily due to the renewal of long-term contracts with third parties at current market and adjust as necessary. up 21% year-on-year. margin of 10% reflecting the challenging of venture capital funding. Variable costs were up 18%, driven by an advertising market and planned investment rates, in the current and prior year. This trend is expected to continue. Compared to the same period in 2023, M&E non-advertising revenues were down increase in bandwidth costs and other in ITVX. TAR is expected to be up 3% in Q1 2024, 2% in 2023, with growth in subscription streaming-related costs, along with with continued strong growth in digital revenue offset by the expected and third-party commercial payaways. Partnerships and other revenue advertising revenues. continuing decline in SDN revenue, and a Partnerships and other revenue include reduction in partnerships and other revenue. M&E infrastructure and overhead costs were revenue from platforms, such as Sky and Further detail on the year-on-year flat year-on-year with inflation and the Virgin Media O2, competition revenue, movement is included on the following page. investment in headcount associated with third-party commission, e.g. for services we provide to STV, and commercial revenue from our creative partnerships. 5. Includes revenue from digital advertising, digital sponsorship and our subscription services
30 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 31 S OPERATING AND FINANCIAL PERFORMANCE REVIEW CONTINUED T R A T E G I With the expansion of ITVX’s online inventory Commercial and creative partnershipsnearly 400 digital-only advertisers to ITV in Partnerships and other revenue declined by C R and reach, ITV is well positioned to meet the 2023. For example: 2% in the year mainly driven by lower E ITV’s Commercial team delivers strategic P increasing demand for targeted advertising. competition revenue. O commercial and creative partnerships with • ITV AdVentures Ignite: Encouraging R We have a significant opportunity to partake advertisers who highly value ITV’s large and digitally native brands to advertise on T in the addressable market of around £6.8 targeted audiences to establish and grow television for the first time We expect Partnerships and other revenues billion in 2023 (Source: AA/WARC Q3 2023 their own brands. This includes product to decline in 2024 following our decision to Expenditure Report), and have the placement, ad-funded programming and • ITV AdVentures Invest: Through our Media revise our partnership agreements to allow foundations in place to successfully other partnerships that leverage the for Equity program, we take minority ITVX viewers to watch in HD, and allow ITV to compete for the long tail of advertisers within strength of our programme brands to help stakes in direct-to-consumer businesses target ads to a much larger proportion of the online video market which were advertisers connect with audiences in in return for advertising inventory across those viewers, using Planet V. previously inaccessible to ITV due to their unique ways. As a vertically integrated ITV’s linear TV channels and ITVX, for scale and targeting requirements. Since we producer broadcaster and streamer, we example, Flarin, a pain relief brand, and BritBox International launched Planet V we have attracted in have the advantage of having editorial, Resi, an architectural design company excess of 1,000 new advertisers to ITV.• ITV Ad Labs: This brings together all On 01 March 2024, ITV announced the sale of commercial, creative, and production teams its 50% shareholding in BritBox International working together, creating valuable innovations under one proposition and to the BBC Studios for £255 million. ITV ITVX and Planet V have helped drive opportunities for advertisers. includes data solutions which can Studios will continue to receive an ongoing growth in digital advertising revenue in the securely match client data with ITV’s revenue stream from BritBox International year, up 21%.Our Commercial team also has various existing registered first-party audience similar to current levels for the use of ITV initiatives to attract and engage advertisers, and Boots’ Advantage Card and Tesco’s content under new extended licensing attracting over 250 new brands to TV and Dunnhumby Clubcard databases. agreements. Prior to this date, BritBox International was THE MASKED SINGER continues to drive mass audiences ITV’s joint venture with the BBC, providing and returned for its fifth series in January 2024. an ad-free subscription streaming service M&E 2023 financial performance offering the most comprehensive collection of British content available in the US, 2023 2022 Change Change Total advertising revenue (TAR) Subscription revenue Canada, Australia, South Africa and the Twelve months to 31 December£m£m£m% Total advertising revenue1,7781,931(153)(8)TAR was down 8% year-on-year in 2023 Subscription revenue is generated directly Nordics (made up of Sweden, Finland, Subscription revenue595459 which was in line with our expectations. from the premium tier of ITVX, our Denmark and Norway). Subscribers on standalone BritBox UK app, and BritBox UK 31 December 2023 were 3.7 million. SDN4855(7)(13) (31 December 2022: 3.0 million). BritBox Partnerships and other revenue205209(4)(2)The start of 2023 saw TAR down 10% in Q1 and ITV Catch Up services on Amazon Prime and down 11% in Q2 against tough Video Channels. It does not include BritBox International revenue and profit or loss, M&E non-advertising revenue312318(6)(2)comparatives and the challenging International, which is included within JVs is included in share of profits/losses on Total M&E revenue2,0902,249(159)(7)macroeconomic environment. Q3 was up 1% and Associates. JVs and not within M&E adjusted EBITA. Content costs(1,293)(1,216)(77)(6)and Q4 was down 9% with October up 2%, Variable costs(153)(130)(23)(18)November down 15% and December down In 2023, subscription revenue increased by M&E infrastructure and overheads(439)(439)––14% against strong comparatives in 2022 9% due to the annualisation of subscribers in OUTLOOK Total M&E costs(1,885)(1,785)(100)(6)from the FIFA World Cup. 2022, combined with new ITVX Premium We remain on track to deliver at least subscribers. This was partly offset by a £750 million of digital revenues by 2026. Total M&E adjusted EBITA*205464(259)(56)As expected, most TAR categories were reduction in subscribers on our BritBox UK Total adjusted EBITA margin10%21%down year-on-year, with the largest being standalone app and the closure of ITV Catch We have had a good start to 2024 and * Refer to APMs for key adjustments to EBITAFinance, down 31% driven by online and retail Up on Amazon Prime Video Channels. will build on ITVX’s successful launch banks and insurance companies. Publishing year through continuous improvements and Broadcasting was down 28% with In 2024 the BritBox Amazon and the BritBox in content, product, distribution and 2023 2022 Change Change decreases from streaming platforms and direct to consumer service will close, which marketing. Twelve months to 31 December£m£m£m% Digital advertising revenue4153437221social media sites, and Entertainment and will impact our number of subscribers and Leisure was down 18% with declines from subscription revenues in 2024. ITVX’s strong performance in 2023 has Subscription revenue595459 gaming, music and film companies. shown us that we can grow viewing Other1614214 SDN significantly with slightly lower overall Total digital revenue4904117919Categories that increased spend during the content spend. Therefore we expect to year included FMCGs, who used brand SDN generates revenue by licensing video streams to broadcast channels, radio stations marginally reduce our content cost in advertising to help push through price and data providers on digital terrestrial 2024 to around £1,275 million as we increases to consumers. Airlines and Travel television (DTT) or Freeview. SDN customers further optimise linear, evolve our Total M&E revenue was down 7% in 2023 Total M&E costs were up 6% in the year and ITVX, offset by a reduction in the employee were up 3%, driven by online holiday windowing strategy and improve with the decrease predominantly driven by within this, content costs was up 6% bonus payout and permanent cost savings of companies and overseas tourism boards. include ITV and third parties. SDN’s current licence has been renewed until 2034. personalisation. At the same time we the expected decline in total advertising reflecting the additional planned investment £11 million delivered in the year relating to will increase our marketing spend by revenue which was down 8% to £1,778 in content for ITVX which was partially offset the renegotiation of transmission contracts After many years of double digit growth, £15 million to drive both streaming and million. Digital revenue5, an important by a reduction in content amortisation to and property savings.e-commerce companies, excluding gambling, In 2023, external revenue (non-ITV) declined as expected by 13%. This decrease is linear viewing. We will continue to Streaming KPI, was up 19% in the year and reflect the windowing of content between decreased 29% driven by online car and retail evaluate content and marketing ROI within this, digital advertising revenues were linear and streaming, as previously guided. M&E adjusted EBITA was down 56% with a brands, as a result of the reduced availability primarily due to the renewal of long-term contracts with third parties at current market and adjust as necessary. up 21% year-on-year. margin of 10% reflecting the challenging of venture capital funding. Variable costs were up 18%, driven by an advertising market and planned investment rates, in the current and prior year. This trend is expected to continue. Compared to the same period in 2023, M&E non-advertising revenues were down increase in bandwidth costs and other in ITVX. TAR is expected to be up 3% in Q1 2024, 2% in 2023, with growth in subscription streaming-related costs, along with with continued strong growth in digital revenue offset by the expected and third-party commercial payaways. Partnerships and other revenue advertising revenues. continuing decline in SDN revenue, and a Partnerships and other revenue include reduction in partnerships and other revenue. M&E infrastructure and overhead costs were revenue from platforms, such as Sky and Further detail on the year-on-year flat year-on-year with inflation and the Virgin Media O2, competition revenue, movement is included on the following page.investment in headcount associated with third-party commission, e.g. for services we provide to STV, and commercial revenue from our creative partnerships. 5. Includes revenue from digital advertising, digital sponsorship and our subscription services
32 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 33 S T SOCIAL PURPOSE R A T E G I C R E Creating a culture where we all do more P O R MENTAL to look after our mental wellbeing. T Wellbeing OUR GOAL Inspire 200 million actions to support better mental and physical Re ecting health by 2023 ANDSHAPING SUSTAINABLE DEVELOPMENT GOAL Mental wellbeing has been our primary THE RESULTS Behind the Scenes CULTURE social cause since 2019, and we have surpassed our five year target of 7.2 million people started a Mental health in the media encouraging 200 million actions to support mental or physical health by conversation, or had a better conference 2023. This has been achieved through quality conversation, with a In March we ran a conference series to behaviour change campaigns in friend or family member due open up conversations about mental advertising airtime, and editorial health portrayals on-screen, and content across the year. to our Britain Get Talking approaches off-screen, developed in 1 campaign partnership with the Film and TV Charity, Off-screen we continued to focus on Mind, YoungMinds, SAMH and Campaign the wellbeing of our people, producers Against Living Miserably (CALM). Almost At the heart of ITV’s purpose to reflect and shape and participants. Tackling online trolling 1,000 participants attended from across Our Social Purpose ITV partnered with The Cybersmile streaming, broadcast, advertising and culture is our Social Purpose, which is all about agenda focuses on Foundation on a new campaign titled production sectors of the TV industry. shaping culture for good: changing ITV for the beer four key areas where The Campaigns ‘Would you say it’ to develop three TV we can have the ads to help tackle the rise in online Colleague wellbeing and using our content and reach to inspire positive biggest impact: Britain Get Talking trolling. We also developed a social media awareness training module for This is a priority at ITV. Refer to the Our change in the wider world. Britain Get Talking is ITV’s flagship People section (page 40) for details on MENTAL mental health campaign, designed programme participants in addition to how we support the mental health and Wellbeing to encourage people to connect with existing extensive welfare measures. wellbeing of our colleagues, and our one another to improve their mental Duty of Care charter on pages 81 and 98. 2023 marks the culmination of five years of quarterly. Progress against climate action wellbeing. Supported by Mind, THE RESULTS focus on Better Health, while our work on targets is reviewed quarterly by the ITV YoungMinds and Scottish Action THE RESULTS Climate Action and Diversity, Equity and Studios and M&E Boards and progress for Mental Health (SAMH) in Scotland, Over ¼ of 16-34 year olds Inclusion (DEI) continues to mature. From against diversity targets is reviewed in 2023 the campaign focused on (28%) said they plan to think 249 million actions to 2024, our health pillar will have a sharper quarterly by the Management Board. The the growing mental health crisis in focus on Mental Wellbeing, building on the Board Nominations Committee and Audit young people. twice before posting on other support better mental and work of our landmark campaign Britain Get and Risk Committee also review progress BETTER people’s social media posts as physical health achieved since Talking to encourage everyone to look after against diversity targets and carbon Ant & Dec, alongside a number of other 2 Futures a result of seeing the campaign 2019, surpassing our goal of their mental health proactively. Our work to emissions targets. famous faces launched a campaign to 3 support others through giving time, money encourage schools to set a unique piece 200 million and using our platform will be reshaped Our Social Purpose goals align with the UN’s of homework ahead of World Mental towards supporting the next generation, Sustainable Development Goals (SDGs). The Health Day. BRITAIN GET TALKING under the name Better Futures. nine SDGs below are where we believe ITV can make the most significant contribution. Designed in collaboration with a child Our social impact is tracked through CLIMATE psychologist and our charity partners, extensive, regular research commissioned Refer to our 2023 Social Purpose Impact the task encouraged young people to from YouGov and other partners. Report for further details on all our Social Action share their thoughts and feelings openly. Performance and plans are reviewed by the Purpose priorities. It is available to download This was accompanied by dedicated Board annually and the Management Board at: www.itvplc.com/socialpurpose/overview programming integrated into our evening schedule, focusing on mental health. 1. Extrapolated from YouGov, November 2023 DIVERSITY, (Sample: 2,016 UK adults) Equity 2. YouGov Tracker ( 1,011 nat rep sample, April 2023) and 3. Data extrapolated from YouGov and other nationally representative surveys of the Inclusion UK public commissioned by ITV and charity partners. For more details on each campaign, see www.itvplc.com/socialpurpose
32 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 33 S T SOCIAL PURPOSE R A T E G I C R E Creating a culture where we all do more P O R MENTAL to look after our mental wellbeing. T Wellbeing OUR GOAL Inspire 200 million actions to support better mental and physical Re ecting health by 2023 ANDSHAPING SUSTAINABLE DEVELOPMENT GOAL Mental wellbeing has been our primary THE RESULTS Behind the Scenes CULTURE social cause since 2019, and we have surpassed our five year target of 7.2 million people started a Mental health in the media encouraging 200 million actions to support mental or physical health by conversation, or had a better conference 2023. This has been achieved through quality conversation, with a In March we ran a conference series to behaviour change campaigns in friend or family member due open up conversations about mental advertising airtime, and editorial health portrayals on-screen, and content across the year. to our Britain Get Talking approaches off-screen, developed in 1 campaign partnership with the Film and TV Charity, Off-screen we continued to focus on Mind, YoungMinds, SAMH and Campaign the wellbeing of our people, producers Against Living Miserably (CALM). Almost At the heart of ITV’s purpose to reflect and shape and participants. Tackling online trolling 1,000 participants attended from across Our Social Purpose ITV partnered with The Cybersmile streaming, broadcast, advertising and culture is our Social Purpose, which is all about agenda focuses on Foundation on a new campaign titled production sectors of the TV industry. shaping culture for good: changing ITV for the beer four key areas where The Campaigns ‘Would you say it’ to develop three TV we can have the ads to help tackle the rise in online Colleague wellbeing and using our content and reach to inspire positive biggest impact:Britain Get Talking trolling. We also developed a social media awareness training module for This is a priority at ITV. Refer to the Our change in the wider world. Britain Get Talking is ITV’s flagship People section (page 40) for details on MENTAL mental health campaign, designed programme participants in addition to how we support the mental health and Wellbeing to encourage people to connect with existing extensive welfare measures. wellbeing of our colleagues, and our one another to improve their mental Duty of Care charter on pages 81 and 98. 2023 marks the culmination of five years of quarterly. Progress against climate action wellbeing. Supported by Mind, THE RESULTS focus on Better Health, while our work on targets is reviewed quarterly by the ITV YoungMinds and Scottish Action THE RESULTS Climate Action and Diversity, Equity and Studios and M&E Boards and progress for Mental Health (SAMH) in Scotland, Over ¼ of 16-34 year olds Inclusion (DEI) continues to mature. From against diversity targets is reviewed in 2023 the campaign focused on (28%) said they plan to think 249 million actions to 2024, our health pillar will have a sharper quarterly by the Management Board. The the growing mental health crisis in focus on Mental Wellbeing, building on the Board Nominations Committee and Audit young people. twice before posting on other support better mental and work of our landmark campaign Britain Get and Risk Committee also review progress BETTER people’s social media posts as physical health achieved since Talking to encourage everyone to look after against diversity targets and carbon Ant & Dec, alongside a number of other 2 Futures a result of seeing the campaign 2019, surpassing our goal of their mental health proactively. Our work to emissions targets.famous faces launched a campaign to 3 support others through giving time, money encourage schools to set a unique piece 200 million and using our platform will be reshaped Our Social Purpose goals align with the UN’s of homework ahead of World Mental towards supporting the next generation, Sustainable Development Goals (SDGs). The Health Day. BRITAIN GET TALKING under the name Better Futures. nine SDGs below are where we believe ITV can make the most significant contribution. Designed in collaboration with a child Our social impact is tracked through CLIMATEpsychologist and our charity partners, extensive, regular research commissioned Refer to our 2023 Social Purpose Impact the task encouraged young people to from YouGov and other partners. Report for further details on all our Social Actionshare their thoughts and feelings openly. Performance and plans are reviewed by the Purpose priorities. It is available to download This was accompanied by dedicated Board annually and the Management Board at: www.itvplc.com/socialpurpose/overviewprogramming integrated into our evening schedule, focusing on mental health. 1. Extrapolated from YouGov, November 2023 DIVERSITY, (Sample: 2,016 UK adults) Equity 2. YouGov Tracker ( 1,011 nat rep sample, April 2023) and 3. Data extrapolated from YouGov and other nationally representative surveys of the Inclusion UK public commissioned by ITV and charity partners. For more details on each campaign, see www.itvplc.com/socialpurpose
34 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 35 S SOCIAL PURPOSE CONTINUED T R A T E G I C R E Supporting the next generation in our industry, Shows with the biggest impact on audiences and P O R BETTER across the UK and around the world. CLIMATE the smallest impact on the planet. T Futures SUSTAINABLE DEVELOPMENT GOALS Action OUR GOALS – Net Zero: Reducing emissions we control by 46.2% and those we can influence by 28% by 2030, and all emissions by 90% by 2050 – 100% sustainable supply chain by 2030 – Zero Waste by 2030 – 100% albert certified and trained each year – Increase visibility and impact of climate action content on-screen SUSTAINABLE DEVELOPMENT GOALS Mentoring and volunteering Encouraging The Daily Mile In 2023 ITV continued its mentoring ITV continued its partnership with The partnership with Creative Access, an actions to improve Daily Mile encouraging schoolchildren to organisation that helps people from children’s physical do 15 minutes of daily exercise to tackle under-represented communities access lowering levels of physical activity in careers and progress to leadership in the health children in the UK. The ‘Thrive’ campaign Context time. Energy-efficiency measures in our creative industries. re-ran in September and October, hub sites, including LED lighting, motion Zero Waste highlighting the positive impact of daily As the impacts of climate change sensors and solar energy generation, ITV colleagues were also involved in Eat Them To Defeat Them exercise in improving mood and memory, worsen and the transition to a have driven the reduction in Scope 1 and We are continuously taking steps to training workshops, including Media Now in its fifth year, ITV continued its as well as attention in class. sustainable economy accelerates, it is 2 emissions. improve our data quality and monitor Trust’s Creativity Work’s: Multimedia award-winning partnership with Veg increasingly important for companies waste in our offices and production Training programme and ITV Academy’s Power to encourage children to eat more THE RESULTS to integrate climate action into strategic activities, all while working towards a Creative Access Showcase in decision making. THE RESULTS circular economy from office equipment vegetables. Sky and Channel 4 together Manchester. matched ITV’s airtime commitment, 32,730 more children took up to props. enabling a £3 million media campaign, To address this, we are publishing our Our Scope 1 & 2 emissions THE RESULTS the Daily Mile as a result of the initial Climate Transition Plan alongside have decreased by 52% since with additional funding from an alliance campaign On-screen of supermarket and food brands. the 2023 Annual Report and Accounts. our baseline year 90 mentoring partnerships This details how we will transform ITV Nearly half a million to meet our ambitious targets, while As a founding signatory of the Climate and 559 hours of mentoring THE RESULTS 69% of our electricity comes Content Pledge, ITV is committed to children have signed up to using our reach and influence to took place in 2023. There have inspire behaviour change in audiences. from renewable energy doing more to reach and engage been 340 partnerships since 77% of parents whose The Daily Mile since ITV began For more information on our climate audiences with climate action content. 1 children took part in the school supporting the campaign in action progress, refer to our Shows from Daytime to The Masked the scheme began Reducing our Scope 3 Singer and Love Island incorporate campaigns said they ate more April 20193 2023 Social Purpose Impact report. emissions (influenced by ITV) climate content. vegetables as a result Targets, data and governance ITV’s Scope 3 footprint has decreased by £132m veg sales as a direct Soccer Aid for UNICEF We are continuously improving our data. 17% compared to our baseline year. Biodiversity 1. Data supplied by Creative Access result of our Eat Them To 2023 saw the 12th Soccer Aid for UNICEF ITV’s Scope 1 and 2 (controlled by ITV) and Scope 3 (influenced by ITV) Business Travel emissions have We recognise how critical it is for 2. Data supplied by Veg Power Defeat Them campaign since match, marking 17 years of the ITV and increased by 13% compared to 2022, but 3. Daily Mile school registrations, data UNICEF partnership. Teams of former emissions for 2023 were independently businesses to address the biodiversity provided by The Daily Mile it launched in 20192 assured by ERM Certification and remain below pre-COVID-19 levels with crisis. In preparation for future reporting professional footballers and celebrities a 45% reduction compared to 2019. ITV came together to raise money for Verification Services Limited (ERM CVS), requirements, we are reviewing the and we have published an updated Basis is introducing prompts to our booking actions we can take across our UNICEF’s work helping children who are system to encourage colleagues to facing conflict, disasters, and other of Reporting document. Our Scope 3 production activities, supply chain data quality is improving thanks to more choose lower emission travel. engagement and office improvements crises around the world. company–level data into our calculations to manage our nature related and engagement with our supply chain. Purchased Goods and Services are dependencies, risks and opportunities. The match took place in front of over the largest contributor to ITV’s Scope 3 63,000 fans and was broadcast emissions; of these, 65% come from our exclusively on ITV and STV. Reducing our emissions productions. We use BAFTA albert Reducing our Scope 1 and 2 sustainability certification to tackle this THE RESULTS emissions (controlled by ITV) and work with broadcasting peers to ITV’s Scope 1 and 2 emissions are support sector-wide change. £14.6 million raised in total decreasing on track with our targets, from the match and Soccer with a 52% reduction compared to our THE RESULTS Aid week TV specials. Over baseline year. Our market-based Scope £90 million has been raised 2 figures have reduced by 28% since their Our Scope 3 emissions have since the start of Soccer Aid apparent spike in 2022 which arose from decreased by 17% since our limited evidence around renewable baseline year energy sources for several sites at the
34 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 35 S SOCIAL PURPOSE CONTINUED T R A T E G I C R E Supporting the next generation in our industry, Shows with the biggest impact on audiences and P O R BETTER across the UK and around the world.CLIMATE the smallest impact on the planet. T Futures SUSTAINABLE DEVELOPMENT GOALSAction OUR GOALS – Net Zero: Reducing emissions we control by 46.2% and those we can influence by 28% by 2030, and all emissions by 90% by 2050 – 100% sustainable supply chain by 2030 – Zero Waste by 2030 – 100% albert certified and trained each year – Increase visibility and impact of climate action content on-screen SUSTAINABLE DEVELOPMENT GOALS Mentoring and volunteering Encouraging The Daily Mile In 2023 ITV continued its mentoring ITV continued its partnership with The partnership with Creative Access, an actions to improve Daily Mile encouraging schoolchildren to organisation that helps people from children’s physical do 15 minutes of daily exercise to tackle under-represented communities access lowering levels of physical activity in careers and progress to leadership in the healthchildren in the UK. The ‘Thrive’ campaign Context time. Energy-efficiency measures in our creative industries. re-ran in September and October, hub sites, including LED lighting, motion Zero Waste highlighting the positive impact of daily As the impacts of climate change sensors and solar energy generation, ITV colleagues were also involved in Eat Them To Defeat Themexercise in improving mood and memory, worsen and the transition to a have driven the reduction in Scope 1 and We are continuously taking steps to training workshops, including Media Now in its fifth year, ITV continued its as well as attention in class. sustainable economy accelerates, it is 2 emissions. improve our data quality and monitor Trust’s Creativity Work’s: Multimedia award-winning partnership with Veg increasingly important for companies waste in our offices and production Training programme and ITV Academy’s Power to encourage children to eat more THE RESULTSto integrate climate action into strategic activities, all while working towards a Creative Access Showcase in decision making. THE RESULTS circular economy from office equipment vegetables. Sky and Channel 4 together Manchester. matched ITV’s airtime commitment, 32,730 more children took up to props. enabling a £3 million media campaign, To address this, we are publishing our Our Scope 1 & 2 emissions THE RESULTSthe Daily Mile as a result of the initial Climate Transition Plan alongside have decreased by 52% since with additional funding from an alliance campaign On-screen of supermarket and food brands. the 2023 Annual Report and Accounts. our baseline year 90 mentoring partnerships This details how we will transform ITV Nearly half a million to meet our ambitious targets, while As a founding signatory of the Climate and 559 hours of mentoring THE RESULTS 69% of our electricity comes Content Pledge, ITV is committed to children have signed up to using our reach and influence to took place in 2023. There have inspire behaviour change in audiences. from renewable energy doing more to reach and engage been 340 partnerships since 77% of parents whose The Daily Mile since ITV began For more information on our climate audiences with climate action content. 1children took part in the school supporting the campaign in action progress, refer to our Shows from Daytime to The Masked the scheme began Reducing our Scope 3 Singer and Love Island incorporate campaigns said they ate more April 20193 2023 Social Purpose Impact report. emissions (influenced by ITV) climate content. vegetables as a result Targets, data and governance ITV’s Scope 3 footprint has decreased by £132m veg sales as a direct Soccer Aid for UNICEF We are continuously improving our data. 17% compared to our baseline year. Biodiversity 1. Data supplied by Creative Accessresult of our Eat Them To 2023 saw the 12th Soccer Aid for UNICEF ITV’s Scope 1 and 2 (controlled by ITV) and Scope 3 (influenced by ITV) Business Travel emissions have We recognise how critical it is for 2. Data supplied by Veg Power Defeat Them campaign since match, marking 17 years of the ITV and increased by 13% compared to 2022, but 3. Daily Mile school registrations, data UNICEF partnership. Teams of former emissions for 2023 were independently businesses to address the biodiversity provided by The Daily Mileit launched in 20192 remain below pre-COVID-19 levels with professional footballers and celebrities assured by ERM Certification and crisis. In preparation for future reporting Verification Services Limited (ERM CVS), a 45% reduction compared to 2019. ITV requirements, we are reviewing the came together to raise money for is introducing prompts to our booking UNICEF’s work helping children who are and we have published an updated Basis actions we can take across our of Reporting document. Our Scope 3 system to encourage colleagues to production activities, supply chain facing conflict, disasters, and other choose lower emission travel. crises around the world. data quality is improving thanks to more engagement and office improvements company–level data into our calculations to manage our nature related and engagement with our supply chain. Purchased Goods and Services are dependencies, risks and opportunities. The match took place in front of over the largest contributor to ITV’s Scope 3 63,000 fans and was broadcast emissions; of these, 65% come from our exclusively on ITV and STV. Reducing our emissions productions. We use BAFTA albert Reducing our Scope 1 and 2 sustainability certification to tackle this THE RESULTS emissions (controlled by ITV) and work with broadcasting peers to ITV’s Scope 1 and 2 emissions are support sector-wide change. £14.6 million raised in total decreasing on track with our targets, from the match and Soccer with a 52% reduction compared to our THE RESULTS Aid week TV specials. Over baseline year. Our market-based Scope £90 million has been raised 2 figures have reduced by 28% since their Our Scope 3 emissions have since the start of Soccer Aid apparent spike in 2022 which arose from decreased by 17% since our limited evidence around renewable baseline year energy sources for several sites at the
36 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 37 S SOCIAL PURPOSE CONTINUED T R A T E G I C R E Content by, with and for everyone, connecting P O Streamlined Energy and Carbon Reporting (SECR) – based on data for the year ended 31 December 2023 R 2023 2022 Change DIVERSITY and reflecting modern audiences. T Global Global Global (excl. Equity & OUR GOALS Scope Description Unit UK (excl. UK) Total UK (excl. UK) Total UK UK) Emissions Champion diversity through our mainstream content, create 1 from gas, Inclusion equitable opportunities at ITV and across the industry, and create refrigerants and owned vehicles tCO2e 1,448 284 1,731* 1,608 335 1,943 -10% -15% an inclusive culture at ITV. Build accessibility and disability equity Electricity emissions into everything we do at ITV. Location- using geographical based location tCO2e 3,827 756 4,582* 4,261 1,101 5,361 -10% -31% 2 SUSTAINABLE DEVELOPMENT GOALS Market- Electricity emissions based using purchased electricity factor tCO2e 1,669 794 2,463* 2,570 868 3,438 -35% -8% Location- Total 1 based Emissions tCO2e 5,274 1,039 6,314 5,869 1,435 7,304 -10% -28% & 2 Market- Total based Emissions tCO2e 3,116 1,078 4,194 4,178 1,202 5,381 -25% -10% Direct & Indirect Energy Consumption kWh 24,793,533 4,417,537 29,211,070 26,975,667 5,501,408 32,477,075 -8% -20% Total revenue £m £4,260 £4,345 -2% Normalised Location- emissions to tCO2e/ Overview Mainstream THE RESULTS 1 based revenue £m 1.238 0.244 1.482 1.351 0.330 1.681 -8% -26% & 2 Market- Normalised In 2023, we have continued to focus on Content based emissions tCO2e/ We increased our to revenue £m 0.732 0.253 0.985 0.962 0.277 1.238 -24% -9% interventions that drive long-lasting commissioning spend with Purchased goods improvements. Highlights include We have committed £80 million of ITV’s 3 and services tCO2e 274,626 291,120 -6% investing £22.8 million of our ringfenced content commissioning budget over diverse-led production 3 Capital goods tCO2e 217 1,844 -88% Diversity Commissioning Fund (DCF) three years (2022 to 2024) to drive companies by more than 50% Fuel and reaching £54.2 million over two years; racial and disability equity within our in the first year of our fund Energy-related Step Up 60 where 185 diverse creatives mainstream content. Alongside this, 3 activities tCO2e 1,856 2,170 -14% the £500,000 Development Fund helps compared to 2021. Upstream have stepped up into more senior transportation production roles over three years; and to develop people and ideas that can 3 and distribution tCO2e 558 1,338 -58% delivering the Amplify senior leadership qualify for the DCF. As well as creating Diversity Commissioning 3 Waste tCO2e 64 62 3% programme for Deaf, Disabled or new content, the fund helped us Fund spend: £54.2 million 3 Business travel tCO e 24,078 21,392 13% Neurodivergent colleagues. continue investing in shows like Sorry, 2 including £41.1 million with 3 Commuting tCO e 8,564 8,113 6% I Didn’t Know, which returned for a 2 diverse-led production Upstream We made progress towards all of our fourth series in 2023. We commissioned 3 leased assets tCO2e 14,361 14,373 -0% 2025 target areas at the All Colleagues diverse-led production companies companies (across 2022 3 Use of sold products tCO2e 487,910 485,171 1% level. At senior levels, progress towards including Douglas Road Productions, to 2023). 3 Investments tCO e 21,312 14,568 46% our targets has been slower, however we Flicker Productions, Fuuse Films, Tall 2 3 Total Scope 3 833,546* 840,150 -1% have made improvements overall. In Story Pictures and TriForce Productions. Diversity Development Total Scope 2023, we ran a successful campaign to Fund spend: Nearly 1, 2 & 3 increase diversity data completion rates We have made impactful improvements (Market- up to 82%. in the lead presenters of our biggest £400,000 has been used to Based) tCO2e 837,740 845,531 -1% shows with Maya Jama (Love Island) and date to fund the development In 2024, we will maintain and build on our AJ Odudu (Big Brother). ITV Studios of over 30 projects including Methodology 24% of our market-based Scope 1 and 2 data Where actual data was not available, ITV success, seeking out more diverse ideas, continues to make groundbreaking 2023 emissions data covers global operations set is based on estimated data, which makes spend data was multiplied by the latest CEDA diverse content including I Kissed A Boy, the pilot of Big Zuu’s 12 Dishes up 1% of the total data set. Estimates are EEIO factors. ITV will continue to monitor and production companies, and talent. We for which we have operational control. We use will continue to collaborate across the the UK’s first dating show for gay men. in 12 Hours leading to it being the Greenhouse Gases (GHG) Protocol calculated from previous consumption trends improve our emissions data quality, with an Corporate Accounting and Reporting and published benchmarks. initial focus on actual supplier specific data. industry to drive systemic change. commissioned for a series. Standard and the latest conversion factors Our Scope 2 footprint decreased in 2023 Energy efficiency initiatives from the Department for Energy Security and because of energy efficiencies in our buildings • A metering project has been launched to Net Zero to calculate Scope 1 and Scope 3 and an increase in renewable energy better understand the source of our energy Business Travel emissions, and the latest procurement. use, helping to proactively reduce energy conversion factors from the International consumption BIG ZUU’S 12 DISHES Energy Agency to calculate Scope 2 emissions The calculation methodology for the Scope 3 IN 12 HOURS in tonnes of carbon dioxide equivalents. category ‘Purchased Goods and Services’ in • The lighting in our Leeds archive has been 2023 includes actual supplier data provided swapped to LED lighting, using an estimated ‘Location-based’ calculations reflect the via the CDP (Carbon Disclosure Project), and quarter of the energy previously being used average emissions that using electricity the use of V6 CEDA EEIO (Environmentally • Photovoltaic panels have been installed at creates in the country where the energy is Extended Economic Input Output) factors, our Emmerdale set as part of a wider solar used, while ‘market-based’ calculations which are the GHG-Protocol recommended installation project reflect emissions based on the energy factors for estimating carbon emissions based contracts ITV has chosen, such as through on spend data. The supplier-specific data • Three boilers and three chillers have been purchasing energy on a renewable tariff. accounted for 3.5% of ITV’s total spend and switched off in Leeds, having been replaced was calculated using an average data method, by newer and more efficient cooling and We have chosen to measure and report our heating systems emissions in total gross emissions in metric apportioning the total direct, indirect and tonnes of CO e per £ revenue, which is the upstream emissions of a company based on 2 their yearly revenue and the proportion to recommended intensity ratio for the sector. which ITV spent with them. * The emissions data provided has undergone limited assurance by ERM CVS.
36 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 37 S SOCIAL PURPOSE CONTINUED T R A T E G I C R E Content by, with and for everyone, connecting P O Streamlined Energy and Carbon Reporting (SECR) – based on data for the year ended 31 December 2023 R 20232022Change DIVERSITY and reflecting modern audiences. T Global Global Global (excl. Equity & OUR GOALS ScopeDescriptionUnitUK(excl. UK)TotalUK(excl. UK)TotalUKUK) Emissions Champion diversity through our mainstream content, create 1from gas, Inclusion equitable opportunities at ITV and across the industry, and create refrigerants and owned vehiclestCO2e 1,448 284 1,731* 1,608 335 1,943 -10%-15% an inclusive culture at ITV. Build accessibility and disability equity Electricity emissions into everything we do at ITV. Location- using geographical basedlocationtCO2e 3,827 756 4,582* 4,261 1,101 5,361 -10%-31% 2 SUSTAINABLE DEVELOPMENT GOALS Market- Electricity emissions basedusing purchased electricity factortCO2e 1,669 794 2,463* 2,570 868 3,438 -35%-8% Location- Total 1 basedEmissionstCO2e 5,274 1,039 6,314 5,869 1,435 7,304 -10%-28% & 2Market- Total basedEmissionstCO2e 3,116 1,078 4,194 4,178 1,202 5,381 -25%-10% Direct & Indirect Energy ConsumptionkWh 24,793,533 4,417,537 29,211,070 26,975,667 5,501,408 32,477,075 -8%-20% Total revenue£m£4,260£4,345-2% Normalised Location- emissions to tCO2e/ Overview Mainstream THE RESULTS 1 basedrevenue£m 1.238 0.244 1.482 1.351 0.330 1.681 -8%-26% & 2Market- Normalised In 2023, we have continued to focus on Content basedemissions tCO2e/ We increased our to revenue£m 0.732 0.253 0.985 0.962 0.277 1.238 -24%-9%interventions that drive long-lasting commissioning spend with Purchased goods improvements. Highlights include We have committed £80 million of ITV’s 3and servicestCO2e274,626291,120-6%investing £22.8 million of our ringfenced content commissioning budget over diverse-led production 3Capital goodstCO2e2171,844-88%Diversity Commissioning Fund (DCF) three years (2022 to 2024) to drive companies by more than 50% Fuel and reaching £54.2 million over two years; racial and disability equity within our in the first year of our fund Energy-related Step Up 60 where 185 diverse creatives mainstream content. Alongside this, 3activitiestCO2e1,8562,170-14% the £500,000 Development Fund helps compared to 2021. Upstream have stepped up into more senior transportation production roles over three years; and to develop people and ideas that can 3and distributiontCO2e5581,338-58%delivering the Amplify senior leadership qualify for the DCF. As well as creating Diversity Commissioning 3WastetCO2e64623% programme for Deaf, Disabled or new content, the fund helped us Fund spend: £54.2 million 3Business traveltCO e24,07821,39213%Neurodivergent colleagues. continue investing in shows like Sorry, 2 including £41.1 million with 3CommutingtCO e8,5648,1136% I Didn’t Know, which returned for a 2 diverse-led production Upstream We made progress towards all of our fourth series in 2023. We commissioned 3leased assetstCO2e14,36114,373-0%2025 target areas at the All Colleagues diverse-led production companies companies (across 2022 3Use of sold productstCO2e487,910485,1711%level. At senior levels, progress towards including Douglas Road Productions, to 2023). 3InvestmentstCO e21,31214,56846%our targets has been slower, however we Flicker Productions, Fuuse Films, Tall 2 3Total Scope 3833,546*840,150-1%have made improvements overall. In Story Pictures and TriForce Productions. Diversity Development Total Scope 2023, we ran a successful campaign to Fund spend: Nearly 1, 2 & 3 increase diversity data completion rates We have made impactful improvements (Market- up to 82%. in the lead presenters of our biggest £400,000 has been used to Based)tCO2e837,740845,531-1% shows with Maya Jama (Love Island) and date to fund the development In 2024, we will maintain and build on our AJ Odudu (Big Brother). ITV Studios of over 30 projects including Methodology24% of our market-based Scope 1 and 2 data Where actual data was not available, ITV success, seeking out more diverse ideas, continues to make groundbreaking 2023 emissions data covers global operations set is based on estimated data, which makes spend data was multiplied by the latest CEDA diverse content including I Kissed A Boy, the pilot of Big Zuu’s 12 Dishes up 1% of the total data set. Estimates are EEIO factors. ITV will continue to monitor and production companies, and talent. We for which we have operational control. We use will continue to collaborate across the the UK’s first dating show for gay men. in 12 Hours leading to it being the Greenhouse Gases (GHG) Protocol calculated from previous consumption trends improve our emissions data quality, with an Corporate Accounting and Reporting and published benchmarks. initial focus on actual supplier specific data.industry to drive systemic change. commissioned for a series. Standard and the latest conversion factors Our Scope 2 footprint decreased in 2023 Energy efficiency initiatives from the Department for Energy Security and because of energy efficiencies in our buildings • A metering project has been launched to Net Zero to calculate Scope 1 and Scope 3 and an increase in renewable energy better understand the source of our energy Business Travel emissions, and the latest procurement. use, helping to proactively reduce energy conversion factors from the International consumption BIG ZUU’S 12 DISHES Energy Agency to calculate Scope 2 emissions The calculation methodology for the Scope 3 IN 12 HOURS in tonnes of carbon dioxide equivalents. category ‘Purchased Goods and Services’ in • The lighting in our Leeds archive has been 2023 includes actual supplier data provided swapped to LED lighting, using an estimated ‘Location-based’ calculations reflect the via the CDP (Carbon Disclosure Project), and quarter of the energy previously being used average emissions that using electricity the use of V6 CEDA EEIO (Environmentally • Photovoltaic panels have been installed at creates in the country where the energy is Extended Economic Input Output) factors, our Emmerdale set as part of a wider solar used, while ‘market-based’ calculations which are the GHG-Protocol recommended installation project reflect emissions based on the energy factors for estimating carbon emissions based contracts ITV has chosen, such as through on spend data. The supplier-specific data • Three boilers and three chillers have been purchasing energy on a renewable tariff. accounted for 3.5% of ITV’s total spend and switched off in Leeds, having been replaced was calculated using an average data method, by newer and more efficient cooling and We have chosen to measure and report our heating systems emissions in total gross emissions in metric apportioning the total direct, indirect and tonnes of CO e per £ revenue, which is the upstream emissions of a company based on 2their yearly revenue and the proportion to recommended intensity ratio for the sector. which ITV spent with them. * The emissions data provided has undergone limited assurance by ERM CVS.
38 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 39 S SOCIAL PURPOSE CONTINUED T R A T E G I C R E P O Targets for 2025 R T Improve representation in ITV’s workforce, on-screen and off-screen by the end of 2025. Disability Class Ethnicity Gender LGBTQ+ 12% 33% 20% 50% 7% Deaf, Disabled, from working class People of Colour at Women Lesbian, Gay, Neurodivergent, backgrounds the ‘All colleagues’ Bisexual, ELLIE SIMMONDS: or with a long-term level at ITV Transgender or FINDING MY health condition Queer SECRET FAMILY 15% People of Colour at senior levels Creating Inclusive Culture Accessibility and In 2023, at an All colleagues and Manager level, we have already exceeded many of our 2025 representation targets, as detailed Opportunities Our first colleague network launched in isability Equity D in the following table. Our diversity data campaign was successful in increasing the number of colleagues sharing their data and, 2012, and since then they have been vital while this has given us a clearer picture of our workforce, it has also resulted in an increase in the proportion of colleagues from In 2023, Fresh Cuts, which supports in shaping our inclusive culture. Our five Accessibility forms the critical professional backgrounds and a decrease in those from working class backgrounds, which is below our target across all levels. up-and-coming Black filmmakers to Colleague Networks are Able, Balance, foundation of our strategy. We launched In 2024, we will continue to work to improve representation in ITV’s workforce, on and off-screen, sharpening our focus on Deaf, direct their first film for ITV as part of Embrace, Pride and the Women’s the world’s first free 24/7 British Sign Disabled and Neurodivergent leads on-screen. We will also maintain our focus on representation at senior levels where we have Black History Month, returned for a Network. Some networks have global Language channel on ITVX. ITV is an further to improve across all characteristics. second year. We ran a range of initiatives branches outside the UK. Network chairs active member of the TV Access Project for 21 promising diverse writers. We also sit on our Inclusion and Diversity Council (TAP), a joint initiative created by the UK diversity data launched initiatives such as Amplify: The chaired by ITV’s CEO. They share UK’s main broadcasters and streamers Companies, which nurtures and elevates feedback on colleagues’ experiences to embed accessibility and achieve full ITV UK workforce On and off-screen ten production companies owned by with senior leadership and the DEI team. inclusion for Disabled people by 2030. Senior On-screen Off-screen All colleagues Managers Leaders (Diamond Sixth (Diamond Sixth People of Colour and Deaf, Disabled, Characteristic 2025 Target (2023) (2023) (2023)1 Cut, 2021-22)2 Cut, 2021-22)2 or Neurodivergent leaders. In our inaugural line manager survey, We have built accessibility into our Age 50+ – 20.9% 26.9% 52.5% 23.7% 21.1% 85% of colleagues agreed that their productions from the start. We designed We created Production Principles in managers build an inclusive team the Big Brother house with accessible Deaf, Disabled or 2021 as part of the commissioning environment. In 2024, we will work to ramps and a stair lift and remodelled the Neurodivergent 12% 12.3% 10.5% 7.6% 8.6% 5.5% process to embed DEI practices in every improve the experiences of Black, Mixed Ant & Dec’s Saturday Night Takeaway set 20% at the ‘All programme ITV commissions, and we Race/Dual Heritage and other minority to include visible ramps as the main colleagues’ level, 15% People of Colour at senior levels 15.2% 11.6% 14.4% 23.6% 16.0% reviewed and refreshed these in 2023. ethnic colleagues as ITV’s engagement stage entrance. and culture survey found that these Lesbian, Gay, Bisexual, Trans or Queer (LGBTQ+)3 7% 9.6% 8.5% 7.0% 24.0% 20.7% THE RESULTS groups feel less included. THE RESULTS Women 50% 53.2% 50.3% 49.3% 49.5% 46.4% 475 productions have made Our Cultural Advisory Council is now ITV Studios hired our Working class background4 33% 28.9% 31.5% 20.4% N/A4 N/A4 commitments to embed in its third year. These independent first in-house Access Our UK workforce figures include UK permanent and PAYE fixed-term employees only as of 31 December 2023 (it does not include freelance, contingent or agency external advisers from a range of workers) and are based on the number of employees who chose to share diversity data, including those who select ‘prefer not to say’. Due to rounding, figures do not DEI practices into their industries advise and challenge us Coordinator who embeds always total 100%. programmes through the on our DEI plans. accessibility in productions 1. Our Senior Leader population is a defined group of approximately 220 colleagues including the Management Board, colleagues who report to a Management Board member and/or are on the list of top FTE salaries (excluding on-screen talent). Our Manager population is approximately 900 colleagues distinct from our Senior Production Principles. across all our in-house drama Leaders. We updated these categories in 2023 following guidance from Ofcom – while there is some overlap with our previous categories, these figures are not THE RESULTS labels. directly comparable to previous reports 2. On-screen and off-screen representation is measured using Diamond, an industry-wide system for monitoring diversity in broadcasting. This data is from the 185 diverse creatives latest Sixth Cut report. Diamond collects diversity data from cast, contributors, crew and production companies. Diamond does not currently measure class / stepped up into more senior Our colleague networks ITV developed new Event socio-economic background, but we are ensuring this will be included in the current project to update Diamond. The LGBTQ+ figures combine the Diamond figures continue to grow with over for LGB+ and transgender populations. More information about Diamond can be found at: www.creativediversitynetwork.com/diamond production roles through Inclusion and Access 3. Our LGBTQ+ target combines sexual orientation and gender identity. We measure these separately and combine these categories Step Up 60. 1,900 colleagues part of at least Guidelines, which help us, our 4. When analysing our class data, we excluded responses from people who answered ‘don’t know’, ‘not applicable’, ‘prefer not to say’ etc. This enables us to compare one network and a total of over with national benchmarks. This method is slightly different to how we analyse other diversity characteristics (based on all colleagues who share data, including partners, and suppliers make those who respond ‘prefer not to say’) as those questions do not have a ‘don’t know’ option. We followed expert advice on how to analyse and interpret this 3,000 members across all five. information. Class is not measured on-screen and off-screen through Diamond yet, so our 33% target applies to our workforce including senior leaders our biggest events inclusive Note: Under the Companies Act 2006, we are required to report on the gender breakdown of our senior managers – this statutory definition is broader than our and accessible. definition of Senior Leaders. Of our global workforce of 6,743 who disclosed their gender (3,003 men, 3,740 women), 357 were senior managers (190 men, 167 women), Over 450 colleagues which includes senior leaders and directors on the Boards of undertakings of the Group (to the extent there are additional individuals), but exclude individuals who sit as directors on the Board of the Company. completed DEI training, with ITV has published its Gender, Ethnicity, Disability and LGBTQ+ Pay Gap Report: www.itvplc.com/investors/governance over 180 senior leaders and For more information on our Diversity Acceleration Plan, including further data such as intersectional data and specific breakdowns, refer to: www.itv.com/inclusion/ articles/diversity-acceleration-plan managers trained across Australia, Germany and the Netherlands. Results showed improved understanding, awareness and confidence across all locations.
38 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 39 S SOCIAL PURPOSE CONTINUED T R A T E G I C R E P O Targets for 2025 R T Improve representation in ITV’s workforce, on-screen and off-screen by the end of 2025. Disability Class Ethnicity Gender LGBTQ+ 12% 33% 20% 50% 7% Deaf, Disabled, from working class People of Colour at Women Lesbian, Gay, Neurodivergent, backgrounds the ‘All colleagues’ Bisexual, ELLIE SIMMONDS: or with a long-term level at ITV Transgender or FINDING MY health condition Queer SECRET FAMILY 15% People of Colour at senior levels Creating Inclusive CultureAccessibility and In 2023, at an All colleagues and Manager level, we have already exceeded many of our 2025 representation targets, as detailed OpportunitiesOur first colleague network launched in isability Equity D in the following table. Our diversity data campaign was successful in increasing the number of colleagues sharing their data and, 2012, and since then they have been vital while this has given us a clearer picture of our workforce, it has also resulted in an increase in the proportion of colleagues from In 2023, Fresh Cuts, which supports in shaping our inclusive culture. Our five Accessibility forms the critical professional backgrounds and a decrease in those from working class backgrounds, which is below our target across all levels. up-and-coming Black filmmakers to Colleague Networks are Able, Balance, foundation of our strategy. We launched In 2024, we will continue to work to improve representation in ITV’s workforce, on and off-screen, sharpening our focus on Deaf, direct their first film for ITV as part of Embrace, Pride and the Women’s the world’s first free 24/7 British Sign Disabled and Neurodivergent leads on-screen. We will also maintain our focus on representation at senior levels where we have Black History Month, returned for a Network. Some networks have global Language channel on ITVX. ITV is an further to improve across all characteristics. second year. We ran a range of initiatives branches outside the UK. Network chairs active member of the TV Access Project for 21 promising diverse writers. We also sit on our Inclusion and Diversity Council (TAP), a joint initiative created by the UK diversity data launched initiatives such as Amplify: The chaired by ITV’s CEO. They share UK’s main broadcasters and streamers Companies, which nurtures and elevates feedback on colleagues’ experiences to embed accessibility and achieve full ITV UK workforce On and off-screen ten production companies owned by with senior leadership and the DEI team.inclusion for Disabled people by 2030. Senior On-screen Off-screen All colleagues Managers Leaders (Diamond Sixth (Diamond Sixth People of Colour and Deaf, Disabled, Characteristic 2025 Target (2023) (2023) (2023)1 Cut, 2021-22)2 Cut, 2021-22)2 or Neurodivergent leaders.In our inaugural line manager survey, We have built accessibility into our Age 50+ – 20.9% 26.9% 52.5% 23.7% 21.1% 85% of colleagues agreed that their productions from the start. We designed We created Production Principles in managers build an inclusive team the Big Brother house with accessible Deaf, Disabled or 2021 as part of the commissioning environment. In 2024, we will work to ramps and a stair lift and remodelled the Neurodivergent 12% 12.3% 10.5% 7.6% 8.6% 5.5% process to embed DEI practices in every improve the experiences of Black, Mixed Ant & Dec’s Saturday Night Takeaway set 20% at the ‘All programme ITV commissions, and we Race/Dual Heritage and other minority to include visible ramps as the main colleagues’ level, 15% People of Colour at senior levels 15.2% 11.6% 14.4% 23.6% 16.0% reviewed and refreshed these in 2023. ethnic colleagues as ITV’s engagement stage entrance. and culture survey found that these Lesbian, Gay, Bisexual, Trans or Queer (LGBTQ+)3 7% 9.6% 8.5% 7.0% 24.0% 20.7% THE RESULTSgroups feel less included. THE RESULTS Women 50% 53.2% 50.3% 49.3% 49.5% 46.4% 475 productions have made Our Cultural Advisory Council is now ITV Studios hired our Working class background4 33% 28.9% 31.5% 20.4% N/A4 N/A4 commitments to embed in its third year. These independent first in-house Access Our UK workforce figures include UK permanent and PAYE fixed-term employees only as of 31 December 2023 (it does not include freelance, contingent or agency external advisers from a range of workers) and are based on the number of employees who chose to share diversity data, including those who select ‘prefer not to say’. Due to rounding, figures do not DEI practices into their industries advise and challenge us Coordinator who embeds always total 100%. programmes through the on our DEI plans.accessibility in productions 1. Our Senior Leader population is a defined group of approximately 220 colleagues including the Management Board, colleagues who report to a Management Board member and/or are on the list of top FTE salaries (excluding on-screen talent). Our Manager population is approximately 900 colleagues distinct from our Senior Production Principles.across all our in-house drama Leaders. We updated these categories in 2023 following guidance from Ofcom – while there is some overlap with our previous categories, these figures are not THE RESULTSlabels. directly comparable to previous reports 2. On-screen and off-screen representation is measured using Diamond, an industry-wide system for monitoring diversity in broadcasting. This data is from the 185 diverse creatives latest Sixth Cut report. Diamond collects diversity data from cast, contributors, crew and production companies. Diamond does not currently measure class / stepped up into more senior Our colleague networks ITV developed new Event socio-economic background, but we are ensuring this will be included in the current project to update Diamond. The LGBTQ+ figures combine the Diamond figures continue to grow with over for LGB+ and transgender populations. More information about Diamond can be found at: www.creativediversitynetwork.com/diamond production roles through Inclusion and Access 3. Our LGBTQ+ target combines sexual orientation and gender identity. We measure these separately and combine these categories Step Up 60.1,900 colleagues part of at least Guidelines, which help us, our 4. When analysing our class data, we excluded responses from people who answered ‘don’t know’, ‘not applicable’, ‘prefer not to say’ etc. This enables us to compare one network and a total of over with national benchmarks. This method is slightly different to how we analyse other diversity characteristics (based on all colleagues who share data, including partners, and suppliers make those who respond ‘prefer not to say’) as those questions do not have a ‘don’t know’ option. We followed expert advice on how to analyse and interpret this 3,000 members across all five. information. Class is not measured on-screen and off-screen through Diamond yet, so our 33% target applies to our workforce including senior leaders our biggest events inclusive Note: Under the Companies Act 2006, we are required to report on the gender breakdown of our senior managers – this statutory definition is broader than our and accessible. definition of Senior Leaders. Of our global workforce of 6,743 who disclosed their gender (3,003 men, 3,740 women), 357 were senior managers (190 men, 167 women), Over 450 colleagues which includes senior leaders and directors on the Boards of undertakings of the Group (to the extent there are additional individuals), but exclude individuals who sit as directors on the Board of the Company. completed DEI training, with ITV has published its Gender, Ethnicity, Disability and LGBTQ+ Pay Gap Report: www.itvplc.com/investors/governance over 180 senior leaders and For more information on our Diversity Acceleration Plan, including further data such as intersectional data and specific breakdowns, refer to: www.itv.com/inclusion/ articles/diversity-acceleration-plan managers trained across Australia, Germany and the Netherlands. Results showed improved understanding, awareness and confidence across all locations.
40 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 41 S T OUR PEOPLE R A T E G I Management development Building an inclusive culture Our line manager survey identified C R management strengths in wellbeing, E Throughout 2023 we have refreshed our line Ensuring we have an inclusive environment P technical capability and resilience. It O manager development offering, introducing where everyone can be their authentic self R a series of in-person Leadership workshops and thrive, is critical to the delivery of our identified some areas of focus for future T sponsored by our CEO. This included: strategic priorities. development for managers to enable them to give specific feedback that can be • The Art of Brilliant Leadership – centred on Our inclusive culture ensures that ITV actioned regularly and help colleagues follow positive psychology and developing high remains a great place to work for everyone through on innovative ideas. The previously performing teams and supports the delivery of our strategic described Leadership workshops were • Resilient Leader – giving leaders the priorities and our Diversity Acceleration Plan. designed as a result. awareness and tools to manage their We value the creativity that diversity brings resilience and equip their teams with the to our business and continue to provide Mental health, wellbeing and support they need to thrive in a changing support and development for leaders and duty of care environment managers to build inclusive teams through a Supporting the mental and physical health of series of training programmes being; colleagues remains a key priority, particularly Inclusive Hiring and Inclusive Leader, as well in light of the changing ways of working. THE ITV WAY as two specific programmes on Race Fluency THE heart The ITV Ways of working are embedded and Creating Disability Inclusion. The Mental Health Advisory Group (MHAG), across all of our processes from chaired by Baroness Ruth Davidson in 2023 recruitment and selection, to ITV is committed to recruiting, retaining and and Pat Younge from 2024, continued to development and performance developing disabled people with the meet regularly throughout the year. The management. They enable all Department for Work and Pensions renewing MHAG membership includes experts from OF ITV colleagues to understand our ways of our Disability Confident Leader leading mental health charities such as Mind, working and what we expect at ITV in accreditation. Through this, we commit to YoungMinds and SAMH, as well as AND SOUL order to be commercially successful. giving full and fair consideration to the independent advisers and representatives Our ITV Way covers: employment of people with a disability or from across ITV and STV. health condition, and guarantee an interview Make it brilliant to candidates with a disability who meet the In 2023 the MHAG discussed a wide range of Creativity for everyone minimum requirement for a role. We also subjects, including; building line manager work with specialist providers to ensure that capability to have open, honest and effective the recruitment process, and all training, wellbeing conversations, the new Employee Our people are the heart of ITV; from the diary room All colleagues have access to online, Make it new career development and promotion Assistance Programme (now extended to on-demand and in-person development Openness to change, without barriers opportunities are accessible and inclusive to freelancers and international colleagues) on Big Brother, developing the technology to power workshops. This enables us to continue to all colleagues with a disability and that they and the role of leaders in managing change. ITVX, to the creation of new formats internationally, build leadership and line manager capability Make it together have equal career opportunities for growth ITV’s important role as a convenor of mental and support personal skills development, and progression. We continue to be health conversations, mental health trends we empower and support them to build and grow wellbeing and resilience for all colleagues. Collaborating and embracing members of the ‘Valuable 500,’ the global d and industry challenges has been at the ifferences business collective made up of 500 CEOs their skills and capabilities, for now, and the future. Over the last year, we have created focused forefront of our social purpose campaigns in and their organisations innovating together 2023, including the award-winning Britain This will ensure ITV’s enduring legacy and continued development opportunities to build the Aligned with the ITV Way, we have a set for disability inclusion. In 2024, we will take Get Talking. digital and data capabilities in support of of behavioural expectations for all part in the Generation Valuable leadership success, delivering its strategic priorities, within a the delivery of our digital transformation, colleagues. Our ITV behaviours provide programme where one disabled ITV By providing support, guidance and challenge an example being the second series launch a framework for all colleagues to colleague will be part of their global the MHAG helps ensure that ITV’s creative and inclusive culture where everyone thrives of ITV Fast Forward, a collection of one-hour understand what’s expected of them in leadership programme and will be mentored commitment to the mental health and and delivers their best work. immersion sessions exploring the use of terms of how they deliver as well as by our CEO. wellbeing of colleagues, production staff and Generative AI, Design Thinking, Machine what they deliver in their roles. The freelancers, programme participants and the Learning and digital disruptors. behaviours underpin how we manage Refer to page 37 for more information on our viewing public remains industry-leading. performance and support career and Diversity, Equality and Inclusion strategy. We continue to equip leaders, managers and development conversations. Additionally, our Duty of Care Operating Composition of our workforce This is demonstrated through a range of colleagues with the tools and resources to Engagement development opportunities, including the manage a hybrid workforce through our Board ensures that ITV’s duty of care Our workforce, or ‘colleagues’ are a mix of ITV Academy. This provides development The voice of our colleagues is an integral part processes continue to evolve. Refer to pages permanent and fixed-term employees, Smart working framework which centres Attracting and retaining talent is critical to 81 and 98 for further information about the programmes for our production colleagues, on a ‘value exchange’, considering business delivering our More Than TV strategy and our of how we measure and assess our culture, freelancers (individuals who provide their traineeships and entry-level pathways, helping us to identify what is important, how role of the Duty of Care Operating Board and services on a specific project or programme and team requirements balanced with an digital transformation. In 2023 we continued its activities in 2023. aimed at addressing current and future individual’s preferred working pattern. our Digital Skills Programme to address it feels to work at ITV and agreeing on for a finite period of time); and contractors skills gaps in partnership with ScreenSkills, organisational wide and locally driven actions (companies or suppliers who provide a shorter-term resourcing gaps as well as build as a result. The importance of raising workplace concerns service to ITV) all playing their part. Creative Access and the National Film Our Talking Performance approach, based on the digital capabilities we need across and Television School. up to four performance conversations a year, and ‘speaking up’ has been re-emphasised to all technology, product and data over the next 2023 saw four key engagement activities: our colleagues, to ensure they have awareness Investing in the development continues to be a key priority. We have used three to five years. of, and feel empowered to, raise concerns Refer to page 34 for further details. data from our employee engagement and • Creation and launch of a line manager of our people culture surveys to further strengthen our through our Speaking Up framework, refer to We offer apprenticeships in ITV Studios and Our approach to attracting and retaining survey to understand our colleagues’ view pages 99 and 113. We have committed to building a high Media & Entertainment, as well as across our approach to performance management. talent and information on how the of line manager capability performing, creative, innovative and diverse Corporate Functions. As a result of these actions, we saw positive Remuneration Committee considers • A series of cultural deep-dive focus groups For further information on how the Board and workforce by adopting a comprehensive and results in the 2023 Engagement and workforce remuneration is detailed on externally facilitated by Inclusive management engage with the workforce, refer inclusive approach to investing in and Our ‘open to all students’ work experience Culture Survey; page 117. Employers to page 94. rewarding all our colleagues. campaigns have positively impacted • 72% of colleagues responded favourably • Bi-annual engagement and culture survey participants and managers alike, whilst to: ‘My manager gives me useful feedback for employees supporting our Diversity, Equality and on how well I am performing’ • Creation and launch of an engagement Inclusion strategy. Our work experience • 84% of colleagues responded favourably and culture survey for freelancers placements offer a launchpad for students to: ‘I know what I need to do to be to enhance their readiness for a place on our successful in my role.’ apprenticeship programme.
40 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 41 S T OUR PEOPLE R A T E G I Management development Building an inclusive culture Our line manager survey identified C R management strengths in wellbeing, E Throughout 2023 we have refreshed our line Ensuring we have an inclusive environment P technical capability and resilience. It O manager development offering, introducing where everyone can be their authentic self R a series of in-person Leadership workshops and thrive, is critical to the delivery of our identified some areas of focus for future T sponsored by our CEO. This included: strategic priorities. development for managers to enable them to give specific feedback that can be • The Art of Brilliant Leadership – centred on Our inclusive culture ensures that ITV actioned regularly and help colleagues follow positive psychology and developing high remains a great place to work for everyone through on innovative ideas. The previously performing teams and supports the delivery of our strategic described Leadership workshops were • Resilient Leader – giving leaders the priorities and our Diversity Acceleration Plan. designed as a result. awareness and tools to manage their We value the creativity that diversity brings resilience and equip their teams with the to our business and continue to provide Mental health, wellbeing and support they need to thrive in a changing support and development for leaders and duty of care environment managers to build inclusive teams through a Supporting the mental and physical health of series of training programmes being; colleagues remains a key priority, particularly Inclusive Hiring and Inclusive Leader, as well in light of the changing ways of working. THE ITV WAY as two specific programmes on Race Fluency THE heart The ITV Ways of working are embedded and Creating Disability Inclusion. The Mental Health Advisory Group (MHAG), across all of our processes from chaired by Baroness Ruth Davidson in 2023 recruitment and selection, to ITV is committed to recruiting, retaining and and Pat Younge from 2024, continued to development and performance developing disabled people with the meet regularly throughout the year. The management. They enable all Department for Work and Pensions renewing MHAG membership includes experts from OF ITV colleagues to understand our ways of our Disability Confident Leader leading mental health charities such as Mind, working and what we expect at ITV in accreditation. Through this, we commit to YoungMinds and SAMH, as well as AND SOUL order to be commercially successful. giving full and fair consideration to the independent advisers and representatives Our ITV Way covers: employment of people with a disability or from across ITV and STV. health condition, and guarantee an interview Make it brilliant to candidates with a disability who meet the In 2023 the MHAG discussed a wide range of Creativity for everyone minimum requirement for a role. We also subjects, including; building line manager work with specialist providers to ensure that capability to have open, honest and effective the recruitment process, and all training, wellbeing conversations, the new Employee Our people are the heart of ITV; from the diary room All colleagues have access to online, Make it new career development and promotion Assistance Programme (now extended to on-demand and in-person development Openness to change, without barriers opportunities are accessible and inclusive to freelancers and international colleagues) on Big Brother, developing the technology to power workshops. This enables us to continue to all colleagues with a disability and that they and the role of leaders in managing change. ITVX, to the creation of new formats internationally, build leadership and line manager capability Make it together have equal career opportunities for growth ITV’s important role as a convenor of mental and support personal skills development, and progression. We continue to be health conversations, mental health trends we empower and support them to build and grow wellbeing and resilience for all colleagues. Collaborating and embracing members of the ‘Valuable 500,’ the global d and industry challenges has been at the ifferences business collective made up of 500 CEOs their skills and capabilities, for now, and the future. Over the last year, we have created focused forefront of our social purpose campaigns in and their organisations innovating together 2023, including the award-winning Britain This will ensure ITV’s enduring legacy and continued development opportunities to build the Aligned with the ITV Way, we have a set for disability inclusion. In 2024, we will take Get Talking. digital and data capabilities in support of of behavioural expectations for all part in the Generation Valuable leadership success, delivering its strategic priorities, within a the delivery of our digital transformation, colleagues. Our ITV behaviours provide programme where one disabled ITV By providing support, guidance and challenge an example being the second series launch a framework for all colleagues to colleague will be part of their global the MHAG helps ensure that ITV’s creative and inclusive culture where everyone thrives of ITV Fast Forward, a collection of one-hour understand what’s expected of them in leadership programme and will be mentored commitment to the mental health and and delivers their best work.immersion sessions exploring the use of terms of how they deliver as well as by our CEO. wellbeing of colleagues, production staff and Generative AI, Design Thinking, Machine what they deliver in their roles. The freelancers, programme participants and the Learning and digital disruptors. behaviours underpin how we manage Refer to page 37 for more information on our viewing public remains industry-leading. performance and support career and Diversity, Equality and Inclusion strategy. We continue to equip leaders, managers and development conversations. Additionally, our Duty of Care Operating Composition of our workforceThis is demonstrated through a range of colleagues with the tools and resources to Engagement development opportunities, including the manage a hybrid workforce through our Board ensures that ITV’s duty of care Our workforce, or ‘colleagues’ are a mix of ITV Academy. This provides development The voice of our colleagues is an integral part processes continue to evolve. Refer to pages permanent and fixed-term employees, Smart working framework which centres Attracting and retaining talent is critical to 81 and 98 for further information about the programmes for our production colleagues, on a ‘value exchange’, considering business delivering our More Than TV strategy and our of how we measure and assess our culture, freelancers (individuals who provide their traineeships and entry-level pathways, helping us to identify what is important, how role of the Duty of Care Operating Board and services on a specific project or programme and team requirements balanced with an digital transformation. In 2023 we continued its activities in 2023. aimed at addressing current and future individual’s preferred working pattern.our Digital Skills Programme to address it feels to work at ITV and agreeing on for a finite period of time); and contractors skills gaps in partnership with ScreenSkills, organisational wide and locally driven actions (companies or suppliers who provide a shorter-term resourcing gaps as well as build as a result. The importance of raising workplace concerns service to ITV) all playing their part. Creative Access and the National Film Our Talking Performance approach, based on the digital capabilities we need across and Television School. up to four performance conversations a year, and ‘speaking up’ has been re-emphasised to all technology, product and data over the next 2023 saw four key engagement activities: our colleagues, to ensure they have awareness Investing in the development continues to be a key priority. We have used three to five years. of, and feel empowered to, raise concerns Refer to page 34 for further details.data from our employee engagement and • Creation and launch of a line manager of our peopleculture surveys to further strengthen our through our Speaking Up framework, refer to We offer apprenticeships in ITV Studios and Our approach to attracting and retaining survey to understand our colleagues’ view pages 99 and 113. We have committed to building a high Media & Entertainment, as well as across our approach to performance management. talent and information on how the of line manager capability performing, creative, innovative and diverse Corporate Functions. As a result of these actions, we saw positive Remuneration Committee considers • A series of cultural deep-dive focus groups For further information on how the Board and workforce by adopting a comprehensive and results in the 2023 Engagement and workforce remuneration is detailed on externally facilitated by Inclusive management engage with the workforce, refer inclusive approach to investing in and Our ‘open to all students’ work experience Culture Survey;page 117. Employers to page 94. rewarding all our colleagues.campaigns have positively impacted • 72% of colleagues responded favourably • Bi-annual engagement and culture survey participants and managers alike, whilst to: ‘My manager gives me useful feedback for employees supporting our Diversity, Equality and on how well I am performing’ • Creation and launch of an engagement Inclusion strategy. Our work experience • 84% of colleagues responded favourably and culture survey for freelancers placements offer a launchpad for students to: ‘I know what I need to do to be to enhance their readiness for a place on our successful in my role.’ apprenticeship programme.
42 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 43 S T ALTERNATIVE PERFORMANCE MEASURES R A T E G I The Annual Report and Accounts includes both statutory and adjusted Restructuring and Amortisation and impairment Net financing costs C R E reorganisation costs Amortisation and any initial impairment of Net financing costs are adjusted to reflect P measures (Alternative Performance Measures or APMs), the laer of which, O Where there has been a material change in assets acquired through business the underlying cash cost of interest for the R in management’s view, reflect the underlying performance of the business the organisational structure of a business combinations and investments are not business, providing a more meaningful T area or a material initiative, these costs are included within adjusted earnings. As these comparison of how the business is managed and provide a more meaningful comparison of how the business is highlighted and are excluded from our costs are acquisition-related, and in line with and funded on a day-to-day basis. The managed and measured on a day-to-day basis. adjusted measures. These costs arise from our treatment of other acquisition-related adjustments made remove the impact of significant initiatives to reduce the ongoing costs, we consider them to be capital in mark-to-market gains or losses on swaps cost base and improve efficiency in the nature as they do not reflect the underlying and foreign exchange, one-off fees and business to enable the delivery of our trading performance of the Group. premiums relating to the buyback of bonds, Key adjustments for EBITA, Exceptional items strategic priorities. We consider each Amortisation of software licences and exceptional interest and other finance costs Our APMs and KPIs are aligned with adjusted EBITA, profit before project individually to determine whether development is included within our adjusted on acquisitions, imputed pension interest our strategy and business divisions These items are excluded to reflect its size and nature warrant separate profit before tax as management consider and other financial gains and losses that and together are used to measure the tax and EPS performance in a consistent manner and in treatment and disclosure. these assets to be core to supporting the do not reflect the relevant interest cash performance of our business and form EBITA is calculated by adjusting statutory line with how the business is managed and operations of the business. cost to the business and are not yet the basis of the performance measures operating profit for operating exceptional measured on a day‑to‑day basis. They are realised balances. for remuneration. Adjusted results items and amortisation and impairment. typically material amounts related to costs, exclude certain items because, gains or losses arising from events that are if included, they could distort the Adjusted EBITA is calculated by adding back not considered part of the core operations of Reconciliation between statutory and adjusted results understanding of our performance high‑end production tax credits to EBITA. the business, though they may cross several for the period and the comparability Further adjustments, which include the gain/ accounting periods. These include, but are 2023 2023 2023 2022 2022 2022 1. £85 million (2022: £49 million) adjustment relates to between periods. APMs are not defined loss on the sale of non‑current assets, not limited to, costs directly related to Twelve months to Statutory Adjustments Adjusted Statutory Adjustments Adjusted production tax credits which we consider to be a acquisition activity, costs related to major 31 December £m £m £m £m £m £m contribution to production costs and working capital in terms under IFRS and may not be amortisation and impairment of assets EBITA1 404 85 489 668 49 717 nature rather than a corporate tax item. EBITA is not a comparable with similarly titled acquired through business combinations and reorganisation and restructuring statutory measure measures reported by other companies. investments, and certain net financing costs, programmes, material onerous contracts, Exceptional items 2. Exceptional items of £77 million (2022: £65 million) significant impairments, employee‑related 2 largely relate to acquisition-related expenses, are made to remove their effect from (operating) (77) 77 – (65) 65 – tax provisions related to earlier financial restructuring, transformation and property move As adjusted results exclude certain adjusted profit before tax and adjusted EPS. Amortisation and costs. Refer to the Finance Review items (such as significant legal, major The tax effects of all these adjustments are periods (IR35) and other items such as legal impairment3 (89) 25 (64) (84) 57 (27) 3. £25 million (2022: £57 million) adjustment relates to restructuring and transaction items), reflected in the adjusted tax charge. These settlements and non‑routine legal costs (e.g. amortisation and impairment of assets acquired legal costs related to items which are Operating profit 238 187 425 519 171 690 through business combinations and investments. We they should not be regarded as a adjustments are detailed below. Net financing costs4 (45) 16 (29) (26) – (26) include only amortisation on purchased intangibles, complete picture of the Group’s themselves considered to be exceptional such as software within adjusted profit before tax financial performance. The exclusion of Adjusted EBITDA, which is used to calculate items). We also adjust for the tax effect of Share of profits on 4. £16 million (2022: £nil) adjustment is for non-cash these items. JVs and associates – – – 8 – 8 interest cost. This provides a more meaningful adjusting items may result in adjusted the Group’s leverage, is calculated by adding comparison of how the business is managed and earnings being materially higher or lower back depreciation to adjusted EBITA. Profit before tax 193 203 396 501 171 672 funded on a day-to-day basis See note 2.2 to the financial statements 5. Tax adjustments are the tax effects of the adjustments than statutory earnings. In particular, for further detail. Tax5 16 (101) (85) (66) (69) (135) made to reconcile profit before tax and adjusted profit when significant impairments, Production tax credits Profit after tax 209 102 311 435 102 537 before tax. A full reconciliation is included in the restructuring charges and legal costs Acquisition-related costs Finance Review are excluded, adjusted earnings will be The ability to access tax credits, which are Non-controlling 6. Weighted average diluted number of shares in the rebates based on production spend, is We structure our acquisitions with earnouts interests 1 – 1 (7) – (7) period was 4,059 million (2022: 4,046 million) higher than statutory earnings. fundamental to our ITV Studios business or put and call options, to allow part of the Earnings 210 102 312 428 102 530 The Audit and Risk Committee has across the world when assessing the viability consideration to be based on the future of investment decisions, especially with performance of the business as well as Shares (million), oversight of ITV’s APMs and actively regard to drama and comedy. ITV reports tax weighted average 4,023 – 4,023 4,010 – 4,010 reviews, challenges, revises and to lock in and incentivise creative talent. credits generated in the US and other Where consideration paid or contingent EPS (p) 5.2p – 7.8p 10.7p – 13.2p approves the policy for classifying adjustments and exceptional items. countries (e.g. Italy, Canada and Spain) within consideration payable in the future is Diluted EPS (p)6 5.2p – 7.7p 10.6p – 13.1p Further detail is included in the cost of sales, whereas in the UK tax credits employment‑linked, it is treated as an following section. for high‑end drama must be classified as a expense (under accounting rules) and corporation tax item. However, in our view all therefore part of our statutory results. Adjusted EBITDA (used to calculate the group’s leverage) for the year is £535 million (2022: £770 million), calculated by adding back tax credits relate directly to the production of However, we exclude all consideration of depreciation of £46 million (2022: £53 million) to adjusted EBITA (which is shown in the table above). programmes. Therefore, to align treatment, this type from adjusted EBITA, adjusted regardless of production location, and to profit after tax and adjusted EPS as, in our reflect the way the business is managed view, these items are part of the capital OTHER ALTERNATIVE PERFORMANCE MEASURES and measured on a day‑to‑day basis, the UK transaction and do not form part of the tax credits are recognised in adjusted EBITA. Group’s core operations. The Finance Review Total revenue Our cash measures, including profit to explains this further. Acquisition‑related cash conversion and free cashflow are costs, including legal and advisory fees on As a vertically integrated producer broadcaster and streamer, we look at the total revenue generated by the business including internal revenue, also adjusted for the impact of production completed deals or significant deals that do which is the sale of ITV Studios programmes to M&E. ITV Studios selling programmes to the M&E business is an important part of our strategy tax credits. not complete, are also treated as an expense as a vertically integrated business and it ensures we own all the rights to the content. (under accounting rules) and therefore on a In 2024, the adjustment we make to add back statutory basis form part of our statutory A reconciliation between external revenue and total revenue is provided below. high‑end production tax credits to EBITA will results. In our view, these items also form change. See the Tax note on page 47 of the part of the capital transaction or are one‑off 2023 2022 Finance Review Section for further details. and material in nature and are therefore Twelve months to 31 December £m £m excluded from our adjusted measures. External revenue (Statutory) 3,624 3,728 Internal supply 636 617 Total revenue (Adjusted) 4,260 4,345
42 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 43 S T ALTERNATIVE PERFORMANCE MEASURES R A T E G I The Annual Report and Accounts includes both statutory and adjusted Restructuring and Amortisation and impairment Net financing costs C R E reorganisation costs Amortisation and any initial impairment of Net financing costs are adjusted to reflect P measures (Alternative Performance Measures or APMs), the laer of which, O Where there has been a material change in assets acquired through business the underlying cash cost of interest for the R in management’s view, reflect the underlying performance of the business the organisational structure of a business combinations and investments are not business, providing a more meaningful T area or a material initiative, these costs are included within adjusted earnings. As these comparison of how the business is managed and provide a more meaningful comparison of how the business is highlighted and are excluded from our costs are acquisition-related, and in line with and funded on a day-to-day basis. The managed and measured on a day-to-day basis.adjusted measures. These costs arise from our treatment of other acquisition-related adjustments made remove the impact of significant initiatives to reduce the ongoing costs, we consider them to be capital in mark-to-market gains or losses on swaps cost base and improve efficiency in the nature as they do not reflect the underlying and foreign exchange, one-off fees and business to enable the delivery of our trading performance of the Group. premiums relating to the buyback of bonds, Key adjustments for EBITA, Exceptional itemsstrategic priorities. We consider each Amortisation of software licences and exceptional interest and other finance costs Our APMs and KPIs are aligned with adjusted EBITA, profit before project individually to determine whether development is included within our adjusted on acquisitions, imputed pension interest our strategy and business divisions These items are excluded to reflect its size and nature warrant separate profit before tax as management consider and other financial gains and losses that and together are used to measure the tax and EPSperformance in a consistent manner and in treatment and disclosure.these assets to be core to supporting the do not reflect the relevant interest cash performance of our business and form EBITA is calculated by adjusting statutory line with how the business is managed and operations of the business.cost to the business and are not yet the basis of the performance measures operating profit for operating exceptional measured on a day‑to‑day basis. They are realised balances. for remuneration. Adjusted results items and amortisation and impairment. typically material amounts related to costs, exclude certain items because, gains or losses arising from events that are if included, they could distort the Adjusted EBITA is calculated by adding back not considered part of the core operations of Reconciliation between statutory and adjusted results understanding of our performance high‑end production tax credits to EBITA. the business, though they may cross several for the period and the comparability Further adjustments, which include the gain/accounting periods. These include, but are 2023202320232022202220221. £85 million (2022: £49 million) adjustment relates to between periods. APMs are not defined loss on the sale of non‑current assets, not limited to, costs directly related to Twelve months to Statutory AdjustmentsAdjustedStatutory AdjustmentsAdjustedproduction tax credits which we consider to be a acquisition activity, costs related to major 31 December£m £m £m £m £m £m contribution to production costs and working capital in terms under IFRS and may not be amortisation and impairment of assets EBITA140485489 668 49 717 nature rather than a corporate tax item. EBITA is not a comparable with similarly titled acquired through business combinations and reorganisation and restructuring statutory measure measures reported by other companies.investments, and certain net financing costs, programmes, material onerous contracts, Exceptional items 2. Exceptional items of £77 million (2022: £65 million) significant impairments, employee‑related 2 largely relate to acquisition-related expenses, are made to remove their effect from (operating)(77) 77 – (65) 65 – tax provisions related to earlier financial restructuring, transformation and property move As adjusted results exclude certain adjusted profit before tax and adjusted EPS. Amortisation and costs. Refer to the Finance Review items (such as significant legal, major The tax effects of all these adjustments are periods (IR35) and other items such as legal impairment3(89)25(64)(84)57(27)3. £25 million (2022: £57 million) adjustment relates to restructuring and transaction items), reflected in the adjusted tax charge. These settlements and non‑routine legal costs (e.g. amortisation and impairment of assets acquired legal costs related to items which are Operating profit238 187 425 519 171 690 through business combinations and investments. We they should not be regarded as a adjustments are detailed below.Net financing costs4(45)16(29)(26) – (26) include only amortisation on purchased intangibles, complete picture of the Group’s themselves considered to be exceptional such as software within adjusted profit before tax financial performance. The exclusion of Adjusted EBITDA, which is used to calculate items). We also adjust for the tax effect of Share of profits on 4. £16 million (2022: £nil) adjustment is for non-cash these items. JVs and associates – – – 8 – 8 interest cost. This provides a more meaningful adjusting items may result in adjusted the Group’s leverage, is calculated by adding comparison of how the business is managed and earnings being materially higher or lower back depreciation to adjusted EBITA.Profit before tax193203396501171 672 funded on a day-to-day basis See note 2.2 to the financial statements 5. Tax adjustments are the tax effects of the adjustments than statutory earnings. In particular, for further detail.Tax516(101) (85) (66) (69) (135) made to reconcile profit before tax and adjusted profit when significant impairments, Production tax creditsProfit after tax209102311 435 102 537 before tax. A full reconciliation is included in the restructuring charges and legal costs Acquisition-related costs Finance Review are excluded, adjusted earnings will be The ability to access tax credits, which are Non-controlling 6. Weighted average diluted number of shares in the rebates based on production spend, is We structure our acquisitions with earnouts interests1–1(7) – (7) period was 4,059 million (2022: 4,046 million) higher than statutory earnings.fundamental to our ITV Studios business or put and call options, to allow part of the Earnings210 102 312 428 102 530 The Audit and Risk Committee has across the world when assessing the viability consideration to be based on the future of investment decisions, especially with performance of the business as well as Shares (million), oversight of ITV’s APMs and actively regard to drama and comedy. ITV reports tax weighted average4,023–4,0234,010–4,010 reviews, challenges, revises and to lock in and incentivise creative talent. credits generated in the US and other Where consideration paid or contingent EPS (p)5.2p–7.8p10.7p – 13.2p approves the policy for classifying adjustments and exceptional items. countries (e.g. Italy, Canada and Spain) within consideration payable in the future is Diluted EPS (p)65.2p–7.7p10.6p–13.1p Further detail is included in the cost of sales, whereas in the UK tax credits employment‑linked, it is treated as an following section. for high‑end drama must be classified as a expense (under accounting rules) and corporation tax item. However, in our view all therefore part of our statutory results. Adjusted EBITDA (used to calculate the group’s leverage) for the year is £535 million (2022: £770 million), calculated by adding back tax credits relate directly to the production of However, we exclude all consideration of depreciation of £46 million (2022: £53 million) to adjusted EBITA (which is shown in the table above). programmes. Therefore, to align treatment, this type from adjusted EBITA, adjusted regardless of production location, and to profit after tax and adjusted EPS as, in our reflect the way the business is managed view, these items are part of the capital OTHER ALTERNATIVE PERFORMANCE MEASURES and measured on a day‑to‑day basis, the UK transaction and do not form part of the tax credits are recognised in adjusted EBITA. Group’s core operations. The Finance Review Total revenue Our cash measures, including profit to explains this further. Acquisition‑related cash conversion and free cashflow are costs, including legal and advisory fees on As a vertically integrated producer broadcaster and streamer, we look at the total revenue generated by the business including internal revenue, also adjusted for the impact of production completed deals or significant deals that do which is the sale of ITV Studios programmes to M&E. ITV Studios selling programmes to the M&E business is an important part of our strategy tax credits.not complete, are also treated as an expense as a vertically integrated business and it ensures we own all the rights to the content. (under accounting rules) and therefore on a In 2024, the adjustment we make to add back statutory basis form part of our statutory A reconciliation between external revenue and total revenue is provided below. high‑end production tax credits to EBITA will results. In our view, these items also form change. See the Tax note on page 47 of the part of the capital transaction or are one‑off 2023 2022 Finance Review Section for further details. and material in nature and are therefore Twelve months to 31 December £m £m excluded from our adjusted measures.External revenue (Statutory) 3,624 3,728 Internal supply 636 617 Total revenue (Adjusted) 4,260 4,345
44 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 45 S ALTERNATIVE PERFORMANCE MEASURES CONTINUED T FINANCE REVIEW R A T E G I ITV Studios organic revenue growth C R E ITV Studios organic revenue growth adjusts revenue growth for the impacts of foreign currency and acquisitions in the current or comparative P O period. Current period revenues are measured at constant currency which assumes exchange rates remain consistent with the comparative R period. The table below shows the calculation of our organic revenue growth within ITV Studios: T 2 0 2 3 2 0 2 2 Change Change Twelve months to 31 December £m £m £m % ITV Studios total revenue 2,170 2,096 74 4 Adjustment for constant currency 15 – – – Adjustment for acquisitions in prior period (65) (32) (33) 103 ITV Studios total revenue – organic basis 2,120 2,064 56 3 CHRIS KENNEDY GROUP CHIEF FINANCIAL OFFICER AND CHIEF OPERATING OFFICER Net pension surplus/deficit Profit to cash conversion Covenant net debt and covenant This is our defined benefit pension scheme This is the measure of our effectiveness at liquidity surplus or deficit under IAS 19 adjusted for working capital management. It is calculated Covenant net debt is our leverage as defined other pension assets, mainly gilts, which are as our adjusted cash flow as a proportion of in our Revolving Credit Facility (RCF) This Finance Review focuses on the more technical aspects of our financial results held by the Group as security for future adjusted EBITA. Adjusted cash flow, which agreement. This calculation is materially while the operating and financial performance of the Group, M&E and ITV Studios unfunded pension payments for four reflects the cash generation of our underlying different to how net debt is defined and is Granada executives and over which the business, is calculated on our statutory cash relevant in demonstrating we have met the has been discussed within the Operating and Financial Performance Review. unfunded pension scheme holds a charge. generated from operations and adjusted for required RCF financial covenants at our See note 3.7 to the financial statements. exceptional items, net of capex on property, reporting date. plant and equipment and intangible assets, and including the cash impact of high-end Our Alternative Performance Measures (APMs) section, explains the adjustments we make to our statutory results. This enables focus on the production tax credits. key measures that we report on and use as KPIs across the business. See earlier sections for further details. 2023 2022 Change Change Covenant adjusted EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) is used to calculate our covenant compliance and Twelve months to 31 December £m £m £m % our leverage, and is defined in the RCF agreement. The calculation of covenant adjusted EBITDA, covenant net debt and covenant liquidity are ITV Studios total revenue 2,170 2,096 74 4 detailed in the tables below: Total advertising revenue 1,778 1,931 (153) (8) 31 December 31 December M&E non-advertising revenue 312 318 (6) (2) 2023 2022 £m £m M&E total revenue 2,090 2,249 (159) (7) Statutory operating profit 238 519 Total non-advertising revenue 2,482 2,414 68 3 Exceptional items 77 65 Total group revenue 4,260 4,345 (85) (2) Amortisation and impairment 89 84 Internal supply (636) (617) (19) (3) EBITA 404 668 Group external revenue 3,624 3,728 (104) (3) Depreciation 46 53 Group adjusted EBITA 489 717 (228) (32) Right of use assets depreciation (19) (25) Group adjusted EBITA margin 13% 19% (6) Interest charged on lease liabilities (4) (4) Covenant adjusted EBITDA 427 692 Statutory operating profit 238 519 (281) (54) Adjusted EPS 7.8p 13.2p (5.4p) (41) 31 December 31 December Statutory EPS 5.2p 10.7p (5.5p) (51) 2023 2022 Dividend per share 5.0p 5.0p £m £m Net debt (including IFRS 16 lease liabilities) (553) (623) Net debt as at 31 December (553) (623) 70 11 Impact of IFRS 16 lease liabilities 115 132 Long-term trade payables (25) (17) Other pension asset 48 47 Exceptional items Covenant net debt (415) (461) 2023 2022 Twelve months to 31 December £m £m * Covenant adjusted EBITDA 427 692 Acquisition-related expenses (24) (4) * Covenant net debt to adjusted EBITDA 1.0x 0.7x Restructuring and transformation costs (25) (28) Property costs (10) (24) Cash and cash equivalents 340 348 Costs relating to the passing of Her Majesty Queen Elizabeth II – (16) Undrawn RCF 600 450 Sports rights impairment reversal – 5 Undrawn CDS facility 300 300 Covenant liquidity** 1,240 1,098 Pension related costs – (4) Employee-related tax provision 3 (10) * Covenant adjusted EBITDA is defined per the facility agreement. The Finance Review includes further detail on our covenant ratios. ** Covenant liquidity is defined as cash and cash equivalents plus undrawn committed facilities. Insured trade receivable 3 23 Legal settlements (13) – Legal and other costs (11) (7) Operating exceptional items (77) (65) Total exceptional items (77) (65)
44 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 45 S ALTERNATIVE PERFORMANCE MEASURES CONTINUED T FINANCE REVIEW R A T E G I ITV Studios organic revenue growth C R E ITV Studios organic revenue growth adjusts revenue growth for the impacts of foreign currency and acquisitions in the current or comparative P O period. Current period revenues are measured at constant currency which assumes exchange rates remain consistent with the comparative R period. The table below shows the calculation of our organic revenue growth within ITV Studios: T 2 0 2 3 2 0 2 2 Change Change Twelve months to 31 December£m£m£m % ITV Studios total revenue2,1702,096744 Adjustment for constant currency 15––– Adjustment for acquisitions in prior period(65)(32)(33)103 ITV Studios total revenue – organic basis2,1202,064563 CHRIS KENNEDY GROUP CHIEF FINANCIAL OFFICER AND CHIEF OPERATING OFFICER Net pension surplus/deficitProfit to cash conversionCovenant net debt and covenant This is our defined benefit pension scheme This is the measure of our effectiveness at liquidity surplus or deficit under IAS 19 adjusted for working capital management. It is calculated Covenant net debt is our leverage as defined other pension assets, mainly gilts, which are as our adjusted cash flow as a proportion of in our Revolving Credit Facility (RCF) This Finance Review focuses on the more technical aspects of our financial results held by the Group as security for future adjusted EBITA. Adjusted cash flow, which agreement. This calculation is materially while the operating and financial performance of the Group, M&E and ITV Studios unfunded pension payments for four reflects the cash generation of our underlying different to how net debt is defined and is Granada executives and over which the business, is calculated on our statutory cash relevant in demonstrating we have met the has been discussed within the Operating and Financial Performance Review. unfunded pension scheme holds a charge. generated from operations and adjusted for required RCF financial covenants at our See note 3.7 to the financial statements.exceptional items, net of capex on property, reporting date. plant and equipment and intangible assets, and including the cash impact of high-end Our Alternative Performance Measures (APMs) section, explains the adjustments we make to our statutory results. This enables focus on the production tax credits.key measures that we report on and use as KPIs across the business. See earlier sections for further details. 2023 2022 Change Change Covenant adjusted EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) is used to calculate our covenant compliance and Twelve months to 31 December£m£m£m% our leverage, and is defined in the RCF agreement. The calculation of covenant adjusted EBITDA, covenant net debt and covenant liquidity are ITV Studios total revenue2,1702,096744 detailed in the tables below: Total advertising revenue 1,778 1,931 (153) (8) 31 December 31 December M&E non-advertising revenue 312 318 (6) (2) 20232022 £m£m M&E total revenue 2,090 2,249 (159) (7) Statutory operating profit238519Total non-advertising revenue 2,482 2,414 68 3 Exceptional items7765Total group revenue 4,260 4,345 (85) (2) Amortisation and impairment8984Internal supply (636) (617) (19) (3) EBITA404668 Group external revenue 3,624 3,728 (104) (3) Depreciation4653 Group adjusted EBITA 489 717 (228) (32) Right of use assets depreciation(19)(25) Group adjusted EBITA margin 13% 19% (6) Interest charged on lease liabilities(4)(4) Covenant adjusted EBITDA427692Statutory operating profit 238 519 (281) (54) Adjusted EPS 7.8p 13.2p (5.4p) (41) 31 December 31 December Statutory EPS 5.2p 10.7p (5.5p) (51) 20232022 Dividend per share 5.0p 5.0p £m£m Net debt (including IFRS 16 lease liabilities)(553)(623)Net debt as at 31 December (553) (623) 70 11 Impact of IFRS 16 lease liabilities115132 Long-term trade payables(25)(17) Other pension asset4847Exceptional items Covenant net debt(415)(461) 2023 2022 Twelve months to 31 December £m £m * Covenant adjusted EBITDA427692Acquisition-related expenses (24) (4) * Covenant net debt to adjusted EBITDA1.0x0.7x Restructuring and transformation costs (25) (28) Property costs (10) (24) Cash and cash equivalents340348Costs relating to the passing of Her Majesty Queen Elizabeth II – (16) Undrawn RCF600450 Sports rights impairment reversal – 5 Undrawn CDS facility300300 Covenant liquidity**1,2401,098Pension related costs – (4) Employee-related tax provision 3 (10) * Covenant adjusted EBITDA is defined per the facility agreement. The Finance Review includes further detail on our covenant ratios. ** Covenant liquidity is defined as cash and cash equivalents plus undrawn committed facilities.Insured trade receivable 3 23 Legal settlements (13) – Legal and other costs (11) (7) Operating exceptional items (77) (65) Total exceptional items (77) (65)
46 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 47 S FINANCE REVIEW CONTINUED T R A T E G I Total exceptional items in the period were Employee-related tax provisions credit of 2022, the review was completed, leading to Tax C R £77 million (2022: £65 million). Acquisition- £3 million relates to the release of provisions the release of the corresponding bad debt E Adjusted tax charge P related expenses of £24 million (2022: in respect of years that are no longer in scope provision of which £23 million was treated as O R £4 million) are predominantly performance- and confirmation from HMRC that certain an exceptional credit. During 2023, a The total adjusted tax charge for the year was £85 million (2022: £135 million), corresponding to an effective tax rate on adjusted PBT of 21.5% T based, employment-linked consideration to individuals are no longer under review in settlement of the remaining claim was (2022: 20.1%), which is lower than the standard UK corporation tax rate of 23.5% (2022: 19%). We expect the adjusted effective tax rate to be former owners, and professional fees related respect of IR35. The £10 million charge in agreed upon with insurers resulting in an around 25% in 2024, as a result of the increase in the UK statutory rate to 25% from April 2023. to acquisitions and potential acquisitions. 2022 reflected an increase in the provision exceptional credit of £3 million. for potential employment taxes due to On a reported basis, there is a tax credit of £16 million (2022: £66 million tax charge) which corresponds to an effective tax rate of (8.3%) Restructuring and transformation costs of HMRC in relation to the employment status Legal settlements of £13 million relate to (2022: tax charge rate 13.2%). This rate in 2023 is lower than in previous years due to the impact of higher HETV tax credits relative to the tax £25 million (2022: £28 million) relate to of individuals contracted by the Group for settlements or proposed settlements on a charge, as well as a proportionally lower profit before tax in the period compared to the prior year. The adjustments made to reconcile the one-off restructuring projects in respect of periods before 2022. number of significant legal cases which are statutory tax charge with the adjusted tax charge are the tax effects of the adjustments made to reconcile PBT and adjusted PBT, as detailed the Group-wide commitment to reduce the considered to be outside the normal course in the previous table. overhead cost base, as well as reorganisation In 2017, the Group recorded a bad debt of business. and transformation programme costs to provision of US$41 million related to trade 2 0 2 3 2 0 2 2 deliver our strategy. Significant projects receivables for The Voice of China. As the Legal and other costs relate primarily to 2023 Effective 2022 Effective Twelve months to 31 December £m tax rate £m tax rate include the implementation of a new Directors anticipated recovering the amount legal costs for matters considered to be Statutory tax (credit)/charge (16) (8.3)% 66 13.2% cloud-based ERP solution and rationalisation either from the counterparty or from trade outside the normal course of business, of the Studios operational structures outside credit insurance, US$37 million was treated including Box Clever, The Voice of Holland, Production tax credits 85 100% 49 100% the UK. as an exceptional cost and the insurance the UK Competition and Markets Authority Charge for exceptional items 12 15.6% 8 12.3% excess of US$4 million was treated as an (CMA) investigation and the Phillip Schofield Charge in respect of amortisation and impairment* 6 24.0% 12 21.1% Property costs relate to the London office operating cost. US$34 million of cash KC Review. Charge in respect of adjustments to net financing costs (2) (12.5)% – – move to Broadcast Centre. No further received in 2018 and 2019 on behalf of the exceptional costs are expected related to debtor was placed under review and the bad Adjusted tax charge** 85 21.5% 135 20.1% this move. debt provision remained in place. During * In respect of intangible assets arising from business combinations and investments. Also reflects the cash tax benefit of tax deductions for US goodwill. ** As a percentage of adjusted profit before tax. Net financing costs Cash tax Cash tax paid in the year was £32 million (2022: £55 million) and is net of £38 million of production tax credits received (2022: £31 million). 2023 2022 The majority of the cash tax payments were made in the UK. The cash tax paid is lower compared to the previous year due to lower profits and Twelve months to 31 December £m £m Financing costs directly attributable to loans and bonds (24) (26) higher production tax credits received. A reconciliation between the tax charge for the year and the cash tax paid in the year is shown below. Cash-related net financing costs (5) 1 2023 2022 Amortisation on bonds and gilts – (1) Twelve months to 31 December £m £m Adjusted financing costs (29) (26) Tax credit/(charge) (statutory) 16 (66) Net pension interest 8 – Temporary differences recognised through deferred tax* 7 44 Other net financial losses and unrealised foreign exchange (24) – Prior year adjustments to current tax 12 (9) Statutory net financing costs (45) (26) Current tax, current year 35 (31) Phasing of tax payments (including in respect of pension contribution benefits) (20) (6) Adjusted financing costs were £29 million (2022: £26 million) largely due to financing costs attributable to loans and bonds. Statutory net financing costs were £45 million (2022: £26 million) mainly driven by charges related to acquisition-related put and call options. Production tax credits – timing of receipt (47) (18) Cash tax paid (statutory) (32) (55) JVs and associates * Further detail is included within Note 2.3 of the financial statements. Our share of profits from JVs and associates in the period was £nil (2022: profit of £8 million). This was our share of the net profits and losses arising from our investments, such as BritBox International, Bedrock Entertainment and Blumhouse Television. The reduction year-on-year primarily results from the phasing of the delivery of productions. Changes to the current UK system increase our EBITA, adjusted EBITA, adjusted provides an exemption from the requirement Profit before tax of Audio-Visual tax credits EBITA margin, profit before tax and tax to recognise and disclose deferred taxes On 29 November 2023, the UK government expense but will leave our profit after tax arising from enacted or substantively Statutory profit before tax decreased significantly year-on-year to £193 million (2022: £501 million) as a result of the impact of the challenging unchanged, this is compared to the previous enacted tax law that implements the Pillar advertising market and planned ITVX investment. issued final legislation to reform the current system of Audio-Visual Expenditure Credit HETV accounting treatment. We continue to Two model rules. (‘AVEC’) tax credits to merge the four existing assess the impact on the Group and do not 2023 2022 AVEC schemes (Film, High-End Television anticipate there to be a material change in Based on an initial analysis of the current Twelve months to 31 December £m £m (HETV), Children’s Television and Animation) the net economic value. year financial data, most territories in which Statutory profit before tax 193 501 the Group operates are expected to qualify into a single scheme and has reviewed the Production tax credits 85 49 qualifying criteria. The AVEC legislation was Base Erosion and Profit Shifting (BEPS) for one of the safe harbour exemptions such Exceptional items 77 65 substantively enacted on 5 February 2024 Pillar Two that top-up taxes should not apply. In Amortisation and impairment* 25 57 and can be claimed on expenditure incurred On 20 June 2023, Finance (No.2) Act 2023 territories where this is not the case there is from 1 January 2024. was substantively enacted in the UK, the potential for Pillar Two taxes to apply, but Adjustments to net financing costs 16 – introducing a global minimum effective tax these are not expected to be material. The Adjusted profit before tax 396 672 The new scheme is one of expenditure rate of 15% for large groups and for financial Group continues to refine this assessment credits as opposed to corporate tax relief, years beginning on or after 31 December and analyse the future consequences of * In respect of assets arising from business combinations and investments. these rules. requiring a change to the accounting 2023. Taxation balances are adjusted for a treatment to include them within statutory change in tax law if the change has been operating profit rather than within the substantively enacted by the balance sheet consolidated tax charge. The effect of this date. However the amendments to IAS 12 change in legislation will therefore be to ‘Income Taxes’ Pillar Two income taxes
46 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 47 S FINANCE REVIEW CONTINUED T R A T E G I Total exceptional items in the period were Employee-related tax provisions credit of 2022, the review was completed, leading to Tax C R £77 million (2022: £65 million). Acquisition-£3 million relates to the release of provisions the release of the corresponding bad debt E Adjusted tax charge P related expenses of £24 million (2022: in respect of years that are no longer in scope provision of which £23 million was treated as O R £4 million) are predominantly performance-and confirmation from HMRC that certain an exceptional credit. During 2023, a The total adjusted tax charge for the year was £85 million (2022: £135 million), corresponding to an effective tax rate on adjusted PBT of 21.5% T based, employment-linked consideration to individuals are no longer under review in settlement of the remaining claim was (2022: 20.1%), which is lower than the standard UK corporation tax rate of 23.5% (2022: 19%). We expect the adjusted effective tax rate to be former owners, and professional fees related respect of IR35. The £10 million charge in agreed upon with insurers resulting in an around 25% in 2024, as a result of the increase in the UK statutory rate to 25% from April 2023. to acquisitions and potential acquisitions.2022 reflected an increase in the provision exceptional credit of £3 million. for potential employment taxes due to On a reported basis, there is a tax credit of £16 million (2022: £66 million tax charge) which corresponds to an effective tax rate of (8.3%) Restructuring and transformation costs of HMRC in relation to the employment status Legal settlements of £13 million relate to (2022: tax charge rate 13.2%). This rate in 2023 is lower than in previous years due to the impact of higher HETV tax credits relative to the tax £25 million (2022: £28 million) relate to of individuals contracted by the Group for settlements or proposed settlements on a charge, as well as a proportionally lower profit before tax in the period compared to the prior year. The adjustments made to reconcile the one-off restructuring projects in respect of periods before 2022. number of significant legal cases which are statutory tax charge with the adjusted tax charge are the tax effects of the adjustments made to reconcile PBT and adjusted PBT, as detailed the Group-wide commitment to reduce the considered to be outside the normal course in the previous table. overhead cost base, as well as reorganisation In 2017, the Group recorded a bad debt of business. and transformation programme costs to provision of US$41 million related to trade 2 0 2 3 2 0 2 2 deliver our strategy. Significant projects receivables for The Voice of China. As the Legal and other costs relate primarily to 2023 Effective 2022 Effective Twelve months to 31 December £m tax rate £m tax rate include the implementation of a new Directors anticipated recovering the amount legal costs for matters considered to be Statutory tax (credit)/charge (16) (8.3)% 66 13.2% cloud-based ERP solution and rationalisation either from the counterparty or from trade outside the normal course of business, of the Studios operational structures outside credit insurance, US$37 million was treated including Box Clever, The Voice of Holland, Production tax credits 85 100% 49 100% the UK.as an exceptional cost and the insurance the UK Competition and Markets Authority Charge for exceptional items 12 15.6% 8 12.3% excess of US$4 million was treated as an (CMA) investigation and the Phillip Schofield Charge in respect of amortisation and impairment* 6 24.0% 12 21.1% Property costs relate to the London office operating cost. US$34 million of cash KC Review.Charge in respect of adjustments to net financing costs (2) (12.5)% – – move to Broadcast Centre. No further received in 2018 and 2019 on behalf of the exceptional costs are expected related to debtor was placed under review and the bad Adjusted tax charge** 85 21.5% 135 20.1% this move.debt provision remained in place. During * In respect of intangible assets arising from business combinations and investments. Also reflects the cash tax benefit of tax deductions for US goodwill. ** As a percentage of adjusted profit before tax. Net financing costs Cash tax Cash tax paid in the year was £32 million (2022: £55 million) and is net of £38 million of production tax credits received (2022: £31 million). 2023 2022 The majority of the cash tax payments were made in the UK. The cash tax paid is lower compared to the previous year due to lower profits and Twelve months to 31 December£m£m Financing costs directly attributable to loans and bonds(24)(26)higher production tax credits received. A reconciliation between the tax charge for the year and the cash tax paid in the year is shown below. Cash-related net financing costs(5)1 2023 2022 Amortisation on bonds and gilts–(1)Twelve months to 31 December £m £m Adjusted financing costs(29)(26)Tax credit/(charge) (statutory) 16 (66) Net pension interest8– Temporary differences recognised through deferred tax* 7 44 Other net financial losses and unrealised foreign exchange (24)–Prior year adjustments to current tax 12 (9) Statutory net financing costs(45)(26)Current tax, current year 35 (31) Phasing of tax payments (including in respect of pension contribution benefits) (20) (6) Adjusted financing costs were £29 million (2022: £26 million) largely due to financing costs attributable to loans and bonds. Statutory net financing costs were £45 million (2022: £26 million) mainly driven by charges related to acquisition-related put and call options.Production tax credits – timing of receipt (47) (18) Cash tax paid (statutory) (32) (55) JVs and associates * Further detail is included within Note 2.3 of the financial statements. Our share of profits from JVs and associates in the period was £nil (2022: profit of £8 million). This was our share of the net profits and losses arising from our investments, such as BritBox International, Bedrock Entertainment and Blumhouse Television. The reduction year-on-year primarily results from the phasing of the delivery of productions. Changes to the current UK system increase our EBITA, adjusted EBITA, adjusted provides an exemption from the requirement Profit before tax of Audio-Visual tax credits EBITA margin, profit before tax and tax to recognise and disclose deferred taxes On 29 November 2023, the UK government expense but will leave our profit after tax arising from enacted or substantively Statutory profit before tax decreased significantly year-on-year to £193 million (2022: £501 million) as a result of the impact of the challenging unchanged, this is compared to the previous enacted tax law that implements the Pillar advertising market and planned ITVX investment. issued final legislation to reform the current system of Audio-Visual Expenditure Credit HETV accounting treatment. We continue to Two model rules. (‘AVEC’) tax credits to merge the four existing assess the impact on the Group and do not 2023 2022 AVEC schemes (Film, High-End Television anticipate there to be a material change in Based on an initial analysis of the current Twelve months to 31 December£m£m (HETV), Children’s Television and Animation) the net economic value. year financial data, most territories in which Statutory profit before tax 193501 the Group operates are expected to qualify into a single scheme and has reviewed the Production tax credits8549 qualifying criteria. The AVEC legislation was Base Erosion and Profit Shifting (BEPS) for one of the safe harbour exemptions such Exceptional items 7765 substantively enacted on 5 February 2024 Pillar Two that top-up taxes should not apply. In Amortisation and impairment*2557and can be claimed on expenditure incurred On 20 June 2023, Finance (No.2) Act 2023 territories where this is not the case there is from 1 January 2024. was substantively enacted in the UK, the potential for Pillar Two taxes to apply, but Adjustments to net financing costs16– introducing a global minimum effective tax these are not expected to be material. The Adjusted profit before tax396672The new scheme is one of expenditure rate of 15% for large groups and for financial Group continues to refine this assessment credits as opposed to corporate tax relief, years beginning on or after 31 December and analyse the future consequences of * In respect of assets arising from business combinations and investments. these rules. requiring a change to the accounting 2023. Taxation balances are adjusted for a treatment to include them within statutory change in tax law if the change has been operating profit rather than within the substantively enacted by the balance sheet consolidated tax charge. The effect of this date. However the amendments to IAS 12 change in legislation will therefore be to ‘Income Taxes’ Pillar Two income taxes
48 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 49 S FINANCE REVIEW CONTINUED T R A T E G I Tax strategy Statutory EPS decreased by 51% to 5.2p We have generally structured our deals with Cash generation C R (2022: 10.7p). earnouts or with put and call options in place E ITV is a responsible business, and we take a Profit to cash conversion P for the remainder of the equity, capping the O responsible attitude to tax, recognising that R it affects all of our stakeholders. To allow A full reconciliation between statutory and maximum consideration payable by basing a 2023 2022 T adjusted EPS is included in the Alternative significant part of the consideration on Twelve months to 31 December £m £m those stakeholders to understand our Adjusted EBITA 489 717 approach to tax, we have published our Performance Measures section. future performance. This has allowed us to Global Tax Strategy, which is available on lock in creative talent and ensure our Working capital movement 90 (150) our corporate website. Dividend per share incentives are aligned, and also reduce our Adjustment for The Voice of China cash received* – 23 The Board recognises the importance of the risk by only paying for the actual, not expected, performance delivered over time. Adjustment for production tax credits (47) (18) www.itvplc.com/investors/ ordinary dividend to ITV shareholders. ** governance/policies Reflecting its confidence in the business and Depreciation 46 53 its strategy, as well as the continued strong The majority of earnouts or put and call Share-based compensation 16 19 We have four key strategic tax objectives: cash generation, in line with ITV’s dividend options are dependent on the seller Acquisition of property, plant and equipment and intangible assets*** (70) (78) policy, the Board has declared a final remaining within the business. Where future 1. Engage with tax authorities in an open and payments are directly related to the seller Lease liability payments (including lease interest) (26) (26) transparent way to minimise uncertainty dividend of 3.3p (2022: 3.3p), giving an remaining with the business, these payments ordinary dividend of 5.0p per share for the Adjusted cash flow 498 540 2. Proactively partner with the business to full year 2023 (2022: 5.0p), a total payout are treated as employment costs and, Profit to cash ratio (adjusted EBITA/adjusted cash flow) 102% 75% provide clear, timely, relevant and business of around £200 million. The Board remains therefore, are part of our statutory results. focused advice across all aspects of tax However, we exclude these payments from * Cash received in 2018 and 2019 for The Voice of China was placed under review and treated as an exceptional cash receipt and excluded from the profit to cash conversion committed to paying a total dividend of at adjusted profits and adjusted EPS as an calculation. In 2022, the review completed and the cash was released. This adjustment shows the conversion of exceptional cash to operating cash. 3. Take an appropriate and balanced least 5.0p in 2024, which it expects to grow ** Depreciation of £46 million (2022: £53 million) includes £28 million (2022: £33 million) which relates to ITV Studios and £18 million (2022: £20 million) relating to Media & approach when considering how to over the medium term, whilst balancing exceptional item, as in our view, for the Entertainment. structure tax sensitive transactions further investment to support our strategy reasons set out above, these items are part *** Except where disclosed, management views the acquisition of property, plant and equipment and intangibles as business as usual capex, necessary to the ongoing investment of the capital consideration reflecting how in the business. 4. Manage ITV’s tax risk by operating and our commitment to investment grade we structure our transactions and do not effective tax governance and metrics over the medium term. form part of the core operations. understanding our tax control framework Cash generated from operations is reconciled to the adjusted cash flow as follows: with a view to continuously adjusting our Dividends are distributed based on the Acquisition-related liabilities or approach to be compliant with our tax realised distributable reserves (within performance-based employment-linked 2023 2022 obligations. retained earnings) of ITV plc (the Company) Twelve months to 31 December £m £m and not based on the Group’s retained earnouts are amounts estimated to be Cash generated from operations 488 537 Our tax strategy is aligned with that of the earnings. payable to previous owners. The estimated future payments as at 31 December 2023 are Cash outflow from exceptional items 68 53 business and its commercial activities and £105 million and are sensitive to forecast Cash generated from operations excluding exceptional items 556 590 establishes a clear Group-wide approach The dividend timetable profits as they are based on a multiple of based on openness and transparency in all is as follows: Adjustment for production tax credits 38 31 aspects of tax reporting and compliance, earnings. The range of reasonably possible Adjustment for The Voice of China cash received – 23 wherever the Company and its subsidiaries Thursday outcomes for the liability is between £86 Announcement 7 March 2024 million and £147 million. The estimated Acquisition of property, plant and equipment and intangible assets (70) (78) operate. The strategy confirms that ITV does future payments, treated as employment not engage in or condone tax evasion or the Thursday Lease liability payments (including lease interest) (26) (26) Ex-dividend date 11 April 2024 costs, are accrued over the period the sellers facilitation of tax evasion in any form and Friday are required to remain with the business, and Adjusted cash flow 498 540 that we have in place reasonable procedures Record date 12 April 2024 those not linked to employment are to prevent the facilitation of tax evasion. Thursday recognised at acquisition at their time One of ITV’s strengths is its cash generation, reflecting our ongoing tight management of working capital balances. We manage risk when Within our overall governance structure, the Dividend paid 23 May 2024 discounted value. making all investment decisions, particularly in scripted content and ITVX, through having a disciplined approach to cash and costs. Remaining governance of tax and tax risk is given a high focused on cash and costs means we are in a good position to continue to invest across the business in line with our strategic priorities. priority by the Board, and Audit and Risk We closely monitor the forecast Committee (ARC). The ITV Global Tax Acquisitions performance of each acquisition and, where In the year, we generated £498 million of operational cash (2022: £540 million) from £489 million of adjusted EBITA (2022: £717 million), Strategy, approved by the Board and ARC in there has been a change in expectations, resulting in a profit to cash ratio of 102% (2022: 75%). The increase in our profit to cash ratio year-on-year reflects a favourable movement in September 2023, and as published on the As part of our strategy to Expand Studios, we working capital due to the unwind of programme rights and inventory previously built up for the launch of ITVX. In addition, there has been a ITV plc website, is compliant with the UK tax consider selective value-creating M&A and we adjust our view of potential future talent deals in both scripted and unscripted commitments. Expected future payments of reduction in production inventories predominantly in the US as a result of the 2023 writers’ and actors’ strike. strategy publication requirement set out in £105 million have increased by £16 million Part 2 Schedule 19 of the Finance Act 2016. to obtain further creative talent and IP. Free cash flow since 31 December 2022, due to increases in We have strict criteria for evaluating potential forecast profits. 2023 2022 EPS – adjusted and statutory Twelve months to 31 December £m £m acquisitions. Financially, we assess Overall, adjusted profit after tax was down at ownership of IP, earnings growth and At 31 December 2023, £78 million of Adjusted cash flow 498 540 £311 million (2022: £537 million). Non- valuation based on return on capital expected future payments had been Net interest paid (excluding lease interest) (27) (37) controlling interest was a share of losses of employed and discounted cash flow. recorded on the balance sheet, with the £1 million (2022: share of profit of £7 million) balance of £27 million to be accrued over the Adjusted cash tax* (70) (86) Strategically, we ensure an acquisition target which is the net result from the non-ITV has a strong creative track record and period in which the sellers are required to Pension funding (40) (137) owned share in entities such as Plimsoll, pipeline in content genres that return and remain with the business. Free cash flow 361 280 Cattleya and Tomorrow Studios. travel, namely drama, entertainment and There were no acquisitions during 2023. * Adjusted cash tax of £70 million is total net cash tax paid of £32 million plus receipt of production tax credits of £38 million, which are included within adjusted cash flow from factual, as well as retention and succession operations, as these production tax credits relate directly to the production of programmes. Adjusted basic EPS was down 41% to 7.8p in planning for key individuals in the business. the year (2022: 13.2p). The weighted average number of shares increased year-on-year to Our free cash flow after payments for interest, cash tax and pension funding was £361 million (2022: £280 million). 4,023 million (2022: 4,010 million). Diluted adjusted EPS in the year was 7.7p (2022: 13.1p) reflecting a weighted average diluted number of shares of 4,059 million (2022: 4,046 million).
48 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 49 S FINANCE REVIEW CONTINUED T R A T E G I Tax strategyStatutory EPS decreased by 51% to 5.2p We have generally structured our deals with Cash generation C R (2022: 10.7p).earnouts or with put and call options in place E ITV is a responsible business, and we take a Profit to cash conversion P for the remainder of the equity, capping the O responsible attitude to tax, recognising that R it affects all of our stakeholders. To allow A full reconciliation between statutory and maximum consideration payable by basing a 2023 2022 T adjusted EPS is included in the Alternative significant part of the consideration on Twelve months to 31 December £m £m those stakeholders to understand our Adjusted EBITA 489 717 approach to tax, we have published our Performance Measures section.future performance. This has allowed us to Global Tax Strategy, which is available on lock in creative talent and ensure our Working capital movement 90 (150) our corporate website.Dividend per shareincentives are aligned, and also reduce our Adjustment for The Voice of China cash received* – 23 The Board recognises the importance of the risk by only paying for the actual, not expected, performance delivered over time. Adjustment for production tax credits (47) (18) www.itvplc.com/investors/ ordinary dividend to ITV shareholders. ** governance/policiesReflecting its confidence in the business and Depreciation 46 53 its strategy, as well as the continued strong The majority of earnouts or put and call Share-based compensation 16 19 We have four key strategic tax objectives:cash generation, in line with ITV’s dividend options are dependent on the seller Acquisition of property, plant and equipment and intangible assets*** (70) (78) policy, the Board has declared a final remaining within the business. Where future 1. Engage with tax authorities in an open and payments are directly related to the seller Lease liability payments (including lease interest) (26) (26) transparent way to minimise uncertaintydividend of 3.3p (2022: 3.3p), giving an remaining with the business, these payments ordinary dividend of 5.0p per share for the Adjusted cash flow 498 540 2. Proactively partner with the business to full year 2023 (2022: 5.0p), a total payout are treated as employment costs and, Profit to cash ratio (adjusted EBITA/adjusted cash flow) 102% 75% provide clear, timely, relevant and business of around £200 million. The Board remains therefore, are part of our statutory results. focused advice across all aspects of taxHowever, we exclude these payments from * Cash received in 2018 and 2019 for The Voice of China was placed under review and treated as an exceptional cash receipt and excluded from the profit to cash conversion committed to paying a total dividend of at adjusted profits and adjusted EPS as an calculation. In 2022, the review completed and the cash was released. This adjustment shows the conversion of exceptional cash to operating cash. 3. Take an appropriate and balanced least 5.0p in 2024, which it expects to grow ** Depreciation of £46 million (2022: £53 million) includes £28 million (2022: £33 million) which relates to ITV Studios and £18 million (2022: £20 million) relating to Media & approach when considering how to over the medium term, whilst balancing exceptional item, as in our view, for the Entertainment. structure tax sensitive transactionsfurther investment to support our strategy reasons set out above, these items are part *** Except where disclosed, management views the acquisition of property, plant and equipment and intangibles as business as usual capex, necessary to the ongoing investment of the capital consideration reflecting how in the business. 4. Manage ITV’s tax risk by operating and our commitment to investment grade we structure our transactions and do not effective tax governance and metrics over the medium term. form part of the core operations. understanding our tax control framework Cash generated from operations is reconciled to the adjusted cash flow as follows: with a view to continuously adjusting our Dividends are distributed based on the Acquisition-related liabilities or approach to be compliant with our tax realised distributable reserves (within performance-based employment-linked 2023 2022 obligations. retained earnings) of ITV plc (the Company) Twelve months to 31 December £m £m and not based on the Group’s retained earnouts are amounts estimated to be Cash generated from operations 488 537 Our tax strategy is aligned with that of the earnings. payable to previous owners. The estimated future payments as at 31 December 2023 are Cash outflow from exceptional items 68 53 business and its commercial activities and £105 million and are sensitive to forecast Cash generated from operations excluding exceptional items 556 590 establishes a clear Group-wide approach The dividend timetable profits as they are based on a multiple of based on openness and transparency in all is as follows:Adjustment for production tax credits 38 31 aspects of tax reporting and compliance, earnings. The range of reasonably possible Adjustment for The Voice of China cash received – 23 wherever the Company and its subsidiaries Thursday outcomes for the liability is between £86 Announcement 7 March 2024million and £147 million. The estimated Acquisition of property, plant and equipment and intangible assets (70) (78) operate. The strategy confirms that ITV does future payments, treated as employment not engage in or condone tax evasion or the Thursday Lease liability payments (including lease interest) (26) (26) Ex-dividend date11 April 2024costs, are accrued over the period the sellers facilitation of tax evasion in any form and Friday are required to remain with the business, and Adjusted cash flow 498 540 that we have in place reasonable procedures Record date12 April 2024those not linked to employment are to prevent the facilitation of tax evasion. Thursday recognised at acquisition at their time One of ITV’s strengths is its cash generation, reflecting our ongoing tight management of working capital balances. We manage risk when Within our overall governance structure, the Dividend paid23 May 2024discounted value.making all investment decisions, particularly in scripted content and ITVX, through having a disciplined approach to cash and costs. Remaining governance of tax and tax risk is given a high focused on cash and costs means we are in a good position to continue to invest across the business in line with our strategic priorities. priority by the Board, and Audit and Risk We closely monitor the forecast Committee (ARC). The ITV Global Tax Acquisitionsperformance of each acquisition and, where In the year, we generated £498 million of operational cash (2022: £540 million) from £489 million of adjusted EBITA (2022: £717 million), Strategy, approved by the Board and ARC in there has been a change in expectations, resulting in a profit to cash ratio of 102% (2022: 75%). The increase in our profit to cash ratio year-on-year reflects a favourable movement in September 2023, and as published on the As part of our strategy to Expand Studios, we working capital due to the unwind of programme rights and inventory previously built up for the launch of ITVX. In addition, there has been a ITV plc website, is compliant with the UK tax consider selective value-creating M&A and we adjust our view of potential future talent deals in both scripted and unscripted commitments. Expected future payments of reduction in production inventories predominantly in the US as a result of the 2023 writers’ and actors’ strike. strategy publication requirement set out in £105 million have increased by £16 million Part 2 Schedule 19 of the Finance Act 2016.to obtain further creative talent and IP. Free cash flow since 31 December 2022, due to increases in We have strict criteria for evaluating potential forecast profits. 2023 2022 EPS – adjusted and statutoryTwelve months to 31 December £m £m acquisitions. Financially, we assess Overall, adjusted profit after tax was down at ownership of IP, earnings growth and At 31 December 2023, £78 million of Adjusted cash flow 498 540 £311 million (2022: £537 million). Non-valuation based on return on capital expected future payments had been Net interest paid (excluding lease interest) (27) (37) controlling interest was a share of losses of employed and discounted cash flow. recorded on the balance sheet, with the £1 million (2022: share of profit of £7 million) balance of £27 million to be accrued over the Adjusted cash tax* (70) (86) Strategically, we ensure an acquisition target which is the net result from the non-ITV has a strong creative track record and period in which the sellers are required to Pension funding (40) (137) owned share in entities such as Plimsoll, pipeline in content genres that return and remain with the business. Free cash flow 361 280 Cattleya and Tomorrow Studios.travel, namely drama, entertainment and There were no acquisitions during 2023. * Adjusted cash tax of £70 million is total net cash tax paid of £32 million plus receipt of production tax credits of £38 million, which are included within adjusted cash flow from factual, as well as retention and succession operations, as these production tax credits relate directly to the production of programmes. Adjusted basic EPS was down 41% to 7.8p in planning for key individuals in the business. the year (2022: 13.2p). The weighted average number of shares increased year-on-year to Our free cash flow after payments for interest, cash tax and pension funding was £361 million (2022: £280 million). 4,023 million (2022: 4,010 million). Diluted adjusted EPS in the year was 7.7p (2022: 13.1p) reflecting a weighted average diluted number of shares of 4,059 million (2022: 4,046 million).
50 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 51 S FINANCE REVIEW CONTINUED T R A T E G I Funding and liquidity Reported net debt Production inventories, contract therefore the £16 million payment may • Total pension deficit funding contributions C R resume in 2024. The Group retains day-to- for 2024 are expected to come down year E Debt structure and liquidity 2023 2022 assets and liabilities P At 31 December £m £m day operational control of SDN and SDN’s on year. More detailed guidance will be O In 2023, contract assets increased by R The Group’s financing policy is to manage its Gross cash 340 348 £17 million, production inventories revenues, profits and cashflows continue to given following the completion on the T liquidity and funding risk for the medium to be consolidated in the Group’s accounts. On triennial valuation long term. ITV uses debt instruments with a Gross debt (including IFRS 16 lease liabilities) (893) (971) decreased by £259 million and contract completion of the final payment in 2031, the range of maturities, has access to liabilities decreased by £185 million • The Board has proposed a final dividend Net debt (553) (623) Scheme’s partnership interest will have been of 3.3p, which will be paid in May 2024. appropriate short‑term borrowing facilities compared to 31 December 2022. Contract repaid in full and it will have no right to any and has a policy to maintain a minimum of assets increased due to UK scripted growth This gives a full year dividend of 5.0p. further payments. Going forward, the Board intends to pay £250 million of cash and undrawn committed with streaming platforms. The production facilities available at all times. We have three inventories decrease was driven a full year ordinary dividend of at least committed facilities in place to maintain our Financing – gross debt predominantly by key US and UK deliveries. Post balance sheet event 5.0p, which it expects to grow over the W medium term financial flexibility, which includes a £500 e are financed using debt instruments and facilities with a range of maturities. Borrowings at Contract liabilities decreased due to the On 01 March 2024 the Group announced million multilateral Revolving Credit Facility 31 December 2023 were repayable as follows: phasing of production deliveries, particularly the sale of its entire 50% interest in BritBox (RCF). £83 million of this facility matures in in the US and the UK. International to its joint venture partner CMA Investigation January 2028, and £417 million remains BBC Studios for a cash consideration of As previously reported, on 12 July 2022, committed until January 2029. The RCF has Amount repayable as at 31 December 2023 £m Maturity Pensions £255 million. The Board intends to return the the UK Competition and Markets Authority leverage and interest cover covenants which €600 million Eurobond* 535 Sep 2026 entire net proceeds to shareholders through (CMA) opened an investigation into certain require us to maintain a covenant net debt to The net pension surplus for the defined a £235 million share buyback which will be £230 million term loan 230 Jul 2027 benefit schemes at 31 December 2023 on an conduct of ITV and other named companies adjusted EBITDA ratio of below 3.5x and completed within 18 months. Refer to notes in the sector relating to the production and Other loans 13 Various accounting basis was £209 million (31 3.4 and 5.3 to the financial statements for interest cover (adjusted EBITDA to net broadcasting of sports content in the United finance charges) above 3.0x. Total debt repayable on maturity** 778 December 2022: £192 million). The further details. movement in the year was driven by Kingdom. The investigation is at an early * Includes £15 million currency component of swaps held against euro‑denominated bond. employer contributions and a reduction in stage and the CMA has confirmed it is At 31 December 2023, ITV’s financial position ** Excludes £115 million of IFRS16 Lease Liabilities. liabilities due to changes in demographic Planning assumptions for the currently undertaking further investigation was well within its covenants. During the assumptions partly offset by a fall in full year 2024 until at least March 2024, subsequent to year, the Group secured an additional £100 The Group’s €259 million Eurobond which matured in December 2023 was refinanced by corporate bond yields. The following planning assumptions for 2024 which ITV anticipates it will receive additional million of committed funding via a bilateral drawing on the £230 million committed four year term loan, maturing in July 2027. The term are based on our current best view but may detail regarding any future steps. RCF which matures in 2028. The terms and loan has the same financial covenants as ITV’s Revolving Credit Facility and is excluded from The net pension assets include £48 million of change depending on how events unfold over conditions, including financial covenants, the total committed undrawn facilities of £900 million. gilts, which are held by the Group as security the rest of the year. On 11 October 2023, the CMA opened an are aligned to the £500 million multilateral for future unfunded pension payments to investigation into certain conduct of ITV RCF facility. four former Granada executives, the Profit and Loss impact: and other named companies in the sector liabilities of which are included in our pension relating to the production and broadcasting We also have a bilateral financing facility Capital allocation and leverage Foreign exchange • Total content costs are expected to of television content in the UK, excluding of £300 million, which is free of financial obligations. A full reconciliation is included be around £1,275 million as we further In line with our capital allocation policy, our As ITV continues to grow internationally, we within note 3.7 to the financial statements. sports content. The investigation remains at covenants and matures on 30 June 2026. priorities remain as follows: to invest are increasingly exposed to foreign exchange optimise linear, evolve our windowing an early stage and it is not currently possible At 31 December 2023, all facilities were organically in line with our strategic priorities; on our overseas operations. We do not hedge strategy and improve personalisation. to reliably quantify any liability that might undrawn (31 December 2022: only Deficit funding contributions We will invest an additional £15 million manage our financial metrics consistent with our exposure to revenues and profits result from the investigation. ITV is £50 million from the £500 million RCF The accounting surplus or deficit does not in marketing committed to complying with competition our commitment to investment grade generated overseas, as this is seen as an drive the deficit funding contribution. The was drawn), which with cash and cash metrics over the medium term; sustain a inherent risk. We may elect to hedge our • Delivery of £40 million of savings – law, and is cooperating with the CMA’s equivalents of £340 million, provided total Group’s deficit funding contributions in 2023 comprising of £10 million from our enquiries in relation to both investigations. regular ordinary dividend which can grow overseas net assets, where material. were £40 million, which included £37 million liquidity of £1,240 million (31 December over the medium term; continue to consider existing £150 million cost saving target 2022: £1,098 million). This provides us with following the agreement of the 2019 Triennial and £30 million of additional in year Foreign exchange sensitivity value creating inorganic investment against ITV is also exposed to foreign exchange risk valuation of the main section of the Scheme, sufficient liquidity to meet the requirements strict financial and strategic criteria, on transactions we undertake in a foreign savings as part of the new strategic The following table highlights ITV Studios of the business in the short to medium term and £3 million annual payment under the restructuring and efficiency programme and any surplus capital will be returned currency. Our policy is to hedge a portion London Television Centre pension funding sensitivity, for the remainder of the year under a variety of scenarios, including a to shareholders. of any known or forecast transaction where • Adjusted financing costs are expected (using internal forecasts), to translation severe but plausible downside scenario. partnerships. Further details are included in to be around £35 million there is an underlying cash exposure for the Note 3.7 to the financial statements. resulting from a 10% appreciation/ Our objective is to run an efficient balance full tenor of that exposure, to a maximum of • The adjusted effective tax rate is expected depreciation in sterling against the US dollar After acquisition‑related costs, pension sheet and manage our financial metrics five years forward, where the portion hedged to be 25% over the medium term in line and euro, assuming all other variables are and tax payments, we ended the period appropriately, consistent with our depends on the level of certainty we have on SDN pension funding partnership with reported net debt of £553 million with the UK statutory tax rate of 25% held constant. An appreciation in sterling has commitment to investment grade metrics the final size of the transaction. In 2010, ITV established a Pension Funding • Exceptional items are expected to a negative effect on revenue and adjusted (31 December 2022: £623 million). over the medium term. At 31 December 2023, Partnership (PFP) with the Trustees backed EBITA; a depreciation has a positive effect. our leverage, or net debt to adjusted EBITDA Finally, ITV is exposed to foreign exchange by SDN, which was subsequently extended in be around £90 million mainly due to was 1.0x (31 December 2022: 0.8x). risk on the retranslation of foreign currency 2011. The PFP addressed £200 million of the costs associated with the new strategic restructuring strategic restructuring Adjusted loans and deposits. Our policy is to keep funding deficit in Section A of the defined Revenue EBITA benefit pension scheme and under the and efficiency programme and digital Currency £m £m Credit ratings these balances to a minimum and hedge transformation costs such exposures where there is an original agreement, a payment of up to US dollar +/-40-55 +/ – 5-7 We continue to be rated investment grade by two rating agencies. Our current ratings are expectation that any changes in the value £200 million was due in 2022. The existing Euro +/ – 40-50 +/-7-9 of these items will result in a realised cash PFP agreement was amended and extended Cash impact BBB‑ (stable outlook) by Standard and • Total capex is expected to be around Poor’s and Baa3 (stable outlook) by Moody’s movement over the short to medium term. to 2031. As a result of this agreement, CHRIS KENNEDY Investor Services. The factors that are taken The foreign exchange and interest rate payments of £94 million were made under £75 million as we further invest in our GROUP CFO & COO into account in assessing our credit rating hedging strategy is set out in our the SDN PFP arrangement in 2022. The digital capabilities include our degree of operational gearing and Treasury policies which are approved Group is committed to up to nine annual • The cash cost of exceptionals is expected exposure to the economic cycle, as well as by the ITV PLC Board. payments of £16 million from 2023. These to be around £90 million mainly due to business and geographical diversity. payments are required if the Scheme is costs associated with the restructuring calculated to be in a technical deficit. This and efficiency programme and digital calculation is based upon the most recent transformation cost triennial valuation updated for current market • Profit to cash conversion is expected to conditions. The partnership’s interest in SDN be around 80% out to 2026. In 2024 profit provides collateral for these payments. The to cash conversion will be lower reflecting £16 million payment under the SDN PFP was an increase in working capital. Across 2023 not required to be paid in 2023. However, this and 2024 we expect cash conversion to assessment is made on an annual basis and be around 80%
50 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 51 S FINANCE REVIEW CONTINUED T R A T E G I Funding and liquidityReported net debt Production inventories, contract therefore the £16 million payment may • Total pension deficit funding contributions C R resume in 2024. The Group retains day-to- for 2024 are expected to come down year E Debt structure and liquidity2023 2022 assets and liabilities P At 31 December£m£m day operational control of SDN and SDN’s on year. More detailed guidance will be O In 2023, contract assets increased by R The Group’s financing policy is to manage its Gross cash 340348£17 million, production inventories revenues, profits and cashflows continue to given following the completion on the T liquidity and funding risk for the medium to be consolidated in the Group’s accounts. On triennial valuation long term. ITV uses debt instruments with a Gross debt (including IFRS 16 lease liabilities)(893)(971)decreased by £259 million and contract completion of the final payment in 2031, the range of maturities, has access to liabilities decreased by £185 million • The Board has proposed a final dividend Net debt (553)(623) Scheme’s partnership interest will have been of 3.3p, which will be paid in May 2024. appropriate short‑term borrowing facilities compared to 31 December 2022. Contract repaid in full and it will have no right to any and has a policy to maintain a minimum of assets increased due to UK scripted growth This gives a full year dividend of 5.0p. further payments. Going forward, the Board intends to pay £250 million of cash and undrawn committed with streaming platforms. The production facilities available at all times. We have three inventories decrease was driven a full year ordinary dividend of at least committed facilities in place to maintain our Financing – gross debtpredominantly by key US and UK deliveries. Post balance sheet event 5.0p, which it expects to grow over the W medium term financial flexibility, which includes a £500 e are financed using debt instruments and facilities with a range of maturities. Borrowings at Contract liabilities decreased due to the On 01 March 2024 the Group announced million multilateral Revolving Credit Facility 31 December 2023 were repayable as follows:phasing of production deliveries, particularly the sale of its entire 50% interest in BritBox (RCF). £83 million of this facility matures in in the US and the UK. International to its joint venture partner CMA Investigation January 2028, and £417 million remains BBC Studios for a cash consideration of As previously reported, on 12 July 2022, committed until January 2029. The RCF has Amount repayable as at 31 December 2023£mMaturityPensions £255 million. The Board intends to return the the UK Competition and Markets Authority leverage and interest cover covenants which €600 million Eurobond*535Sep 2026 entire net proceeds to shareholders through (CMA) opened an investigation into certain require us to maintain a covenant net debt to The net pension surplus for the defined a £235 million share buyback which will be £230 million term loan230Jul 2027benefit schemes at 31 December 2023 on an conduct of ITV and other named companies adjusted EBITDA ratio of below 3.5x and completed within 18 months. Refer to notes in the sector relating to the production and Other loans13Various accounting basis was £209 million (31 3.4 and 5.3 to the financial statements for interest cover (adjusted EBITDA to net broadcasting of sports content in the United finance charges) above 3.0x. Total debt repayable on maturity**778December 2022: £192 million). The further details. movement in the year was driven by Kingdom. The investigation is at an early * Includes £15 million currency component of swaps held against euro‑denominated bond.employer contributions and a reduction in stage and the CMA has confirmed it is At 31 December 2023, ITV’s financial position ** Excludes £115 million of IFRS16 Lease Liabilities.liabilities due to changes in demographic Planning assumptions for the currently undertaking further investigation was well within its covenants. During the assumptions partly offset by a fall in full year 2024 until at least March 2024, subsequent to year, the Group secured an additional £100 The Group’s €259 million Eurobond which matured in December 2023 was refinanced by corporate bond yields.The following planning assumptions for 2024 which ITV anticipates it will receive additional million of committed funding via a bilateral drawing on the £230 million committed four year term loan, maturing in July 2027. The term are based on our current best view but may detail regarding any future steps. RCF which matures in 2028. The terms and loan has the same financial covenants as ITV’s Revolving Credit Facility and is excluded from The net pension assets include £48 million of change depending on how events unfold over conditions, including financial covenants, the total committed undrawn facilities of £900 million.gilts, which are held by the Group as security the rest of the year. On 11 October 2023, the CMA opened an are aligned to the £500 million multilateral for future unfunded pension payments to investigation into certain conduct of ITV RCF facility. four former Granada executives, the Profit and Loss impact: and other named companies in the sector liabilities of which are included in our pension relating to the production and broadcasting We also have a bilateral financing facility Capital allocation and leverageForeign exchange • Total content costs are expected to of television content in the UK, excluding of £300 million, which is free of financial obligations. A full reconciliation is included be around £1,275 million as we further In line with our capital allocation policy, our As ITV continues to grow internationally, we within note 3.7 to the financial statements. sports content. The investigation remains at covenants and matures on 30 June 2026. priorities remain as follows: to invest are increasingly exposed to foreign exchange optimise linear, evolve our windowing an early stage and it is not currently possible At 31 December 2023, all facilities were organically in line with our strategic priorities; on our overseas operations. We do not hedge strategy and improve personalisation. to reliably quantify any liability that might undrawn (31 December 2022: only Deficit funding contributions We will invest an additional £15 million manage our financial metrics consistent with our exposure to revenues and profits result from the investigation. ITV is £50 million from the £500 million RCF The accounting surplus or deficit does not in marketing committed to complying with competition our commitment to investment grade generated overseas, as this is seen as an drive the deficit funding contribution. The was drawn), which with cash and cash metrics over the medium term; sustain a inherent risk. We may elect to hedge our • Delivery of £40 million of savings – law, and is cooperating with the CMA’s equivalents of £340 million, provided total Group’s deficit funding contributions in 2023 comprising of £10 million from our enquiries in relation to both investigations. regular ordinary dividend which can grow overseas net assets, where material.were £40 million, which included £37 million liquidity of £1,240 million (31 December over the medium term; continue to consider existing £150 million cost saving target 2022: £1,098 million). This provides us with following the agreement of the 2019 Triennial and £30 million of additional in year Foreign exchange sensitivity value creating inorganic investment against ITV is also exposed to foreign exchange risk valuation of the main section of the Scheme, sufficient liquidity to meet the requirements strict financial and strategic criteria, on transactions we undertake in a foreign savings as part of the new strategic The following table highlights ITV Studios of the business in the short to medium term and £3 million annual payment under the restructuring and efficiency programme and any surplus capital will be returned currency. Our policy is to hedge a portion London Television Centre pension funding sensitivity, for the remainder of the year under a variety of scenarios, including a to shareholders. of any known or forecast transaction where • Adjusted financing costs are expected (using internal forecasts), to translation severe but plausible downside scenario.partnerships. Further details are included in to be around £35 million there is an underlying cash exposure for the Note 3.7 to the financial statements. resulting from a 10% appreciation/ Our objective is to run an efficient balance full tenor of that exposure, to a maximum of • The adjusted effective tax rate is expected depreciation in sterling against the US dollar After acquisition‑related costs, pension sheet and manage our financial metrics five years forward, where the portion hedged to be 25% over the medium term in line and euro, assuming all other variables are and tax payments, we ended the period appropriately, consistent with our depends on the level of certainty we have on SDN pension funding partnership with reported net debt of £553 million with the UK statutory tax rate of 25% held constant. An appreciation in sterling has commitment to investment grade metrics the final size of the transaction.In 2010, ITV established a Pension Funding • Exceptional items are expected to a negative effect on revenue and adjusted (31 December 2022: £623 million).over the medium term. At 31 December 2023, Partnership (PFP) with the Trustees backed EBITA; a depreciation has a positive effect. our leverage, or net debt to adjusted EBITDA Finally, ITV is exposed to foreign exchange by SDN, which was subsequently extended in be around £90 million mainly due to was 1.0x (31 December 2022: 0.8x).risk on the retranslation of foreign currency 2011. The PFP addressed £200 million of the costs associated with the new strategic restructuring strategic restructuring Adjusted loans and deposits. Our policy is to keep funding deficit in Section A of the defined Revenue EBITA benefit pension scheme and under the and efficiency programme and digital Currency £m £m Credit ratingsthese balances to a minimum and hedge transformation costs such exposures where there is an original agreement, a payment of up to US dollar +/-40-55 +/ – 5-7 We continue to be rated investment grade by two rating agencies. Our current ratings are expectation that any changes in the value £200 million was due in 2022. The existing Euro +/ – 40-50 +/-7-9 of these items will result in a realised cash PFP agreement was amended and extended Cash impact BBB‑ (stable outlook) by Standard and • Total capex is expected to be around Poor’s and Baa3 (stable outlook) by Moody’s movement over the short to medium term. to 2031. As a result of this agreement, CHRIS KENNEDY Investor Services. The factors that are taken The foreign exchange and interest rate payments of £94 million were made under £75 million as we further invest in our GROUP CFO & COO into account in assessing our credit rating hedging strategy is set out in our the SDN PFP arrangement in 2022. The digital capabilities include our degree of operational gearing and Treasury policies which are approved Group is committed to up to nine annual • The cash cost of exceptionals is expected exposure to the economic cycle, as well as by the ITV PLC Board.payments of £16 million from 2023. These to be around £90 million mainly due to business and geographical diversity.payments are required if the Scheme is costs associated with the restructuring calculated to be in a technical deficit. This and efficiency programme and digital calculation is based upon the most recent transformation cost triennial valuation updated for current market • Profit to cash conversion is expected to conditions. The partnership’s interest in SDN be around 80% out to 2026. In 2024 profit provides collateral for these payments. The to cash conversion will be lower reflecting £16 million payment under the SDN PFP was an increase in working capital. Across 2023 not required to be paid in 2023. However, this and 2024 we expect cash conversion to assessment is made on an annual basis and be around 80%
52 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 53 S T NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT R A T E G I The table below, and the information it refers to, sets out our compliance C R SOCIAL IMPACT E P with the non‑financial reporting requirements in accordance with Sections O Policies Due diligence and implementation Outcomes of policies and related KPIs Related principal risks (pages 57 to 64) R 414CA and 414CB of the Companies Act 2006. T • Social Purpose is a core enabler in • We evaluate and monitor all • Our Social Purpose strategy • Social impact matters are not delivering ITV’s overall strategy. We our Social Purpose campaigns has four priorities relating to considered to be a standalone use ITV’s scale and creativity to and progress against our goals. Mental Wellbeing, Better Futures, principal risk, however social shape culture for good not just 2023 carbon emissions data has Climate Action and Diversity, Equity impact matters which influence Refer to page 2 for details on our Business Model. within ITV but across the UK and been independently verified by and Inclusion, (see pages 32) other principal risks are detailed in other markets that we might a third party • The Social Purpose strategy our Risks and Uncertainties section impact. We have set and published • ITV’s Mental Health Advisory is aligned with the UN SDGs. ITV ENVIRONMENT ambitious targets which align to the Group, chaired by Baroness Ruth has identified nine SDGs where it United Nations Sustainable Davidson in 2023 and succeeded by can have the most impact, Policies Due diligence and implementation Outcomes of policies and related KPIs Related principal risks (pages 57 to 64) Development Goals (UN SDGs) Pat Younge in 2024, comprises (see page 32) external expert advisers and ITV • Our Environmental Management • We evaluate and monitor climate • Climate Action is one of the • Climate change is not currently representatives and provides Policy sets out our commitment to change risks and progress against priorities of ITV’s Social Purpose recognised as a principal risk of the guidance on best practice for reaching our Science Based Targets our environmental targets through strategy (see page 35). See more on Group, but is categorised as an looking after the welfare of people, on carbon emissions by 2030. In our governance structure, which this and our GHG data emerging risk and kept under productions and campaigns addition, we are part of the includes the Climate Action • We are active members of the regular review through our risk • In 2023, ITV introduced a Business Ambition for 1.5 degrees, Delivery Group, and is referenced in industry sustainability body BAFTA management framework. However, psychologist professional setting additional 2050 goals for further detail in our TCFD report albert, and are committed to principal risks are assessed with a development programme to 90% carbon emissions reduction (see page 65) reducing the impact of production climate risk lens. We have identified expand the pool of registered across all Scopes • Progress against our environmental emissions by ensuring all the specific climate risks for ITV psychologists working in television. • We disclose against the Task targets is reported to the Studios, programmes produced or through climate scenario analysis It was delivered in partnership with Force on Climate-related Financial Media & Entertainment, and commissioned in the UK are • For our TCFD report see page 65 the BBC and accredited by the Disclosures (TCFD) framework Management Boards up to four albert certified British Psychological Society and our exposure to climate-related times a year, and annually to the aimed at supporting ITV and BBC risks and processes to mitigate PLC Board. The Audit and Risk programmes in their duty of care to these risks Committee also has oversight contributors • ITV’s commitment to climate of environmental matters (see • ITV is a member of the Responsible action has been assessed by the page 114) Media Forum Carbon Disclosure Project and • All colleagues and Board • Progress against our targets and given an A rating, putting ITV in the members are required to the impact of our campaigns are top 2% of disclosing companies for complete mandatory training reported to the Management Board leadership in transparency and on climate action four times a year, monthly in social corporate reporting purpose papers and annually to the • Our Supplier Code of Conduct sets PLC Board out our expectation of our suppliers to align with our 2030 environmental targets HUMAN RIGHTS Policies Due diligence and implementation Outcomes of policies and related KPIs Related principal risks (pages 57 to 64) COLLEAGUES • ITV is fully committed to ensuring • Ultimate oversight sits with • No incidences of human rights • Legal and regulatory Policies Due diligence and implementation Outcomes of policies and related KPIs Related principal risks (pages (57 to 64) that we do not participate in the the Board abuse or modern slavery have non-compliance (including labour violation of human rights and • ITV’s Modern Slavery Working been identified rights issues) is recognised as a • Our Code of Ethics and Conduct • All colleagues and Board members • The Speaking Up framework has • Non-compliance with laws and expects the same of our suppliers. Group is responsible for overseeing • Our Code of Ethics and Conduct principal risk with the Board having (Our Code) promotes the highest complete annual mandatory been enhanced, making it easier to regulations is recognised as a We are a founding member of the modern slavery risk management explains ITV’s aim to address and zero tolerance for known and standards of ethical business, training aligned with Our Code. raise concerns and support ITV’s principal risk. The Board has zero television Industry and Human for ITV in a manner that places identify the risks of modern slavery deliberate non-compliance. underpinning our values and • Our Code is reviewed regularly and open culture tolerance for known and deliberate Rights Forum set up to identify and concerns for potential victims at We have a compliance and risk corporate culture approved by the Audit and Risk • Diversity, Equity and Inclusion non-compliance. We regularly proactively address labour rights • Suppliers are required to comply management framework in place assess potential risks associated the centre. It agrees on strategies with our Supplier Code of Conduct • Adherence is a key requirement of Committee is one of the four priorities of issues in the television industry and for addressing key risks identified and address the risk of modern to identify potential risks and our overall compliance framework • Our Inclusion and Diversity Council, ITV’s Social Purpose strategy with employee conduct and ethics raise awareness beyond it and raises awareness among ITV’s mitigate these (see page 32) as part of our compliance slavery in their operations and • Our Diversity, Equity and Inclusion chaired by the Chief Executive, processes • ITV’s Modern Slavery Statement decision-makers of labour rights supply chains strategy is aligned with and drives the organisation’s diversity • ITV has ranked third in the FTSE sets out the steps taken to identify, considerations and seeks their supports our business strategy and inclusion agenda (see page 37) 250 index and is the top media • Failure to deliver our Diversity address and prevent modern support for appropriate initiatives • Our employment and recruitment • Progress against our diversity company within the index for Acceleration Plan is not recognised slavery and human trafficking in our • Our Modern Slavery Statement is policies are based on equal targets is reported to the Studios women in leadership roles. ITV was as a standalone principal risk but is business and supply chain reviewed by the Board on an annual opportunities and and Media & Entertainment Boards also one of 20 FTSE 250 companies recognised as an important factor • Our Supplier Code of Conduct sets basis. and can be found in the non-discrimination and set out our biannually, the Management Board with at least five women on its within the recruitment and out our expectation of suppliers to Governance section of our commitment to an open and four times a year, the Nominations Board. (Source: FTSE Women retention of talent principal risk and protect human rights of workers ITV PLC website inclusive culture Committee regularly, and the PLC Leaders Review February 2024) remains under review, monitored by and communities impacted by Board annually the Nominations Committee operations and supply chains • ITV’s Duty of Care Charter sets out • Failure to create the right our commitment to the physical • The Audit and Risk Committee organisational culture, which and mental health and safety of reviews the Group’s health and allows colleagues to speak up, and employees, participants and others safety procedures at least annually, failure to extend an adequate duty we work with and receives regular reports from of care or a major health and • ITV has a ‘Speaking Up’ framework the Duty of Care Operating Board, safety incident are recognised for anyone working for or with ITV to which the Chair of the Audit and as principal risks raise concerns and grievances in Risk Committee attends confidence (and if they wish • Our Speaking Up framework is anonymously), as well as a monitored and reviewed by the freelancer complaints procedure Audit and Risk Committee • We also have policies on bullying, biannually. Statistics on concerns harassment and dignity at work, raised are reviewed at each and grievances Board meeting
52 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 53 S T NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT R A T E G I The table below, and the information it refers to, sets out our compliance C R SOCIAL IMPACT E P with the non‑financial reporting requirements in accordance with Sections O Policies Due diligence and implementation Outcomes of policies and related KPIs Related principal risks (pages 57 to 64) R 414CA and 414CB of the Companies Act 2006. T • Social Purpose is a core enabler in • We evaluate and monitor all • Our Social Purpose strategy • Social impact matters are not delivering ITV’s overall strategy. We our Social Purpose campaigns has four priorities relating to considered to be a standalone use ITV’s scale and creativity to and progress against our goals. Mental Wellbeing, Better Futures, principal risk, however social shape culture for good not just 2023 carbon emissions data has Climate Action and Diversity, Equity impact matters which influence Refer to page 2 for details on our Business Model.within ITV but across the UK and been independently verified by and Inclusion, (see pages 32) other principal risks are detailed in other markets that we might a third party • The Social Purpose strategy our Risks and Uncertainties section impact. We have set and published • ITV’s Mental Health Advisory is aligned with the UN SDGs. ITV ENVIRONMENT ambitious targets which align to the Group, chaired by Baroness Ruth has identified nine SDGs where it United Nations Sustainable Davidson in 2023 and succeeded by can have the most impact, PoliciesDue diligence and implementationOutcomes of policies and related KPIsRelated principal risks (pages 57 to 64)Development Goals (UN SDGs)Pat Younge in 2024, comprises (see page 32) external expert advisers and ITV • Our Environmental Management • We evaluate and monitor climate • Climate Action is one of the • Climate change is not currently representatives and provides Policy sets out our commitment to change risks and progress against priorities of ITV’s Social Purpose recognised as a principal risk of the guidance on best practice for reaching our Science Based Targets our environmental targets through strategy (see page 35). See more on Group, but is categorised as an looking after the welfare of people, on carbon emissions by 2030. In our governance structure, which this and our GHG dataemerging risk and kept under productions and campaigns addition, we are part of the includes the Climate Action • We are active members of the regular review through our risk • In 2023, ITV introduced a Business Ambition for 1.5 degrees, Delivery Group, and is referenced in industry sustainability body BAFTA management framework. However, psychologist professional setting additional 2050 goals for further detail in our TCFD report albert, and are committed to principal risks are assessed with a development programme to 90% carbon emissions reduction (see page 65)reducing the impact of production climate risk lens. We have identified expand the pool of registered across all Scopes• Progress against our environmental emissions by ensuring all the specific climate risks for ITV psychologists working in television. • We disclose against the Task targets is reported to the Studios, programmes produced or through climate scenario analysisIt was delivered in partnership with Force on Climate-related Financial Media & Entertainment, and commissioned in the UK are • For our TCFD report see page 65the BBC and accredited by the Disclosures (TCFD) framework Management Boards up to four albert certifiedBritish Psychological Society and our exposure to climate-related times a year, and annually to the aimed at supporting ITV and BBC risks and processes to mitigate PLC Board. The Audit and Risk programmes in their duty of care to these risksCommittee also has oversight contributors • ITV’s commitment to climate of environmental matters (see • ITV is a member of the Responsible action has been assessed by the page 114) Media Forum Carbon Disclosure Project and • All colleagues and Board • Progress against our targets and given an A rating, putting ITV in the members are required to the impact of our campaigns are top 2% of disclosing companies for complete mandatory training reported to the Management Board leadership in transparency and on climate action four times a year, monthly in social corporate reporting purpose papers and annually to the • Our Supplier Code of Conduct sets PLC Board out our expectation of our suppliers to align with our 2030 environmental targets HUMAN RIGHTS Policies Due diligence and implementation Outcomes of policies and related KPIs Related principal risks (pages 57 to 64) COLLEAGUES • ITV is fully committed to ensuring • Ultimate oversight sits with • No incidences of human rights • Legal and regulatory PoliciesDue diligence and implementationOutcomes of policies and related KPIsRelated principal risks (pages (57 to 64)that we do not participate in the the Boardabuse or modern slavery have non-compliance (including labour violation of human rights and • ITV’s Modern Slavery Working been identified rights issues) is recognised as a • Our Code of Ethics and Conduct • All colleagues and Board members • The Speaking Up framework has • Non-compliance with laws and expects the same of our suppliers. Group is responsible for overseeing • Our Code of Ethics and Conduct principal risk with the Board having (Our Code) promotes the highest complete annual mandatory been enhanced, making it easier to regulations is recognised as a We are a founding member of the modern slavery risk management explains ITV’s aim to address and zero tolerance for known and standards of ethical business, training aligned with Our Code.raise concerns and support ITV’s principal risk. The Board has zero television Industry and Human for ITV in a manner that places identify the risks of modern slaverydeliberate non-compliance. underpinning our values and • Our Code is reviewed regularly and open culturetolerance for known and deliberate Rights Forum set up to identify and concerns for potential victims at We have a compliance and risk corporate cultureapproved by the Audit and Risk • Diversity, Equity and Inclusion non-compliance. We regularly proactively address labour rights • Suppliers are required to comply management framework in place assess potential risks associated the centre. It agrees on strategies with our Supplier Code of Conduct • Adherence is a key requirement of Committeeis one of the four priorities of issues in the television industry and for addressing key risks identified and address the risk of modern to identify potential risks and our overall compliance framework• Our Inclusion and Diversity Council, ITV’s Social Purpose strategy with employee conduct and ethics raise awareness beyond it and raises awareness among ITV’s mitigate these (see page 32)as part of our compliance slavery in their operations and • Our Diversity, Equity and Inclusion chaired by the Chief Executive, processes• ITV’s Modern Slavery Statement decision-makers of labour rights supply chains strategy is aligned with and drives the organisation’s diversity • ITV has ranked third in the FTSE sets out the steps taken to identify, considerations and seeks their supports our business strategyand inclusion agenda (see page 37) 250 index and is the top media • Failure to deliver our Diversity address and prevent modern support for appropriate initiatives • Our employment and recruitment • Progress against our diversity company within the index for Acceleration Plan is not recognised slavery and human trafficking in our • Our Modern Slavery Statement is policies are based on equal targets is reported to the Studios women in leadership roles. ITV was as a standalone principal risk but is business and supply chainreviewed by the Board on an annual opportunities and and Media & Entertainment Boards also one of 20 FTSE 250 companies recognised as an important factor • Our Supplier Code of Conduct sets basis. and can be found in the non-discrimination and set out our biannually, the Management Board with at least five women on its within the recruitment and out our expectation of suppliers to Governance section of our commitment to an open and four times a year, the Nominations Board. (Source: FTSE Women retention of talent principal risk and protect human rights of workers ITV PLC website inclusive cultureCommittee regularly, and the PLC Leaders Review February 2024)remains under review, monitored by and communities impacted by Board annuallythe Nominations Committee operations and supply chains • ITV’s Duty of Care Charter sets out • Failure to create the right our commitment to the physical • The Audit and Risk Committee organisational culture, which and mental health and safety of reviews the Group’s health and allows colleagues to speak up, and employees, participants and others safety procedures at least annually, failure to extend an adequate duty we work withand receives regular reports from of care or a major health and • ITV has a ‘Speaking Up’ framework the Duty of Care Operating Board, safety incident are recognised for anyone working for or with ITV to which the Chair of the Audit and as principal risks raise concerns and grievances in Risk Committee attends confidence (and if they wish • Our Speaking Up framework is anonymously), as well as a monitored and reviewed by the freelancer complaints procedureAudit and Risk Committee • We also have policies on bullying, biannually. Statistics on concerns harassment and dignity at work, raised are reviewed at each and grievancesBoard meeting
54 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 55 S NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT CONTINUED T RISKS AND UNCERTAINTIES R A T E G I Risk Landscape C R ANTI-CORRUPTION AND ANTI-BRIBERY E P O Policies Due diligence and implementation Outcomes of policies and related KPIs Related principal risks (pages 57 to 64) R The increasing pace of change in the market and the continued impact of the T • Our Code of Ethics and Conduct • All colleagues and Board members • We take a zero-tolerance approach • Legal and regulatory macroeconomic environment and global uncertainty means we must continue to (Our Code) promotes the highest are required to complete annual to bribery and corruption and are non-compliance (including with standards of ethical business and mandatory training aligned with committed to acting professionally, the Bribery Act 2010) is recognised be agile in the way we implement our strategy and manage the resulting risks. reinforces the importance of Our Code, and systems are in place fairly and with integrity in all our as a principal risk. We have a awareness of compliance through the Speaking Up business dealings and relationships compliance programme in place requirements framework to enable employees to wherever we operate, as well as to mitigate the risk of bribery, • Our Anti-Bribery Policy sets out our identify and raise issues, including implementing and enforcing which is articulated in our responsibilities and provides suspected wrongdoing, fraud or effective systems to counter Anti-Bribery Policy Our approach SPOTLIGHT ON… ITV’s risk oversight and governance information and guidance on what malpractice in the workplace bribery and corruption The focus in 2023 has been on evolving our framework has been set up to assist the bribery is and how to deal with • Bespoke training on the approach to risk management to ensure it CLIMATE PLC Board in fulfilling its responsibility bribery and corruption issues. Anti-Bribery Policy is provided to remains appropriate for the risk landscape for overseeing the management of risk Those working for or with us must employees working in roles or • We approach the actual and emerging risks across ITV. observe and uphold the policy territories at higher risk of bribery and proportionate so as not to stifle and corruption issues creativity. We started the year by reassessing associated with the climate no differently • Our Sanctions Policy ensures that to how we manage any other risk faced by The Risk and Compliance Steering the business complies with all • Compliance with the Anti-Bribery our risk landscape and deep diving into the ITV. The activities taken to manage our Committee (RCSC) plays an integral part relevant international and financial Policy is kept under review and risk categories that this is made up of. The responsibilities related to emerging in assisting the Management Board in sanctions in force at the time by the reported to the Management Board learnings from this exercise allowed us to regulations, investor expectations and our overseeing the management of risk across US, UN, EU or UK government and Audit and Risk Committee adapt our approach to further drive external disclosure requirements are of • Our Supplier Code of Conduct sets biannually standardisation in our risk management particular interest to the Board. ITV. It provides the central teams and out our expectation of our suppliers • Bribery and corruption risks are processes and enhance our understanding divisions with a route to escalate risks and • Upskilling and educating the business commissions deep dives into principal and to comply with all anti-bribery laws reviewed annually by the Audit of ITV’s most critical risks. forms the basis for ensuring we have and Risk Committee, as is wider effective management and accountability emerging risks to enhance understanding policy compliance Our approach places emphasis on the for our environmental obligations. This is of the key drivers, mitigating activities importance of collaboration between the supported by a network of green leads to and identify further management Central teams that set expectations and the support both the owners of climate-related activity required. risks and colleagues across ITV to Divisions. On a periodic basis, the Divisions transform our business so we are fit to The Management Board conducts a robust review their exposure to the key risk thrive in a sustainable economy. Our assessment of principal and emerging risks categories managed centrally to identify any Sustainability team acts as the glue to significant and emerging risks that might oversee these activities, join the dots and faced by the Group twice a year. This includes affect their performance. In addition, the provide advice and guidance. consideration of the potential impact and Divisional Leadership teams bring together • Whilst we do not categorise Climate as a probability of each of these occurring. The their most significant risks and uncertainties, standalone principal risk, which could outcome of these assessments is presented including emerging risks, for discussion and materially threaten our viability or strategy, to the Audit and Risk Committee and the we recognise that climate needs to be PLC Board for review and approval. prioritisation. This ‘top-down’ and ‘bottom- considered as part of our everyday up’ approach is facilitated and overseen by activities and is intrinsically linked to many the Group Risk team. of our risks. SPOTLIGHT ON… • For more information on our climate- CLIMATE Emerging risks related risks, see our Climate-Related Financial Disclosures Report. Given the changing landscape in which we • The Climate Action Delivery Group (CADG) operate, we have increased our focus during has been established to support the 2023 on identifying and understanding the Management Board in overseeing the emerging risks we face so we can proactively Risk appetite management of climate-related risks. This take action now. This involved expanding the Group, chaired by the CFO/COO, meets o help focus the way we manage our T four times a year to review and challenge ongoing horizon scanning performed to principal risk categories, the Board has progress against plans, deep dive into embed it as a key consideration when defined our risk appetite for each one to escalated risks and identify areas where assessing the current position of each enable us to strike the right balance between further management activity is required. principal risk category. risk taking and risk mitigation. Our risk • The CADG plays an important role in ITV’s appetite reflects ITV’s willingness to be risk oversight and governance. It reports Our two key emerging risks are climate and innovative and open to ideas as we pursue and escalates key risks to the RCSC that the transformative impact of Generative our strategy, whilst maintaining our low are considered as part of the Management Artificial Intelligence (Generative AI). Board’s robust assessment of principal and tolerance in operational areas, such as duty emerging risks. It also provides updates to of care, data protection and corporate the Management Board, Audit and Risk compliance. Committee and PLC Board on progress against climate-related targets and our Risk leadership and governance climate-related disclosures for review and challenge. Our leadership plays an important role in ensuring risk management is considered in key decision making. Each of our principal risk categories has a Management Board sponsor. They articulate each risk, how we manage them and the actions being taken to operate within our risk appetite.
54 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 55 S NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT CONTINUED T RISKS AND UNCERTAINTIES R A T E G I Risk Landscape C R ANTI-CORRUPTION AND ANTI-BRIBERY E P O PoliciesDue diligence and implementationOutcomes of policies and related KPIsRelated principal risks (pages 57 to 64) R The increasing pace of change in the market and the continued impact of the T • Our Code of Ethics and Conduct • All colleagues and Board members • We take a zero-tolerance approach • Legal and regulatory macroeconomic environment and global uncertainty means we must continue to (Our Code) promotes the highest are required to complete annual to bribery and corruption and are non-compliance (including with standards of ethical business and mandatory training aligned with committed to acting professionally, the Bribery Act 2010) is recognised be agile in the way we implement our strategy and manage the resulting risks. reinforces the importance of Our Code, and systems are in place fairly and with integrity in all our as a principal risk. We have a awareness of compliance through the Speaking Up business dealings and relationships compliance programme in place requirementsframework to enable employees to wherever we operate, as well as to mitigate the risk of bribery, • Our Anti-Bribery Policy sets out our identify and raise issues, including implementing and enforcing which is articulated in our responsibilities and provides suspected wrongdoing, fraud or effective systems to counter Anti-Bribery PolicyOur approachSPOTLIGHT ON… ITV’s risk oversight and governance information and guidance on what malpractice in the workplace bribery and corruptionThe focus in 2023 has been on evolving our framework has been set up to assist the bribery is and how to deal with • Bespoke training on the approach to risk management to ensure it CLIMATE PLC Board in fulfilling its responsibility bribery and corruption issues. Anti-Bribery Policy is provided to remains appropriate for the risk landscape for overseeing the management of risk Those working for or with us must employees working in roles or • We approach the actual and emerging risks across ITV. observe and uphold the policy territories at higher risk of bribery and proportionate so as not to stifle and corruption issuescreativity. We started the year by reassessing associated with the climate no differently • Our Sanctions Policy ensures that to how we manage any other risk faced by The Risk and Compliance Steering the business complies with all • Compliance with the Anti-Bribery our risk landscape and deep diving into the ITV. The activities taken to manage our Committee (RCSC) plays an integral part relevant international and financial Policy is kept under review and risk categories that this is made up of. The responsibilities related to emerging in assisting the Management Board in sanctions in force at the time by the reported to the Management Board learnings from this exercise allowed us to regulations, investor expectations and our overseeing the management of risk across US, UN, EU or UK governmentand Audit and Risk Committee adapt our approach to further drive external disclosure requirements are of • Our Supplier Code of Conduct sets biannually standardisation in our risk management particular interest to the Board. ITV. It provides the central teams and out our expectation of our suppliers • Bribery and corruption risks are processes and enhance our understanding divisions with a route to escalate risks and • Upskilling and educating the business commissions deep dives into principal and to comply with all anti-bribery lawsreviewed annually by the Audit of ITV’s most critical risks.forms the basis for ensuring we have and Risk Committee, as is wider effective management and accountability emerging risks to enhance understanding policy compliance Our approach places emphasis on the for our environmental obligations. This is of the key drivers, mitigating activities importance of collaboration between the supported by a network of green leads to and identify further management Central teams that set expectations and the support both the owners of climate-related activity required. risks and colleagues across ITV to Divisions. On a periodic basis, the Divisions transform our business so we are fit to The Management Board conducts a robust review their exposure to the key risk thrive in a sustainable economy. Our assessment of principal and emerging risks categories managed centrally to identify any Sustainability team acts as the glue to significant and emerging risks that might oversee these activities, join the dots and faced by the Group twice a year. This includes affect their performance. In addition, the provide advice and guidance. consideration of the potential impact and Divisional Leadership teams bring together • Whilst we do not categorise Climate as a probability of each of these occurring. The their most significant risks and uncertainties, standalone principal risk, which could outcome of these assessments is presented including emerging risks, for discussion and materially threaten our viability or strategy, to the Audit and Risk Committee and the we recognise that climate needs to be PLC Board for review and approval. prioritisation. This ‘top-down’ and ‘bottom- considered as part of our everyday up’ approach is facilitated and overseen by activities and is intrinsically linked to many the Group Risk team. of our risks. SPOTLIGHT ON… • For more information on our climate- CLIMATE Emerging risks related risks, see our Climate-Related Financial Disclosures Report. Given the changing landscape in which we • The Climate Action Delivery Group (CADG) operate, we have increased our focus during has been established to support the 2023 on identifying and understanding the Management Board in overseeing the emerging risks we face so we can proactively Risk appetite management of climate-related risks. This take action now. This involved expanding the Group, chaired by the CFO/COO, meets o help focus the way we manage our T four times a year to review and challenge ongoing horizon scanning performed to principal risk categories, the Board has progress against plans, deep dive into embed it as a key consideration when defined our risk appetite for each one to escalated risks and identify areas where assessing the current position of each enable us to strike the right balance between further management activity is required. principal risk category. risk taking and risk mitigation. Our risk • The CADG plays an important role in ITV’s appetite reflects ITV’s willingness to be risk oversight and governance. It reports Our two key emerging risks are climate and innovative and open to ideas as we pursue and escalates key risks to the RCSC that the transformative impact of Generative our strategy, whilst maintaining our low are considered as part of the Management Artificial Intelligence (Generative AI). Board’s robust assessment of principal and tolerance in operational areas, such as duty emerging risks. It also provides updates to of care, data protection and corporate the Management Board, Audit and Risk compliance. Committee and PLC Board on progress against climate-related targets and our Risk leadership and governance climate-related disclosures for review and challenge. Our leadership plays an important role in ensuring risk management is considered in key decision making. Each of our principal risk categories has a Management Board sponsor. They articulate each risk, how we manage them and the actions being taken to operate within our risk appetite.
56 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 57 S RISKS AND UNCERTAINTIES CONTINUED T R A T E G I Principal risks and mitigations C R OUR RISK OVERSIGHT AND GOVERNANCE STRUCTURE AT A GLANCE E Set out below is a description of each of our principal risks and how they are being managed and mitigated. P O R T ITV PLC Board Audit and Risk Key Link to strategy Risk direction of travel Emerging risks Committee (after current mitigations) (ARC) E Expand Studios globally Risk is increasing Indicates where there are macroeconomic related factors, which may influence the risk. S Supercharge Streaming Risk is reducing Indicates where there are climate-related factors, which O Optimise Broadcast Risk remains static may influence the risk. Management Board Risk & Indicates where there are AI-related factors, which may Compliance influence the risk. Steering Committee (RCSC) N.B. – Risks are grouped by category and are not disclosed in order of importance or significance STRATEGIC RISKS Studios M&E Climate Action Board Board Delivery Group (CADG) 1. Streaming Link to S MB Sponsor: Managing Director, Streaming, Interactive & Data strategy Description What this risk category covers: Some of the things we do to manage it: ITVX does not grow at • How we attract viewers to our streaming services in an • Continue to invest in our streaming capability (e.g. the pace required to increasingly competitive and challenging market personalisation) Corporate Studios M&E deliver the desired • How we maintain strong relationships with platforms and • Continue to evolve our partnership & distribution strategy Functions Risk Working Risk Working strategic or financial distributors Group Group outcomes • Continue to invest in content and marketing • How we create a competitive subscription proposition whilst • Ongoing monitoring of our performance KPIs Link to Viability continuing to drive ad-funded video on demand viewing Scenarios: 1 | 2 | 6 • Horizon scanning of the external market • How we manage the complexity of the infrastructure and technology chains involved in the transition to streaming Examples risks in this category: Some of the metrics we track: • Inability to maximise prominence and inclusion • Monthly Active Users (MAUs) Key Direction and management Reporting and escalation Advice and oversight Risk direction: • Increased competition for viewer attention • Total Streaming Hours 2023 2022 • Maintaining pace with the market and viewer expectations • UK Subscribers • Digital Revenues • Share of Voice Risk Management Effectiveness Changes to principal risks • The addition of ‘Third-Party Risk 2. Content Market The PLC Board continues to monitor the during the year Management’ to recognise the increasing effectiveness of risk management at ITV. An complexity and importance of our Link to MB Sponsor: Managing Director. ITV Studios The ongoing management and monitoring of third-party relationships and the potential strategy E independent assessment of ITV’s risk ITV’s most critical risks throughout the year these have to cause significant damage management framework and practices was has led to changes to the principal risks from to our reputation Description What this risk category covers: Some of the things we do to manage it: conducted during Q4 2023 as part of the the previous reporting period (H1 2023). 2023 internal audit plan. The review • Promoting ‘Operational Resilience’ Fundamental changes • The impact the structural decline in linear audiences has on • Continue to invest in developing, attracting and retaining These included: in the content market programming budgets and slots for free-to-air (FTA) world-class creative talent concluded that significant progress has been to recognise the importance of being • Splitting ‘cyber-attack or data breach able to withstand and recover from may result in reduced broadcasters • Continue to grow and maintain relationships with a diverse made over the last year to achieve an opportunities, • The impact increased vertical integration (traditional and customer base, including global streamers effective state for principal risk management incident’ into two separate principal risks our technology and/or services non-renewal of to enhance transparency, improve being compromised. streaming platforms) and market consolidation have on • Continue to seek opportunities to increase market share and within ITV, with a number of opportunities to premium programmes, intensifying market competition drive efficiencies across our productions enhance the framework and practices accountability and enable us to establish and/or impact the more focused mitigation strategies profitability of ITV • The impact that market changes could have on the demand identified and reflected in our risk for, and profitability of ITV’s content management plans for 2024. • Removing ‘Pensions Deficit’ as the Studios content ITV pension scheme position has Link to Viability Examples risks in this category: Some of the metrics we track: significantly improved Scenarios: N/A • Content spend cuts from FTA broadcasters and streamers • ITV Studios total organic revenue growth • Inability to grow streamer customer base as they become • ITV Studios adjusted EBITA margin % a growing part of the content market • Total high-end scripted hours Risk direction: • Increased pressure on our pricing, rights and 2023 2022 • Number of formats sold in three or more countries production premium • % of ITV Studios total revenue from streaming platforms
56 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 57 S RISKS AND UNCERTAINTIES CONTINUED T R A T E G I Principal risks and mitigations C R OUR RISK OVERSIGHT AND GOVERNANCE STRUCTURE AT A GLANCE E Set out below is a description of each of our principal risks and how they are being managed and mitigated. P O R T ITV PLC BoardAudit and Risk Key Link to strategy Risk direction of travel Emerging risks Committee (after current mitigations) (ARC) E Expand Studios globally Risk is increasing Indicates where there are macroeconomic related factors, which may influence the risk. S Supercharge Streaming Risk is reducing Indicates where there are climate-related factors, which O Optimise Broadcast Risk remains static may influence the risk. Management BoardRisk & Indicates where there are AI-related factors, which may Compliance influence the risk. Steering Committee (RCSC) N.B. – Risks are grouped by category and are not disclosed in order of importance or significance STRATEGIC RISKS Studios M&E Climate Action BoardBoardDelivery Group (CADG) 1. Streaming Link to S MB Sponsor: Managing Director, Streaming, Interactive & Data strategy Description What this risk category covers: Some of the things we do to manage it: ITVX does not grow at • How we attract viewers to our streaming services in an • Continue to invest in our streaming capability (e.g. the pace required to increasingly competitive and challenging market personalisation) Corporate Studios M&E deliver the desired • How we maintain strong relationships with platforms and • Continue to evolve our partnership & distribution strategy FunctionsRisk Working Risk Working strategic or financial distributors GroupGroup outcomes • Continue to invest in content and marketing • How we create a competitive subscription proposition whilst • Ongoing monitoring of our performance KPIs Link to Viability continuing to drive ad-funded video on demand viewing Scenarios: 1 | 2 | 6 • Horizon scanning of the external market • How we manage the complexity of the infrastructure and technology chains involved in the transition to streaming Examples risks in this category: Some of the metrics we track: • Inability to maximise prominence and inclusion • Monthly Active Users (MAUs) KeyDirection and managementReporting and escalationAdvice and oversightRisk direction:• Increased competition for viewer attention • Total Streaming Hours 2023 2022 • Maintaining pace with the market and viewer expectations • UK Subscribers • Digital Revenues • Share of Voice Risk Management EffectivenessChanges to principal risks • The addition of ‘Third-Party Risk 2. Content Market The PLC Board continues to monitor the during the yearManagement’ to recognise the increasing effectiveness of risk management at ITV. An complexity and importance of our Link to MB Sponsor: Managing Director. ITV Studios The ongoing management and monitoring of third-party relationships and the potential strategyE independent assessment of ITV’s risk ITV’s most critical risks throughout the year these have to cause significant damage management framework and practices was has led to changes to the principal risks from to our reputationDescriptionWhat this risk category covers: Some of the things we do to manage it: conducted during Q4 2023 as part of the the previous reporting period (H1 2023). 2023 internal audit plan. The review • Promoting ‘Operational Resilience’ Fundamental changes • The impact the structural decline in linear audiences has on • Continue to invest in developing, attracting and retaining These included: in the content market programming budgets and slots for free-to-air (FTA) world-class creative talent concluded that significant progress has been to recognise the importance of being • Splitting ‘cyber-attack or data breach able to withstand and recover from may result in reduced broadcasters • Continue to grow and maintain relationships with a diverse made over the last year to achieve an opportunities, • The impact increased vertical integration (traditional and customer base, including global streamers effective state for principal risk management incident’ into two separate principal risks our technology and/or services non-renewal of to enhance transparency, improve being compromised. streaming platforms) and market consolidation have on • Continue to seek opportunities to increase market share and within ITV, with a number of opportunities to premium programmes, intensifying market competition drive efficiencies across our productions enhance the framework and practices accountability and enable us to establish and/or impact the more focused mitigation strategiesprofitability of ITV • The impact that market changes could have on the demand identified and reflected in our risk for, and profitability of ITV’s content management plans for 2024.• Removing ‘Pensions Deficit’ as the Studios content ITV pension scheme position has Link to Viability Examples risks in this category: Some of the metrics we track: significantly improved Scenarios: N/A • Content spend cuts from FTA broadcasters and streamers • ITV Studios total organic revenue growth • Inability to grow streamer customer base as they become • ITV Studios adjusted EBITA margin % a growing part of the content market • Total high-end scripted hours Risk direction: • Increased pressure on our pricing, rights and 2023 2022 • Number of formats sold in three or more countries production premium • % of ITV Studios total revenue from streaming platforms
58 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 59 S RISKS AND UNCERTAINTIES CONTINUED T R A T E G I 3. Commercial 5. Content Pipeline C R E P O Link to MB Sponsor: Managing Director, Commercial Link to MB Sponsor: Managing Director, Media & Entertainment R strategy S O strategy S O T Description What this risk category covers: Some of the things we do to manage it: Description What this risk category covers: Some of the things we do to manage it: Increasing competition • How we compete for share of advertising spend in a • Continue to enhance our integrated advertising proposition Lack of diversified • How we anticipate and adapt to changes in the tastes and • Our data and insights team focuses on understanding the and challenging challenging macroeconomic environment and with the large to offer i) mass simultaneous reach, ii) data driven target commissioning habits of viewers preferences of our most commercially valuable viewers to advertising market streamers launching advertising tiers addressable and iii) the ability to integrate brands creatively pipeline (whilst • How we develop a quality and appealing content pipeline that help drive the way we commission content conditions impact • The impact redistribution of advertising budgets away from into our content and the future development of outcome- balancing/maintaining is both resilient to changes in viewer preferences, as well as • Continue to invest in content and talent our revenue stream broadcasting to online platforms could have on ad revenue based advertising products mass simultaneous being financially viable • Continue to focus on our key franchises and brands to ensure affecting our ability • How we respond to continued tightening of data protection • Continue to invest and extend Planet V to offer unrivalled reach on linear TV; • How we leverage the value of being an integrated producer, editorial protection to fund our content and privacy regulations that impact our ability to provide addressability at scale attracting light viewers broadcaster and streamer to enable us to continue to provide budget on ITVX; and managing • Continue to evolve the way we commission and acquire targeted advertising • Continue to offer a unique creative proposition to advertisers rising content costs) unrivalled viewers of scale for UK advertisers and to grow our content as well as innovating how we fund content (e.g. Link to Viability through brand partnerships, product placements, digital revenues partnerships, Advertiser Funded Programmes (AFPs) and Scenarios: 1 | 2 | 4 | 6 sponsorships, advertiser funded programmes (AFPs) and may impact total viewing • How we ensure we are commissioning content by, with co-productions) digital advertising solutions and for everyone (Diversity, Equity & Inclusion) whilst • Continue to focus on maintaining strong relationships with • Continue to invest in an outcomes proposition that enables Link to Viability also considering the impact our behaviours and those Scenarios: 1 | 2 | 3 | 6 independent studios from whom we commission content advertisers to measure the effectiveness of their campaigns portrayed through our content have on society and the • Continue to invest in live sports, high-end drama and • Build strategic partnerships with advertisers and agencies wider environment entertainment programmes to maintain mass simultaneous • Continue to monitor the actual and potential advertising reach and to attract our most commercially valuable viewers restrictions • Continue to commission content by, with and for everyone (e.g. £80 million Diversity Commissioning fund) and to Examples risks in this category: Some of the metrics we track: identify ways to make our content accessible to all (e.g. Dedicated British Sign Language (BSL) FAST channel) • Structural decline in broadcast advertising • Total Advertising Revenue (TAR) Risk direction: • Increased competition for market share from the larger • Category spend Examples risks in this category: Some of the metrics we track: 2023 2022 streamers introducing ad tiers and the growth of online video • Failure to grow monetisable streaming viewers • Increased cost of content driven by rising costs of production • Share of Commercial Viewing Risk direction: and increased competition from competitors • Share of Top 1000 commercial broadcast TV Programmes • Failing to secure the right talent at the right price 2023 2022 • Total Streaming Hours • Accelerated decline in linear viewing and growth of other • UK Subscribers 4. Changing Viewer Habits digital offerings Link to S O MB Sponsor: Managing Director, Media & Entertainment 6. Partnerships strategy Description What this risk category covers: Some of the things we do to manage it: Link to S O MB Sponsor: Chief Finance Officer / Chief Operating Officer Inability to respond to • How we attract our most commercially valuable viewers to • Continue to invest in and showcase great content on our strategy changing viewing both linear and streaming content channels and ITVX, with a focus on our most commercially Description What this risk category covers: Some of the things we do to manage it: habits and deliver the • How we drive reach, scale and simultaneous viewing across valuable viewers forecasted audiences/ linear and streaming • Continue to invest in marketing An inability to develop • How we develop and maintain strong partnerships with major • Continue to supercharge our streaming service to strengthen viewing for both linear • How we anticipate, respond and adapt to the shift towards • Continue to evolve our partnership and distribution strategy and maintain adequate platforms and distribution partners to maximise prominence our offering to our most commercially valuable viewers and and streaming will digital viewing, whilst we maintain and increase our share of to position ourselves where our viewers are relationships with and inclusion of our content advertisers result in failure to media time major platform and • How we manage the trade-offs inherent in our commercial • Work closely with Ofcom and the government (DCMS) to monetise and deliver • Continue to invest in ITVX to ensure viewers spend longer on distribution providers arrangements with our platforms and distribution partners modernise the PSB regulatory regime against Commercial • How we ensure that our content is accessible wherever, the platform once they’re there e.g. personalisation may result in reduced revenue targets whenever, and however viewers choose to engage with it • Continue to focus on understanding viewer habits to optimise brand prominence, • How we actively plan for long term changes in traditional • Continue to evolve our partnership and distribution strategy • How we retain viewers and increase the volume of the the relationship between linear and streaming to help drive viewers being unable distribution (DTT & DSat) as viewing continues to transition to reduce reliance on single platforms and secure more Link to Viability online (IP) advantageous commercial relationships Scenarios: 1 | 2 | 3 | 6 content they consume the way we commission content for ITVX to grow overall to find our content and reach a lack of fair value for • We have a dedicated team that continues to build that content relationships with the major distribution providers and Examples risks in this category: Some of the metrics we track: platforms to ensure ITV remains attractive from a distribution Link to Viability perspective Scenarios: 1 | 2 | 6 • Accelerated decline in linear viewing • Share of commercial viewing • Continue to collaborate with the other PSBs to a compelling Risk direction: • Inability to capitalise on the shift to digital viewing through • Share of Top 1000 commercial broadcast TV Programmes consumer controlled entry point to our content in readiness ITVX • TV Viewing – Hours per person per day (adults & 16 to 34s) for the shift to IP only viewing through Freely 2023 2022 • Increase competition for viewer attention from large • Ad viewing time trends • Proactive involvement of the ITV Legal team to ensure we streamers introducing ad tiers and the growth of online video continue to operate within our framework Examples risks in this category: Some of the metrics we track: • Failure to negotiate and re-negotiate favourable carriage • Relationship health check status terms with platforms and distribution partners Risk direction: • Our partners demanding a direct or indirect financial return 2023 2022 for continued carriage • The increasing prevalence of biased algorithmic or AI personalisation impacting the prominence of our content
58 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 59 S RISKS AND UNCERTAINTIES CONTINUED T R A T E G I 3. Commercial 5. Content Pipeline C R E P O Link to MB Sponsor: Managing Director, CommercialLink to MB Sponsor: Managing Director, Media & Entertainment R strategyS O strategy S O T DescriptionWhat this risk category covers:Some of the things we do to manage it:DescriptionWhat this risk category covers:Some of the things we do to manage it: Increasing competition • How we compete for share of advertising spend in a • Continue to enhance our integrated advertising proposition Lack of diversified • How we anticipate and adapt to changes in the tastes and • Our data and insights team focuses on understanding the and challenging challenging macroeconomic environment and with the large to offer i) mass simultaneous reach, ii) data driven target commissioning habits of viewerspreferences of our most commercially valuable viewers to advertising market streamers launching advertising tiersaddressable and iii) the ability to integrate brands creatively pipeline (whilst • How we develop a quality and appealing content pipeline that help drive the way we commission content conditions impact • The impact redistribution of advertising budgets away from into our content and the future development of outcome-balancing/maintaining is both resilient to changes in viewer preferences, as well as • Continue to invest in content and talent our revenue stream broadcasting to online platforms could have on ad revenuebased advertising productsmass simultaneous being financially viable• Continue to focus on our key franchises and brands to ensure affecting our ability • How we respond to continued tightening of data protection • Continue to invest and extend Planet V to offer unrivalled reach on linear TV; • How we leverage the value of being an integrated producer, editorial protection to fund our content and privacy regulations that impact our ability to provide addressability at scaleattracting light viewers broadcaster and streamer to enable us to continue to provide budget on ITVX; and managing • Continue to evolve the way we commission and acquire targeted advertising• Continue to offer a unique creative proposition to advertisers rising content costs) unrivalled viewers of scale for UK advertisers and to grow our content as well as innovating how we fund content (e.g. Link to Viability through brand partnerships, product placements, digital revenues partnerships, Advertiser Funded Programmes (AFPs) and Scenarios: 1 | 2 | 4 | 6sponsorships, advertiser funded programmes (AFPs) and may impact total viewing • How we ensure we are commissioning content by, with co-productions) digital advertising solutions and for everyone (Diversity, Equity & Inclusion) whilst • Continue to focus on maintaining strong relationships with • Continue to invest in an outcomes proposition that enables Link to Viability also considering the impact our behaviours and those Scenarios: 1 | 2 | 3 | 6 independent studios from whom we commission content advertisers to measure the effectiveness of their campaignsportrayed through our content have on society and the • Continue to invest in live sports, high-end drama and • Build strategic partnerships with advertisers and agencieswider environment entertainment programmes to maintain mass simultaneous • Continue to monitor the actual and potential advertising reach and to attract our most commercially valuable viewers restrictions • Continue to commission content by, with and for everyone (e.g. £80 million Diversity Commissioning fund) and to Examples risks in this category:Some of the metrics we track: identify ways to make our content accessible to all (e.g. Dedicated British Sign Language (BSL) FAST channel) • Structural decline in broadcast advertising• Total Advertising Revenue (TAR) Risk direction:• Increased competition for market share from the larger • Category spendExamples risks in this category:Some of the metrics we track: 2023 2022streamers introducing ad tiers and the growth of online video • Failure to grow monetisable streaming viewers • Increased cost of content driven by rising costs of production • Share of Commercial Viewing Risk direction: and increased competition from competitors • Share of Top 1000 commercial broadcast TV Programmes • Failing to secure the right talent at the right price 2023 2022 • Total Streaming Hours • Accelerated decline in linear viewing and growth of other • UK Subscribers 4. Changing Viewer Habits digital offerings Link to SOMB Sponsor: Managing Director, Media & Entertainment6. Partnerships strategy DescriptionWhat this risk category covers:Some of the things we do to manage it: Link to S O MB Sponsor: Chief Finance Officer / Chief Operating Officer Inability to respond to • How we attract our most commercially valuable viewers to • Continue to invest in and showcase great content on our strategy changing viewing both linear and streaming contentchannels and ITVX, with a focus on our most commercially DescriptionWhat this risk category covers:Some of the things we do to manage it: habits and deliver the • How we drive reach, scale and simultaneous viewing across valuable viewers forecasted audiences/linear and streaming• Continue to invest in marketing An inability to develop • How we develop and maintain strong partnerships with major • Continue to supercharge our streaming service to strengthen viewing for both linear • How we anticipate, respond and adapt to the shift towards • Continue to evolve our partnership and distribution strategy and maintain adequate platforms and distribution partners to maximise prominence our offering to our most commercially valuable viewers and and streaming will digital viewing, whilst we maintain and increase our share of to position ourselves where our viewers arerelationships with and inclusion of our content advertisers result in failure to media timemajor platform and • How we manage the trade-offs inherent in our commercial • Work closely with Ofcom and the government (DCMS) to monetise and deliver • Continue to invest in ITVX to ensure viewers spend longer on distribution providers arrangements with our platforms and distribution partnersmodernise the PSB regulatory regime against Commercial • How we ensure that our content is accessible wherever, the platform once they’re there e.g. personalisationmay result in reduced revenue targetswhenever, and however viewers choose to engage with it• Continue to focus on understanding viewer habits to optimise brand prominence, • How we actively plan for long term changes in traditional • Continue to evolve our partnership and distribution strategy • How we retain viewers and increase the volume of the the relationship between linear and streaming to help drive viewers being unable distribution (DTT & DSat) as viewing continues to transition to reduce reliance on single platforms and secure more Link to Viability online (IP) advantageous commercial relationships Scenarios: 1 | 2 | 3 | 6content they consumethe way we commission content for ITVX to grow overall to find our content and reach a lack of fair value for • We have a dedicated team that continues to build that content relationships with the major distribution providers and Examples risks in this category:Some of the metrics we track: platforms to ensure ITV remains attractive from a distribution Link to Viability perspective Scenarios: 1 | 2 | 6 • Accelerated decline in linear viewing• Share of commercial viewing • Continue to collaborate with the other PSBs to a compelling Risk direction:• Inability to capitalise on the shift to digital viewing through • Share of Top 1000 commercial broadcast TV Programmesconsumer controlled entry point to our content in readiness ITVX • TV Viewing – Hours per person per day (adults & 16 to 34s) for the shift to IP only viewing through Freely 2023 2022 • Increase competition for viewer attention from large • Ad viewing time trends • Proactive involvement of the ITV Legal team to ensure we streamers introducing ad tiers and the growth of online video continue to operate within our framework Examples risks in this category: Some of the metrics we track: • Failure to negotiate and re-negotiate favourable carriage • Relationship health check status terms with platforms and distribution partners Risk direction: • Our partners demanding a direct or indirect financial return 2023 2022 for continued carriage • The increasing prevalence of biased algorithmic or AI personalisation impacting the prominence of our content
60 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 61 S RISKS AND UNCERTAINTIES CONTINUED T R A T E G I 7. Data 9. Corporate Compliance C R E P O Link to MB Sponsor: General Counsel and Company Secretary Link to MB Sponsor: General Counsel and Company Secretary R strategy E S O strategy E S O T Description What this risk category covers: Some of the things we do to manage it: Description What this risk category covers: Some of the things we do to manage it: Failure to ensure • How we create value and enable efficiency while providing a • We structure our approach to data use and management We seek to remain • Breaches of corporate compliance could lead to prosecution, • Through our Code of Ethics & Conduct, we foster a culture appropriate access robust framework for data governance around three pillars – Privacy by design, Security by design compliant with all fines, litigation or a regulator stepping in, which might impact where colleagues know the standards expected of them and to consistent and • How we identify the data we have, who is responsible for and Value by design. substantive laws. our reputation and our ability to operate if it resulted in the can speak up if something’s not right trustworthy data and looking after it, how it moves around ITV, who is using it and • Continue to use the OneTrust privacy compliance Key areas of loss of licenses • We Implement a robust tailored compliance programme remaining compliant how is it being used/what is it being used for management tool to determine whether a Data Protection compliance activity • How we set the expectations of our people and develop the based on our risk assessment, including undertaking with our regulatory • How we remain vigilant in protecting our corporate data and Impact Assessment (DPIA) is required in respect of relevant operational infrastructure and tools to drive and make compliance monitoring and effectiveness reviews obligations. We must the personal data we are entrusted with whilst following • Data privacy lawyers and data governance experts are laws, for example, compliance easy for the business • Promote good compliance behaviour in our colleagues, ensure the whole of ITV today’s global data regulations and anticipating and preparing embedded within each of the business areas to act as those relating to through awareness and mandatory training follows the applicable for tomorrow’s partners, monitor data activity and usage, and educate the anti-bribery & data regulations while corruption, modern • Work with the business to support the adoption and anticipating and business on their data obligations slavery, anti- implementation of compliance policies and standards adequately preparing • We have established policies and procedures which set out competitive behaviour, • Conduct due diligence on potential third parties for future ones. what is expected of people across ITV with respect to data competition, trade • Horizon scan to prepare for legislative changes and Link to Viability • We provide mandatory data privacy and data governance sanctions and developing policies to address them Scenarios: 4 training and promote good data behaviour through awareness Speaking Up campaigns Link to Viability Examples risks in this category: Some of the metrics we track: • We perform due diligence on our third parties prior to Scenarios: N/A onboarding • Being exposed to third parties or colleagues engaging in • Speaking Up • AI SteerCo was established to provide oversight of the use unlawful or non-compliant activities on ITV’s behalf • Mandatory training and implications of AI for ITV • Inadequate operational infrastructure to drive and support Risk direction: the execution of a strong third party risk management Examples risks in this category: Some of the metrics we track: 2023 2022 process • Lack of clear infrastructure and appropriate culture for • Using data to inform decision making without understanding • Mandatory Training compliance matters in the business its quality, accuracy, validity, ownership or legality • Data Subject Requests • Failing to comply with data protection laws or regulations that • Total investigated incidents apply to ITV • High Risk DPIA’s • Unintentional data exposure (corporate or personal) as a OPERATIONAL RISKS Risk direction: result of insufficient employee awareness of data governance 2023 2022 and data privacy • Cyber-attacks from well organised threat groups targeting ITV resulting in a data breach 10. Cyber Security Link to E S O MB Sponsor: Chief Technology Officer strategy COMPLIANCE RISKS Description What this risk category covers: Some of the things we do to manage it: We aim to protect ITV, • A successful cyber-attack could lead to ‘black screens’ and • Implement a robust cyber security risk management (NIST) 8. Policy & Regulation our content, our result in a commercial impact due to operational disruption or framework to protect our applications, systems and networks colleagues, our viewers critical system outage • Monitor external threats and gather intelligence on evolving and our partners from • A catastrophic data breach could result in ITV receiving a fine cyber techniques, tactics, capabilities and the threat Link to S O MB Sponsor: Group Director of Strategy, Policy & Regulation harm and financial from the Information Commissioner’s Office (ICO) of up to 4% landscape strategy loss caused by cyber of worldwide turnover security events. • Maintaining a vigilant security setup to quickly detect and Description What this risk category covers: Some of the things we do to manage it: We adapt our controls • Failure to maintain trust and live up to regulatory, viewer, respond to cyber risks before they become incidents, whilst accordingly to detect partner and other stakeholder expectations related to cyber continuing to invest in new and emerging cyber defence and We engage with • The impact the new Media Bill will have on the visibility and • Continue to monitor potential policy, legal and regulatory security could weaken our reputation security tooling regulators and viability of our content distribution and advertising developments and respond to the governments to put businesses evolving threat • Promote good security behaviour in our colleagues, through • Analyse the impact of potential changes and proactively put awareness campaigns and mandatory training our case to shape the • The impact changes in advertising regulation may have on our forward our position during the development of new policies, Link to Viability future regulation that Total Advertising Revenue (TAR) legislation and regulations. Scenarios: 4 • Perform due diligence on our third parties and monitor our protects viewers whilst online applications and technical validation ensuring PSBs can • The impact of emerging regulations and policy on our • Continue to engage with the government and regulators on • Model a severe but plausible hypothetical cyber-attack compete fairly and business (e.g. sustainability and child protection) the PSB regime and other topics relevant to our industry scenario annually and facilitate cyber exercises with the deliver their remits. • How unfavourable changes to European Works quotas could • Actively participating in consultations on areas which may Management Board to simulate an attack to rehearse how We must then be in impact the demand for UK content impact ITV and collaborating with other organisations in the ITV would respond and identify and implement improvement compliance with these • How we continue to meet the expected requirements of a industry, where appropriate in line with our competition law areas regulations whilst Public Service Broadcaster (PSB) obligations. e.g. with pan-European report on possible • Continue to focus on ITV’s recovery capability and minimal maintaining trust and European Works quota changes viable company delivering our strategy • Horizon scanning to identify future changes, analysing the Link to Viability impact this would have on ITV and agreeing our position (e.g. Examples risks in this category: Some of the metrics we track: Scenarios: 1 | 2 | 6 medium to long term future of DTT) • Cyber-attacks from organised threat groups targeting ITV • Attack path stats (by severity) Examples risks in this category: Some of the metrics we track: • Being exposed to third parties with vulnerabilities that can • Endpoint-related incidents (No. per quarter & trends) Risk direction: access our systems • Regulation not keeping pace with the market • Regulatory outlook 2023 2022 • ITVX Bot Attacks • Keeping up with evolving regulation • End of life legacy IT estate vulnerabilities • Minimum Viable Company (MVC) Recovery Capability • Failing to comply with standards, rules, requirements and • Labels IT infrastructure Independent to Group • Third party assessment (critical suppliers) Risk direction: obligations 2023 2022 • Continuing to fulfil the requirements of being a Public Service Broadcaster (PSB) • Renewal of Channel 3 nations, regions and breakfast licenses
60 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 61 S RISKS AND UNCERTAINTIES CONTINUED T R A T E G I 7. Data 9. Corporate Compliance C R E P O Link to MB Sponsor: General Counsel and Company SecretaryLink to MB Sponsor: General Counsel and Company Secretary R strategyE S O strategy E S O T DescriptionWhat this risk category covers:Some of the things we do to manage it:DescriptionWhat this risk category covers:Some of the things we do to manage it: Failure to ensure • How we create value and enable efficiency while providing a • We structure our approach to data use and management We seek to remain • Breaches of corporate compliance could lead to prosecution, • Through our Code of Ethics & Conduct, we foster a culture appropriate access robust framework for data governancearound three pillars – Privacy by design, Security by design compliant with all fines, litigation or a regulator stepping in, which might impact where colleagues know the standards expected of them and to consistent and • How we identify the data we have, who is responsible for and Value by design. substantive laws. our reputation and our ability to operate if it resulted in the can speak up if something’s not right trustworthy data and looking after it, how it moves around ITV, who is using it and • Continue to use the OneTrust privacy compliance Key areas of loss of licenses• We Implement a robust tailored compliance programme remaining compliant how is it being used/what is it being used formanagement tool to determine whether a Data Protection compliance activity • How we set the expectations of our people and develop the based on our risk assessment, including undertaking with our regulatory • How we remain vigilant in protecting our corporate data and Impact Assessment (DPIA) is requiredin respect of relevant operational infrastructure and tools to drive and make compliance monitoring and effectiveness reviews obligations. We must the personal data we are entrusted with whilst following • Data privacy lawyers and data governance experts are laws, for example, compliance easy for the business• Promote good compliance behaviour in our colleagues, ensure the whole of ITV today’s global data regulations and anticipating and preparing embedded within each of the business areas to act as those relating to through awareness and mandatory training follows the applicable for tomorrow’spartners, monitor data activity and usage, and educate the anti-bribery & data regulations while corruption, modern • Work with the business to support the adoption and anticipating and business on their data obligationsslavery, anti- implementation of compliance policies and standards adequately preparing • We have established policies and procedures which set out competitive behaviour, • Conduct due diligence on potential third parties for future ones.what is expected of people across ITV with respect to datacompetition, trade • Horizon scan to prepare for legislative changes and Link to Viability • We provide mandatory data privacy and data governance sanctions and developing policies to address them Scenarios: 4 training and promote good data behaviour through awareness Speaking Up campaigns Link to Viability Examples risks in this category: Some of the metrics we track: • We perform due diligence on our third parties prior to Scenarios: N/A onboarding • Being exposed to third parties or colleagues engaging in • Speaking Up • AI SteerCo was established to provide oversight of the use unlawful or non-compliant activities on ITV’s behalf • Mandatory training and implications of AI for ITV • Inadequate operational infrastructure to drive and support Risk direction: the execution of a strong third party risk management Examples risks in this category:Some of the metrics we track:2023 2022process • Lack of clear infrastructure and appropriate culture for • Using data to inform decision making without understanding • Mandatory Training compliance matters in the business its quality, accuracy, validity, ownership or legality• Data Subject Requests • Failing to comply with data protection laws or regulations that • Total investigated incidents apply to ITV • High Risk DPIA’s • Unintentional data exposure (corporate or personal) as a OPERATIONAL RISKS Risk direction:result of insufficient employee awareness of data governance 2023 2022and data privacy • Cyber-attacks from well organised threat groups targeting ITV resulting in a data breach10. Cyber Security Link to E S O MB Sponsor: Chief Technology Officer strategy COMPLIANCE RISKS Description What this risk category covers: Some of the things we do to manage it: We aim to protect ITV, • A successful cyber-attack could lead to ‘black screens’ and • Implement a robust cyber security risk management (NIST) 8. Policy & Regulationour content, our result in a commercial impact due to operational disruption or framework to protect our applications, systems and networks colleagues, our viewers critical system outage • Monitor external threats and gather intelligence on evolving and our partners from • A catastrophic data breach could result in ITV receiving a fine cyber techniques, tactics, capabilities and the threat Link to SOMB Sponsor: Group Director of Strategy, Policy & Regulationharm and financial from the Information Commissioner’s Office (ICO) of up to 4% landscape strategy loss caused by cyber of worldwide turnover security events. • Maintaining a vigilant security setup to quickly detect and DescriptionWhat this risk category covers:Some of the things we do to manage it:We adapt our controls • Failure to maintain trust and live up to regulatory, viewer, respond to cyber risks before they become incidents, whilst accordingly to detect partner and other stakeholder expectations related to cyber continuing to invest in new and emerging cyber defence and We engage with • The impact the new Media Bill will have on the visibility and • Continue to monitor potential policy, legal and regulatory security could weaken our reputationsecurity tooling regulators and viability of our content distribution and advertising developments and respond to the governments to put businesses evolving threat • Promote good security behaviour in our colleagues, through • Analyse the impact of potential changes and proactively put awareness campaigns and mandatory training our case to shape the • The impact changes in advertising regulation may have on our forward our position during the development of new policies, Link to Viability future regulation that Total Advertising Revenue (TAR)legislation and regulations.Scenarios: 4 • Perform due diligence on our third parties and monitor our protects viewers whilst online applications and technical validation ensuring PSBs can • The impact of emerging regulations and policy on our • Continue to engage with the government and regulators on • Model a severe but plausible hypothetical cyber-attack compete fairly and business (e.g. sustainability and child protection)the PSB regime and other topics relevant to our industryscenario annually and facilitate cyber exercises with the deliver their remits. • How unfavourable changes to European Works quotas could • Actively participating in consultations on areas which may Management Board to simulate an attack to rehearse how We must then be in impact the demand for UK contentimpact ITV and collaborating with other organisations in the ITV would respond and identify and implement improvement compliance with these • How we continue to meet the expected requirements of a industry, where appropriate in line with our competition law areas regulations whilst Public Service Broadcaster (PSB)obligations. e.g. with pan-European report on possible • Continue to focus on ITV’s recovery capability and minimal maintaining trust and European Works quota changes viable company delivering our strategy• Horizon scanning to identify future changes, analysing the Link to Viability impact this would have on ITV and agreeing our position (e.g. Examples risks in this category: Some of the metrics we track: Scenarios: 1 | 2 | 6medium to long term future of DTT) • Cyber-attacks from organised threat groups targeting ITV • Attack path stats (by severity) Examples risks in this category:Some of the metrics we track:• Being exposed to third parties with vulnerabilities that can • Endpoint-related incidents (No. per quarter & trends) Risk direction: access our systems • Regulation not keeping pace with the market• Regulatory outlook2023 2022 • ITVX Bot Attacks • Keeping up with evolving regulation • End of life legacy IT estate vulnerabilities • Minimum Viable Company (MVC) Recovery Capability • Failing to comply with standards, rules, requirements and • Labels IT infrastructure Independent to Group • Third party assessment (critical suppliers) Risk direction:obligations 2023 2022• Continuing to fulfil the requirements of being a Public Service Broadcaster (PSB) • Renewal of Channel 3 nations, regions and breakfast licenses
62 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 63 S RISKS AND UNCERTAINTIES CONTINUED T R A T E G I 1 1. Transformation 13. Duty of Care C R E P O Link to MB Sponsor: Chief Finance Officer / Chief Operating Officer Link to MB Sponsor: Chief Executive Officer R strategy E S O strategy E S O T Description What this risk category covers: Some of the things we do to manage it: Description What this risk category covers: Some of the things we do to manage it: We are accelerating • Failing to deliver our transformation ambitions will adversely • Our Transformation Operations Directors Office (TODO) Failure to extend • Ensuring we run our business safely with consideration to our • We maintain a ‘Speaking Up’ framework that allows anyone transformation impact our efficiency, financial performance, and viewer focuses on operational issues and reducing the risk involved an adequate duty of duty of care and the impact we could have on society working for or with ITV to raise concerns in confidence delivery to build a experience while impacting our reputation in a number of significant and costly transformation activities care or the occurrence • Supporting the mental and physical health and safety of through Safecall , alongside other channels to raise concerns. simpler, more efficient • We are focused on enabling and driving digital transformation • Management Board sponsors, and experienced and skilled of a major health and colleagues, those working with ITV and those participating in • Continue to drive awareness of ‘Speaking up’ through and dynamic ITV in by enhancing organisational agility, improving commercial programme directors across all transformation programmes safety incident could and contributing to our productions, is a key priority communications and mandatory duty of care training module pursuit of our More control and flexibility and embedding a culture of • Continue to instil new ways of working through implementing result in physical and • Our commitment to addressing promptly, fairly and • We have a comprehensive operational risk management Than TV Strategy achievement Agile and standardising tooling mental harm, loss of confidentially all concerns and monitoring the channels we process, and through this, we identify risks to both people’s Link to Viability • We do this while remaining cognisant of the volume, speed human life and have in place to ensure they remain appropriate physical and mental health and safety and put in place Scenarios: N/A • Continue to upskill key business stakeholders with sufficient reputational damage and extent of change required to achieve this knowledge to hold their programme teams to account. measures to manage them appropriately Link to Viability • The ITV Feel Good offering continues to provide advice, • Monthly Transformation Steering Group (TSG) to track the Scenarios: N/A overall portfolio delivery and programme dependencies support, resources and tools for inspiring and enabling • Group Design Authority (GDA) and Group Investment colleagues to look after their own well-being and have a Committee (GIC) to manage technical design and investment balanced and healthy working lifestyle in a hybrid world across the portfolio • We continue to evolve the Participant Aftercare Programme (PAP) Examples risks in this category: Some of the metrics we track: • We support participants through the Participant Crisis Care Stabilisation Pathway, an Out of Hours Welfare Helpline and a • Inadequate change management to overcome resistance to • Programme Milestones ‘call off’ contract with the Nightingale Hospital change • Programme Benefits • Partner with the BBC, to develop an Industry Media Risk direction: • Insufficient resource, lack of required capabilities and Psychologist Development Programme 2023 2022 reliance on contractors / third parties • Our social purpose campaigns seek to support the viewing • Failure to manage complex interdependencies public, including the award-winning Britain Get Talking. • Transformation programmes fail to deliver the intended value • Continue to monitor and respond to historical issues to further strengthen our Duty of Care policies 12. People Examples risks in this category: Some of the metrics we track: • Failure to appropriately support individuals working with ITV • Speaking Up data Link to E S O MB Sponsor: Chief People Officer Risk direction: in our pursuit of editorial content that is relevant and • Accident/Incident Data strategy entertaining 2023 2022 Description What this risk category covers: Some of the things we do to manage it: • Failure to adequately consider the impact our content could have on society An inability to attract, • To attract and retain the right people in the right places for an • Continue to develop our Employee Value Proposition (EVP) develop and retain key organisation as complex and diverse as ITV, we need to have • Continue to evolve our approach to mandatory training and creative, commercial, effective strategic workforce planning speaking up through updating existing modules, introducing 14. Third Party Risk Management technical and • Day-to-day people management activities include managing new modules and phasing the launch throughout the year managerial talent high levels of recruitment, onboarding and terminations, and • Ongoing development of succession plans for business could adversely providing access to relevant training and development critical and management roles (including nominated Link to E S O MB Sponsor: Chief Finance Officer / Chief Operating Officer affect our business opportunities deputies). strategy Link to Viability • Failure to engage our people to ensure their health and • Continue to identify future talent (High potential Description What this risk category covers: Some of the things we do to manage it: Scenarios: N/A wellbeing and create a diverse and inclusive workplace could programme), support the development of people of colour impact our performance and growth ambitions (RISE programme), develop the skills needed to help drive the ITV relies on a wide • The robustness of our due diligence process for onboarding • Continue to evolve our Third Party Risk Management (TPRM) business forward (Digital skills programme) and offer range of third parties third parties to make sure they meet our standards framework to support ITV with assessing and managing risks industry-leading production training (ITV Academy) to operate its • How we adequately monitor and manage the impacts of associated with vendor relationships business. We therefore third-party relationships • Ongoing input from the risk domain leads to enhanced due • Our global Employee Assistance Programme (EAP) is must have robust available to permanent, fixed term and freelance colleagues, • Maintaining a holistic alongside a detailed overview of the diligence performed across all third-party relationships processes in place third parties ITV engages with • Our supplier code of conduct sets out the minimum as well as to dependents. for risk assessing, • Create an inclusive culture through Disability Access onboarding and the standards we expect of all suppliers Passports, Amplify, Fresh Cuts and continuing our Step Up 60 ongoing management • Continue to extend the use of the Prevalent platform to initiative automate the risk management of our vendors Link to Viability • Run engagement surveys and targeted pulse surveys to deep Scenarios: N/A • Continue to set expectations in contracts for talent dive into specific topics • Ongoing monitoring of our distribution providers Examples risks in this category: Some of the metrics we track: Examples risks in this category: Some of the metrics we track: • Failure to attract and retain colleagues in a highly competitive • Resignation Index • Failure to adequately assess, monitor and manage the • The development and agreement of metrics for the new industry • New Hires (Women, Disability, Colour and LGBTQ+)Diversity impacts of third-party relationships principal risk is underway Risk direction: • Technological advancements resulting in a workforce skills Data (Demographic and disability information) • Colleagues bypass the due diligence process gap 2023 • Lack of holistic overview of the third parties ITV engages with Risk direction: • The actions of onscreen talent impacting ITV’s reputation New Risk 2023 2022 and brand • Failing to maintain a diverse organisation impacting our innovation and creativity
62 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 63 S RISKS AND UNCERTAINTIES CONTINUED T R A T E G I 1 1. Transformation 13. Duty of Care C R E P O Link to MB Sponsor: Chief Finance Officer / Chief Operating OfficerLink to MB Sponsor: Chief Executive Officer R strategyE S O strategy E S O T DescriptionWhat this risk category covers:Some of the things we do to manage it:DescriptionWhat this risk category covers: Some of the things we do to manage it: We are accelerating • Failing to deliver our transformation ambitions will adversely • Our Transformation Operations Directors Office (TODO) Failure to extend • Ensuring we run our business safely with consideration to our • We maintain a ‘Speaking Up’ framework that allows anyone transformation impact our efficiency, financial performance, and viewer focuses on operational issues and reducing the risk involved an adequate duty of duty of care and the impact we could have on societyworking for or with ITV to raise concerns in confidence delivery to build a experience while impacting our reputationin a number of significant and costly transformation activities care or the occurrence • Supporting the mental and physical health and safety of through Safecall , alongside other channels to raise concerns. simpler, more efficient • We are focused on enabling and driving digital transformation • Management Board sponsors, and experienced and skilled of a major health and colleagues, those working with ITV and those participating in • Continue to drive awareness of ‘Speaking up’ through and dynamic ITV in by enhancing organisational agility, improving commercial programme directors across all transformation programmessafety incident could and contributing to our productions, is a key prioritycommunications and mandatory duty of care training module pursuit of our More control and flexibility and embedding a culture of • Continue to instil new ways of working through implementing result in physical and • Our commitment to addressing promptly, fairly and • We have a comprehensive operational risk management Than TV StrategyachievementAgile and standardising toolingmental harm, loss of confidentially all concerns and monitoring the channels we process, and through this, we identify risks to both people’s Link to Viability • We do this while remaining cognisant of the volume, speed human life and have in place to ensure they remain appropriatephysical and mental health and safety and put in place Scenarios: N/A• Continue to upskill key business stakeholders with sufficient reputational damage and extent of change required to achieve thisknowledge to hold their programme teams to account. measures to manage them appropriately Link to Viability • The ITV Feel Good offering continues to provide advice, • Monthly Transformation Steering Group (TSG) to track the Scenarios: N/A overall portfolio delivery and programme dependencies support, resources and tools for inspiring and enabling • Group Design Authority (GDA) and Group Investment colleagues to look after their own well-being and have a Committee (GIC) to manage technical design and investment balanced and healthy working lifestyle in a hybrid world across the portfolio • We continue to evolve the Participant Aftercare Programme (PAP) Examples risks in this category:Some of the metrics we track: • We support participants through the Participant Crisis Care Stabilisation Pathway, an Out of Hours Welfare Helpline and a • Inadequate change management to overcome resistance to • Programme Milestones ‘call off’ contract with the Nightingale Hospital change• Programme Benefits • Partner with the BBC, to develop an Industry Media Risk direction:• Insufficient resource, lack of required capabilities and Psychologist Development Programme 2023 2022reliance on contractors / third parties • Our social purpose campaigns seek to support the viewing • Failure to manage complex interdependencies public, including the award-winning Britain Get Talking. • Transformation programmes fail to deliver the intended value • Continue to monitor and respond to historical issues to further strengthen our Duty of Care policies 12. People Examples risks in this category: Some of the metrics we track: • Failure to appropriately support individuals working with ITV • Speaking Up data Link to ESOMB Sponsor: Chief People OfficerRisk direction:in our pursuit of editorial content that is relevant and • Accident/Incident Data strategy entertaining 2023 2022 DescriptionWhat this risk category covers:Some of the things we do to manage it:• Failure to adequately consider the impact our content could have on society An inability to attract, • To attract and retain the right people in the right places for an • Continue to develop our Employee Value Proposition (EVP) develop and retain key organisation as complex and diverse as ITV, we need to have • Continue to evolve our approach to mandatory training and creative, commercial, effective strategic workforce planning speaking up through updating existing modules, introducing 14. Third Party Risk Management technical and • Day-to-day people management activities include managing new modules and phasing the launch throughout the year managerial talent high levels of recruitment, onboarding and terminations, and • Ongoing development of succession plans for business could adversely providing access to relevant training and development critical and management roles (including nominated Link to ESO MB Sponsor: Chief Finance Officer / Chief Operating Officer affect our businessopportunities deputies).strategy Link to Viability • Failure to engage our people to ensure their health and • Continue to identify future talent (High potential DescriptionWhat this risk category covers:Some of the things we do to manage it: Scenarios: N/Awellbeing and create a diverse and inclusive workplace could programme), support the development of people of colour impact our performance and growth ambitions(RISE programme), develop the skills needed to help drive the ITV relies on a wide • The robustness of our due diligence process for onboarding • Continue to evolve our Third Party Risk Management (TPRM) business forward (Digital skills programme) and offer range of third parties third parties to make sure they meet our standardsframework to support ITV with assessing and managing risks industry-leading production training (ITV Academy) to operate its • How we adequately monitor and manage the impacts of associated with vendor relationships business. We therefore third-party relationships • Ongoing input from the risk domain leads to enhanced due • Our global Employee Assistance Programme (EAP) is must have robust available to permanent, fixed term and freelance colleagues, • Maintaining a holistic alongside a detailed overview of the diligence performed across all third-party relationships processes in place third parties ITV engages with • Our supplier code of conduct sets out the minimum as well as to dependents.for risk assessing, • Create an inclusive culture through Disability Access onboarding and the standards we expect of all suppliers Passports, Amplify, Fresh Cuts and continuing our Step Up 60 ongoing management • Continue to extend the use of the Prevalent platform to initiative automate the risk management of our vendors Link to Viability • Run engagement surveys and targeted pulse surveys to deep Scenarios: N/A • Continue to set expectations in contracts for talent dive into specific topics • Ongoing monitoring of our distribution providers Examples risks in this category:Some of the metrics we track:Examples risks in this category: Some of the metrics we track: • Failure to attract and retain colleagues in a highly competitive • Resignation Index • Failure to adequately assess, monitor and manage the • The development and agreement of metrics for the new industry• New Hires (Women, Disability, Colour and LGBTQ+)Diversity impacts of third-party relationships principal risk is underway Risk direction: • Technological advancements resulting in a workforce skills Data (Demographic and disability information)• Colleagues bypass the due diligence process gap 2023 • Lack of holistic overview of the third parties ITV engages with Risk direction:• The actions of onscreen talent impacting ITV’s reputation New Risk 2023 2022and brand • Failing to maintain a diverse organisation impacting our innovation and creativity
64 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 65 S RISKS AND UNCERTAINTIES CONTINUED T CLIMATE RELATED FINANCIAL DISCLOSURES R A T E G I 15. Operational Resilience Our commitment to Climate Action C R E P O Link to MB Sponsor: Chief Finance Officer / Chief Operating Officer R strategy E S O We recognise the climate crisis and the impact it may have on both the wider T Description What this risk category covers: Some of the things we do to manage it: world and the success of our business. We are commied to providing greater A major business • Maintaining business operations, including our ability to • Continue to focus on understanding the minimal viable transparency regarding ITV’s exposure to climate-related risk and the mitigating continuity incident broadcast linear TV, distribute & stream content and company and ITV’s recovery capability with linear/online generate Ad revenue is imperative • Annual major incident scenario testing and ahead of major actions we are taking to enhance our preparedness, responsiveness and transmission or a • We recognise the complexity of the infrastructure and live events critical ad system technology our critical business operations rely on, and the • Maintain and regularly update business continuity and resilience in the face of these uncertainties. may result in service impact these being compromised could have on our disaster recovery plans interruption and resilience. In particular, the number of third parties we rely on, revenue loss the increasing number of platform partners that we • Continue to review and monitor operational performance Link to Viability broadcast content across/through, the range of broadcasting • Continue to closely manage our broadcast chain partners This climate related financial disclosure report has been prepared to meet the minimum requirements outlined within the Task Force on Scenarios: 4 operations (i.e., multiple regions, sites and across multiple and suppliers to ensure the risk of incidents is minimised Climate-related Financial Disclosures (TCFD) as well as the mandatory reporting requirements set out in the Companies Act relating to systems) and the continually evolving methods by which we Climate-related Financial Disclosures (CFD). We have also released our first Climate Transition Plan which sets out ITV’s climate ambitions distribute content and our plans to transition the business to a net-zero pathway. For more information, see our Climate Transition Plan. • We seek to build resilience into our key IT systems and focus on maintaining robust and tested disaster recovery and business continuity plans TCFD and CFD Summary Disclosure Examples risks in this category: Some of the metrics we track: The table below signposts where the TCFD recommendations and CFD requirements can be found in the report. • Lack of resilience in our key IT systems • The development and agreement of metrics for the new Risk direction: • Inadequate IT disaster recovery plans to meet ITV’s business principal risk is underway Task Force on Climate-related Financial Relevant Companies (Strategic Report) (Climate-related Relevant 2023 operation needs Disclosures (TCFD) Recommendation Section Financial Disclosure (CFD)) Regulations Section New Risk • Ineffective operational business continuity plans Governance A. Describe the board’s oversight of Risk leadership and A. Describe the Company’s governance Risk leadership and climate-related risks and governance (page 66) arrangements in relation to assessing governance (page 66) opportunities. and managing climate-related risks and opportunities. B. Describe management’s role in Our Approach (page 66) assessing and managing climate- related risks and opportunities. Strategy A. Describe the climate-related risks and Strategy (page 66) D. Describe i) the principal climate- Strategy (page 66) opportunities the organisation has related risks and opportunities arising identified over the short, medium, and in connection with the Company’s long term. operations, and ii) the time periods by reference to which those risks and opportunities are assessed. B. Describe the impact of climate-related Strategy (page 66) E. Describe the actual and potential Strategy (page 66) risks and opportunities on the impacts of the principal climate- organisation’s businesses, strategy, related risks and opportunities on the and financial planning. Company’s business model and strategy. C. Describe the resilience of the Detailed Risks Strategy F. An analysis of the resilience of the Detailed Risks Strategy organisation’s strategy, taking into (page 66) Company’s business model and (page 66) consideration different climate- Resilience (page 71) strategy, taking into account Resilience (page 71) related scenarios, including a 2°C or consideration of different climate- lower scenario. related scenarios. Risk Management A. Describe the organisation’s processes Risk Management (page 66) B. Describe how the Company identifies, Risk Management and for identifying and assessing assesses, and manages climate Governance (page 66) climate-related risks. related risks and opportunities. B. Describe the organisation’s processes Governance (page 66) for managing climate-related risks. C. Describe how processes for identifying, Risk Management and C. Describe how processes for identifying, Risk Management and assessing, and managing climate- Governance (page 66) assessing, and managing climate Governance (page 66) related risks are integrated into the related risks are integrated into the organisation’s overall risk Company’s overall risk management management. process.
64 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 65 S RISKS AND UNCERTAINTIES CONTINUED T CLIMATE RELATED FINANCIAL DISCLOSURES R A T E G I 15. Operational ResilienceOur commitment to Climate Action C R E P O Link to MB Sponsor: Chief Finance Officer / Chief Operating Officer R strategyE S O We recognise the climate crisis and the impact it may have on both the wider T DescriptionWhat this risk category covers:Some of the things we do to manage it:world and the success of our business. We are commied to providing greater A major business • Maintaining business operations, including our ability to • Continue to focus on understanding the minimal viable transparency regarding ITV’s exposure to climate-related risk and the mitigating continuity incident broadcast linear TV, distribute & stream content and company and ITV’s recovery capability with linear/online generate Ad revenue is imperative• Annual major incident scenario testing and ahead of major actions we are taking to enhance our preparedness, responsiveness and transmission or a • We recognise the complexity of the infrastructure and live events critical ad system technology our critical business operations rely on, and the • Maintain and regularly update business continuity and resilience in the face of these uncertainties. may result in service impact these being compromised could have on our disaster recovery plans interruption and resilience. In particular, the number of third parties we rely on, revenue lossthe increasing number of platform partners that we • Continue to review and monitor operational performance Link to Viability broadcast content across/through, the range of broadcasting • Continue to closely manage our broadcast chain partners This climate related financial disclosure report has been prepared to meet the minimum requirements outlined within the Task Force on Scenarios: 4operations (i.e., multiple regions, sites and across multiple and suppliers to ensure the risk of incidents is minimisedClimate-related Financial Disclosures (TCFD) as well as the mandatory reporting requirements set out in the Companies Act relating to systems) and the continually evolving methods by which we Climate-related Financial Disclosures (CFD). We have also released our first Climate Transition Plan which sets out ITV’s climate ambitions distribute content and our plans to transition the business to a net-zero pathway. For more information, see our Climate Transition Plan. • We seek to build resilience into our key IT systems and focus on maintaining robust and tested disaster recovery and business continuity plansTCFD and CFD Summary Disclosure Examples risks in this category:Some of the metrics we track:The table below signposts where the TCFD recommendations and CFD requirements can be found in the report. • Lack of resilience in our key IT systems• The development and agreement of metrics for the new Risk direction:• Inadequate IT disaster recovery plans to meet ITV’s business principal risk is underwayTask Force on Climate-related Financial Relevant Companies (Strategic Report) (Climate-related Relevant 2023 operation needs Disclosures (TCFD) Recommendation Section Financial Disclosure (CFD)) Regulations Section New Risk • Ineffective operational business continuity plansGovernance A. Describe the board’s oversight of Risk leadership and A. Describe the Company’s governance Risk leadership and climate-related risks and governance (page 66) arrangements in relation to assessing governance (page 66) opportunities. and managing climate-related risks and opportunities. B. Describe management’s role in Our Approach (page 66) assessing and managing climate- related risks and opportunities. Strategy A. Describe the climate-related risks and Strategy (page 66) D. Describe i) the principal climate- Strategy (page 66) opportunities the organisation has related risks and opportunities arising identified over the short, medium, and in connection with the Company’s long term. operations, and ii) the time periods by reference to which those risks and opportunities are assessed. B. Describe the impact of climate-related Strategy (page 66) E. Describe the actual and potential Strategy (page 66) risks and opportunities on the impacts of the principal climate- organisation’s businesses, strategy, related risks and opportunities on the and financial planning. Company’s business model and strategy. C. Describe the resilience of the Detailed Risks Strategy F. An analysis of the resilience of the Detailed Risks Strategy organisation’s strategy, taking into (page 66) Company’s business model and (page 66) consideration different climate- Resilience (page 71) strategy, taking into account Resilience (page 71) related scenarios, including a 2°C or consideration of different climate- lower scenario. related scenarios. Risk Management A. Describe the organisation’s processes Risk Management (page 66) B. Describe how the Company identifies, Risk Management and for identifying and assessing assesses, and manages climate Governance (page 66) climate-related risks. related risks and opportunities. B. Describe the organisation’s processes Governance (page 66) for managing climate-related risks. C. Describe how processes for identifying, Risk Management and C. Describe how processes for identifying, Risk Management and assessing, and managing climate- Governance (page 66) assessing, and managing climate Governance (page 66) related risks are integrated into the related risks are integrated into the organisation’s overall risk Company’s overall risk management management. process.
66 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 67 S CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED T R A T E G I Task Force on Climate-related Financial Relevant Companies (Strategic Report) (Climate-related Relevant Given the evolving nature of climate change and the future policy changes governments globally are considering, there remains a number of C R Disclosures (TCFD) Recommendation Section Financial Disclosure (CFD)) Regulations Section uncertainties in our modelling. We will continue to review our risks and opportunities in this light and intend to continue building on this analysis E P by modelling further risks and opportunities, as they are identified. As the risks and opportunities have remained consistent with previous O Metrics and Target R years, the methodology used for modelling has remained consistent. T A. Disclose the metrics used by the Metrics & Targets (page 71) H. Describe the key performance Metrics & Targets (page 71) organisation to assess climate-related indicators used to assess progress The RAG rating indicates ITV’s exposure to the key climate related risk areas based on the two opposing scenarios of ‘action’ and ‘no action’ risks and opportunities in line with its against targets used to manage in response to climate change, using an amalgamation of financial impacts and benefits. strategy and risk management climate-related risks and realise process. climate-related opportunities and a Detailed Risks description of the calculations on RAG Key which those key performance Time Horizon Key indicators are based. Risks Opportunities Impact From To B. Disclose Scope 1, Scope 2 and, if Metrics & Targets (pages 36 N/A Minimal increase in expenditure Significant time horizon (years) (years) Aligned to appropriate, Scope 3 greenhouse gas and 71) (GHG) emissions and the related risks. and / or reduction in revenue benefit Short-term 01ITV Annual reporting period Moderate increase in Moderate Medium-term 13ITV Long term viability assessment C. Describe the targets used by the Strategy (page 66) G. Describe the targets used by the Metrics & Targets (page 71) organisation to manage climate- Company to manage climate-related expenditure and / or reduction in benefit period and strategic planning cycle related risks and opportunities and risks and to realise climate-related revenue performance against targets opportunities and of performance Long-term 3 10+ ITV science-based and Net Zero Significant increase in Minimal targets* against those targets. expenditure and / or reduction in benefit revenue *This has been extended to align with our additional 2050 emissions commitments Risk management Governance Strategy 1. CHANGES IN THE ADVERTISING SECTOR Our approach to identifying, Our governance structures support the PLC To date, ITV has not experienced a material assessing, managing and Board, committees and senior management impact or cost from climate risks and Context Current policies Revenue loss – minimal to ensure that climate change is integrated opportunities. We continue to track these The advertising market continues to shift to the promotion of (3°C+) Advertising regulators continue to look unfavourably at monitoring climate-related risks into our strategy, business process and impacts (such as costs from extreme low-carbon products and sustainable communications with (High carbon greenwashing and companies with a high carbon footprint. and opportunities decision making. For more information on weather events), to monitor if and when this increased pressure from governments, regulators, as well as scenario impact) We will need to consider the reputational impacts of the ITV’s risk management framework provides climate governance, see the Risk and does become the case. from agencies and brands from within the industry. Including: adverts we broadcast and advertisers we work with. the guardrails for risk management activities Uncertainties section. • Stricter advertising regulations or outright bans for carbon and the risk management process supports Our Methodology and insensitive brands and products. SDS (2°C+) Revenue loss – minimal central functions and divisions to identify, Assessing and Managing climate- Assumptions • Major brands shrink or fail to survive. (Low carbon Advertisers considered as carbon-insensitive or assess, manage, monitor and report on risks, related risks and opportunities • Increased use of carbon calculators in planning and buying scenario impact) environmentally damaging and therefore subject to bans on including climate-related risks. We review the Climate Scenario Analysis media (e.g. capping frequency of ad campaigns to reduce Each business area is supported by Green (CSA) on a three year cycle and update the advertising of their products or services are limited. This carbon emissions). impact will be replaced by clients advertising low carbon Climate change is not currently categorised Leads and Green Teams that follow the risk scenarios using the latest science. The alternative products. by the Board as a Group ‘Principal Risk’ as it is management process to identify, assess and assumptions on which our CSA is built have Time horizon manage climate-related risks and not changed since our last assessment. Our NZE by 2050 Revenue loss – moderate unlikely to have a substantial financial impact Medium – Long-term (1.5°C+) in the next three years. It has however been opportunities on a day-to-day basis. They key risk areas remain: Governments introduce strict policies to influence work closely with the Sustainability team Impact Area (Very low carbon consumption behaviours and a higher proportion of our high identified as a key ‘Emerging Risk’ to ITV 1. Changes in the advertising sector scenario impact) emitting advertising clients are subject to bans. However, we with the potential to impact the way we which plays a key role in reviewing these risks Revenue Loss and opportunities. 2. Increased costs in the transition to a low are able to replace a portion of this revenue through clients do business in the medium to long term. carbon world advertising low carbon alternative products. We continue to assess climate risks with management and the Board every The CADG is a sub-committee of the 3. Resilience of productions to extreme How we are building our resilience to a 2 oC or less scenario six months. Management Board that meets quarterly weather events There remains uncertainty around the timing and impact of advertising restrictions. In order to prepare for the potential changes, we are: and receives updates from the Green Leads. It provides oversight and direction over ITV’s For each of the key risk areas, we conducted • Monitoring the regulatory landscape and engaging with parliamentarians and the UK government to make the case for evidence-based regulation of We focus on the day-to-day management advertising to limit the impact of advertising restrictions on ITV. of climate risks. Ownership is assigned to all climate action agenda, implementation of quantitative modelling and qualitative strategies, environmental targets and assessment of the potential impact both • Continuing to work with advertisers to seek out alternative options to replace potential lost revenue. risks with mitigations and progress against • Monitoring the share of our advertising revenue that is aligned with our climate targets and the Net Zero transition action plans reviewed and challenged by the climate related risks and opportunities. physical and transitional risks may have on Outcomes of these meetings are reported to our business in a 1.5°C, 2°C and 3+°C • Trialling incentives with one major agency customer to provide additional media for sustainable brands in their client base Climate Action Delivery Group (CADG). Risk • Working with advertisers to improve the effectiveness of climate-related advertising owners have responsibility for monitoring the the Management Board and Divisional warming scenario, as at 2030, assuming our risks and opportunities, including Boards quarterly to inform decision making. business model and activities remain the • Working closely with collaborative project Ad Net Zero and the advertising sector to support the development of industry wide approaches to the Net Zero same as today. transition implementing appropriate management • Scaling our existing sustainable partnerships (e.g. eBay / Love Island and Big Brother / Vinted) strategies with support provided by the Remuneration Incentives Risk and Social Purpose teams. The Management Board members have Our overall assessment of the risks, indicates • Developed digital targeting opportunities to enable advertisers to reach ‘climate conscious’ consumers. emission reduction targets included in their that as a business ITV is not significantly Based on our understanding of the context around this risk and all actions in place to prepare, we are confident that we are building resilience against the We assess climate related risks and bonuses and all senior management have exposed to physical or transition climate potential implications of this risk on ITV opportunities at Group, Divisional (Studios Environmental, Social and Corporate risks in our operations and our Group business strategy remains relevant even in Metrics Targets and M&E) and entity level. ITV’s principal Governance (ESG) objectives. These risks with the potential to be most impacted measures encourage leadership to actively light of evolving climate risks. The risks Percentage of revenue aligned to our climate action objectives: We do not currently have any specific targets in respect of this by climate change are Commercial, Content (individually or collectively) do not represent • Percentage of i) top 100 advertisers and ii) major media agencies scoring good or excellent risk, and will reassess the need for specific action once we contribute to reducing ITVs carbon footprint. a threat to our long-term viability, liquidity or against climate action goals (based on a methodology created by ITV to allow us to start have a better understanding of the relevant indicators. Market and Content Pipeline. We are taking All colleagues consider their contributions to tracking how our revenue aligns to our net zero transition) action through our Social Purpose goals to ITV’s Climate Action and ESG targets in their ability to operate and no risks were identified mitigate and manage their impacts both Talking Performance reviews and through a which suggested we need to impair balance • Percentage of Commercial colleagues completing climate awareness training today and in the future, ensuring we continue yearly mandatory training module. sheet assets. The Detailed Risks section that Upcoming metrics: Carbon footprint of adverts running on ITV platforms to build resilience to climate-related physical follows, describes the risks we have considered to arrive at this conclusion. Link to existing principal risk and transition risks. Commercial
66 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 67 S CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED T R A T E G I Task Force on Climate-related Financial Relevant Companies (Strategic Report) (Climate-related Relevant Given the evolving nature of climate change and the future policy changes governments globally are considering, there remains a number of C R Disclosures (TCFD) RecommendationSectionFinancial Disclosure (CFD)) Regulations Sectionuncertainties in our modelling. We will continue to review our risks and opportunities in this light and intend to continue building on this analysis E P by modelling further risks and opportunities, as they are identified. As the risks and opportunities have remained consistent with previous O Metrics and Target R years, the methodology used for modelling has remained consistent. T A.Disclose the metrics used by the Metrics & Targets (page 71)H.Describe the key performance Metrics & Targets (page 71) organisation to assess climate-related indicators used to assess progress The RAG rating indicates ITV’s exposure to the key climate related risk areas based on the two opposing scenarios of ‘action’ and ‘no action’ risks and opportunities in line with its against targets used to manage in response to climate change, using an amalgamation of financial impacts and benefits. strategy and risk management climate-related risks and realise process.climate-related opportunities and a Detailed Risks description of the calculations on RAG Key which those key performance Time Horizon Key indicators are based. Risks Opportunities Impact From To B.Disclose Scope 1, Scope 2 and, if Metrics & Targets (pages 36 N/AMinimal increase in expenditure Significant time horizon (years) (years) Aligned to appropriate, Scope 3 greenhouse gas and 71) (GHG) emissions and the related risks. and / or reduction in revenue benefit Short-term 01ITV Annual reporting period Moderate increase in Moderate Medium-term 13ITV Long term viability assessment C.Describe the targets used by the Strategy (page 66)G.Describe the targets used by the Metrics & Targets (page 71) organisation to manage climate-Company to manage climate-related expenditure and / or reduction in benefit period and strategic planning cycle related risks and opportunities and risks and to realise climate-related revenue performance against targetsopportunities and of performance Long-term 3 10+ ITV science-based and Net Zero Significant increase in Minimal targets* against those targets. expenditure and / or reduction in benefit revenue *This has been extended to align with our additional 2050 emissions commitments Risk management Governance Strategy 1. CHANGES IN THE ADVERTISING SECTOR Our approach to identifying, Our governance structures support the PLC To date, ITV has not experienced a material assessing, managing and Board, committees and senior management impact or cost from climate risks and Context Current policies Revenue loss – minimal to ensure that climate change is integrated opportunities. We continue to track these The advertising market continues to shift to the promotion of (3°C+) Advertising regulators continue to look unfavourably at monitoring climate-related risks into our strategy, business process and impacts (such as costs from extreme low-carbon products and sustainable communications with (High carbon greenwashing and companies with a high carbon footprint. and opportunitiesdecision making. For more information on weather events), to monitor if and when this increased pressure from governments, regulators, as well as scenario impact) We will need to consider the reputational impacts of the ITV’s risk management framework provides climate governance, see the Risk and does become the case.from agencies and brands from within the industry. Including: adverts we broadcast and advertisers we work with. the guardrails for risk management activities Uncertainties section.• Stricter advertising regulations or outright bans for carbon and the risk management process supports Our Methodology and insensitive brands and products. SDS (2°C+) Revenue loss – minimal central functions and divisions to identify, Assessing and Managing climate-Assumptions • Major brands shrink or fail to survive. (Low carbon Advertisers considered as carbon-insensitive or assess, manage, monitor and report on risks, related risks and opportunities• Increased use of carbon calculators in planning and buying scenario impact) environmentally damaging and therefore subject to bans on including climate-related risks.We review the Climate Scenario Analysis media (e.g. capping frequency of ad campaigns to reduce Each business area is supported by Green (CSA) on a three year cycle and update the advertising of their products or services are limited. This carbon emissions). impact will be replaced by clients advertising low carbon Climate change is not currently categorised Leads and Green Teams that follow the risk scenarios using the latest science. The alternative products. by the Board as a Group ‘Principal Risk’ as it is management process to identify, assess and assumptions on which our CSA is built have Time horizon manage climate-related risks and not changed since our last assessment. Our NZE by 2050 Revenue loss – moderate unlikely to have a substantial financial impact Medium – Long-term (1.5°C+) in the next three years. It has however been opportunities on a day-to-day basis. They key risk areas remain: Governments introduce strict policies to influence work closely with the Sustainability team Impact Area (Very low carbon consumption behaviours and a higher proportion of our high identified as a key ‘Emerging Risk’ to ITV 1. Changes in the advertising sector scenario impact) emitting advertising clients are subject to bans. However, we with the potential to impact the way we which plays a key role in reviewing these risks Revenue Loss and opportunities.2. Increased costs in the transition to a low are able to replace a portion of this revenue through clients do business in the medium to long term. carbon world advertising low carbon alternative products. We continue to assess climate risks with management and the Board every The CADG is a sub-committee of the 3. Resilience of productions to extreme How we are building our resilience to a 2 oC or less scenario six months. Management Board that meets quarterly weather eventsThere remains uncertainty around the timing and impact of advertising restrictions. In order to prepare for the potential changes, we are: and receives updates from the Green Leads. It provides oversight and direction over ITV’s For each of the key risk areas, we conducted • Monitoring the regulatory landscape and engaging with parliamentarians and the UK government to make the case for evidence-based regulation of We focus on the day-to-day management advertising to limit the impact of advertising restrictions on ITV. of climate risks. Ownership is assigned to all climate action agenda, implementation of quantitative modelling and qualitative strategies, environmental targets and assessment of the potential impact both • Continuing to work with advertisers to seek out alternative options to replace potential lost revenue. risks with mitigations and progress against • Monitoring the share of our advertising revenue that is aligned with our climate targets and the Net Zero transition action plans reviewed and challenged by the climate related risks and opportunities. physical and transitional risks may have on Outcomes of these meetings are reported to our business in a 1.5°C, 2°C and 3+°C • Trialling incentives with one major agency customer to provide additional media for sustainable brands in their client base Climate Action Delivery Group (CADG). Risk • Working with advertisers to improve the effectiveness of climate-related advertising owners have responsibility for monitoring the the Management Board and Divisional warming scenario, as at 2030, assuming our risks and opportunities, including Boards quarterly to inform decision making.business model and activities remain the • Working closely with collaborative project Ad Net Zero and the advertising sector to support the development of industry wide approaches to the Net Zero same as today. transition implementing appropriate management • Scaling our existing sustainable partnerships (e.g. eBay / Love Island and Big Brother / Vinted) strategies with support provided by the Remuneration Incentives Risk and Social Purpose teams.The Management Board members have Our overall assessment of the risks, indicates • Developed digital targeting opportunities to enable advertisers to reach ‘climate conscious’ consumers. emission reduction targets included in their that as a business ITV is not significantly Based on our understanding of the context around this risk and all actions in place to prepare, we are confident that we are building resilience against the We assess climate related risks and bonuses and all senior management have exposed to physical or transition climate potential implications of this risk on ITV opportunities at Group, Divisional (Studios Environmental, Social and Corporate risks in our operations and our Group business strategy remains relevant even in Metrics Targets and M&E) and entity level. ITV’s principal Governance (ESG) objectives. These risks with the potential to be most impacted measures encourage leadership to actively light of evolving climate risks. The risks Percentage of revenue aligned to our climate action objectives: We do not currently have any specific targets in respect of this by climate change are Commercial, Content (individually or collectively) do not represent • Percentage of i) top 100 advertisers and ii) major media agencies scoring good or excellent risk, and will reassess the need for specific action once we contribute to reducing ITVs carbon footprint. a threat to our long-term viability, liquidity or against climate action goals (based on a methodology created by ITV to allow us to start have a better understanding of the relevant indicators. Market and Content Pipeline. We are taking All colleagues consider their contributions to tracking how our revenue aligns to our net zero transition) action through our Social Purpose goals to ITV’s Climate Action and ESG targets in their ability to operate and no risks were identified mitigate and manage their impacts both Talking Performance reviews and through a which suggested we need to impair balance • Percentage of Commercial colleagues completing climate awareness training today and in the future, ensuring we continue yearly mandatory training module.sheet assets. The Detailed Risks section that Upcoming metrics: Carbon footprint of adverts running on ITV platforms to build resilience to climate-related physical follows, describes the risks we have considered to arrive at this conclusion.Link to existing principal risk and transition risks. Commercial
68 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 69 S CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED T R A T E G I C R 2. INCREASED COSTS IN THE TRANSITION TO A LOW CARBON WORLD 3. RESILIENCE OF PRODUCTIONS TO EXTREME WEATHER EVENTS E P O Context Current policies Expenditure increase – minimal Context Current policies Expenditure Increase – moderate R (3°C+) (3°C+) T All businesses will face costs associated with the transition to Net The Current Policies’ scenario assumes that no carbon pricing If governments and organisations fail to adequately respond to An increase in the frequency and severity of extreme weather Zero and a low carbon economy. Carbon emissions taxation is being (High carbon is introduced and therefore the increased costs are limited as climate change, we are likely to see an increase in physical climate (High carbon events will result in costs associated with adapting our imposed by more nations worldwide to limit and reduce carbon scenario impact) it stays business as usual. risks, such as extreme weather events. scenario impact) approach to how we film, travel and maintain business intensive activities causing climate change. Extreme weather events have the capacity to significantly impact operations as well as challenges to obtaining insurance. We We may be exposed to increased costs of operating in all areas of ITV productions. This may result in operational interruption resulting do however continue to evolve our resilience and continuity our business. This could come from increased environmental in delay in delivering content, meeting consumer contracts and plans to ensure they can respond to extreme weather events. SDS (2°C+) Expenditure increase – moderate regulation, carbon pricing or emissions taxation, investment in low unforeseen costs. SDS (2°C+) Expenditure Increase – minimal to moderate carbon technologies as well as throughout our supply chain. In (Low carbon Increased costs may be felt from the wider transition to a low addition, shifts in supply and demand due to climate related impacts scenario impact) carbon economy. However, the SDS scenario does not provide Time horizon (Low carbon The world is already experiencing the impacts of extreme may result in ITV not being able to source materials for production an indication of how government or regulation may intervene Medium scenario impact) weather events globally, and whilst the frequency and severity due to costs. in this area. of these events under this scenario is assumed to be Impact Area manageable, we anticipate we will feel these impacts more, Time horizon NZE by 2050 Expenditure increase – moderate Expenditure increase with some corresponding financial consequences. Medium (1.5°C+) Increased costs may be felt from wider transitions to a low NZE by 2050 Expenditure Increase – minimal Impact Area (Very low carbon carbon economy. Highest impact expected in terms of (1.5°C+) scenario impact) increased costs passed on through the supply chain. As the world is already experiencing the impacts of extreme Expenditure increase (Very low carbon weather events globally, the increase in frequency and scenario impact) severity of these events in this scenario is assumed to be manageable within ITV’s existing business continuity o How we are building our resilience to a 2 C or less scenario procedures. We are actively seeking to limit the amount of carbon we emit in our business. We continue to focus on increasing our use of renewable energy, assessing the How we are building our resilience to a 2 oC or less scenario maturity of our suppliers in relation to managing climate related risks and partnering with peers to support an industry-wide transition approach. Examples of how we are building our resilience include: Within the international ITV Studios business, the environment and potential weather events are key considerations when making decisions on filming • Consolidating our London offices from three sites to two; locations and as part of risk assessments. Should a situation arise, we would respond on a case-by-case basis, supported by our existing business continuity • Focusing our office and productions investment on improving resilience measures, which include insurance, evacuation protocols to ensure we keep talent and crew safe, and sourcing alternative filming locations. This resilience and agility continue to be tested. • Adopting a centralised approach to procuring and maintaining electric vehicles and the supporting infrastructure. We have implemented a Weather Notification System to enhance our response to extreme weather events. Including real time monitoring of meteorological • Transitioning to the cloud, using partners aligned to our Net Zero targets and data centres powered by renewable energy data, customised alerts tailored to production areas, and direct notifications to allow for proactive awareness. Metrics Targets Metrics Targets • Scope 1, 2 and 3 footprint; • 46.2% reduction of scope 1 and 2 by 2030; 28% reduction of • Data on cost of damage from extreme weather events (by geography), to assess our • Targets being developed • percentage of our electricity coming from a renewable energy tariff; scope 3 by 2030 (base year 2019); exposure to the risk and the priority areas • number of key suppliers aligned with our targets • 100% of our electricity coming from renewable tariff by • Insurance captives 2025; • 100% of our key suppliers aligned with our targets by 2025. Link to existing principal risk Link to existing principal risk Operational Resilience. Not currently linked to a principal risk. However, it is linked to our climate emerging risk.
68 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 69 S CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED T R A T E G I C R 2. INCREASED COSTS IN THE TRANSITION TO A LOW CARBON WORLD3. RESILIENCE OF PRODUCTIONS TO EXTREME WEATHER EVENTS E P O Context Current policies Expenditure increase – minimalContext Current policies Expenditure Increase – moderate R (3°C+) (3°C+) T All businesses will face costs associated with the transition to Net The Current Policies’ scenario assumes that no carbon pricing If governments and organisations fail to adequately respond to An increase in the frequency and severity of extreme weather Zero and a low carbon economy. Carbon emissions taxation is being (High carbon is introduced and therefore the increased costs are limited as climate change, we are likely to see an increase in physical climate (High carbon events will result in costs associated with adapting our imposed by more nations worldwide to limit and reduce carbon scenario impact) it stays business as usual.risks, such as extreme weather events. scenario impact) approach to how we film, travel and maintain business intensive activities causing climate change.Extreme weather events have the capacity to significantly impact operations as well as challenges to obtaining insurance. We We may be exposed to increased costs of operating in all areas of ITV productions. This may result in operational interruption resulting do however continue to evolve our resilience and continuity our business. This could come from increased environmental in delay in delivering content, meeting consumer contracts and plans to ensure they can respond to extreme weather events. SDS (2°C+)Expenditure increase – moderate regulation, carbon pricing or emissions taxation, investment in low unforeseen costs. SDS (2°C+) Expenditure Increase – minimal to moderate carbon technologies as well as throughout our supply chain. In (Low carbon Increased costs may be felt from the wider transition to a low addition, shifts in supply and demand due to climate related impacts scenario impact)carbon economy. However, the SDS scenario does not provide Time horizon(Low carbon The world is already experiencing the impacts of extreme may result in ITV not being able to source materials for production an indication of how government or regulation may intervene Mediumscenario impact)weather events globally, and whilst the frequency and severity due to costs.in this area. of these events under this scenario is assumed to be Impact Area manageable, we anticipate we will feel these impacts more, Time horizonNZE by 2050 Expenditure increase – moderateExpenditure increase with some corresponding financial consequences. Medium(1.5°C+) Increased costs may be felt from wider transitions to a low NZE by 2050 Expenditure Increase – minimal Impact Area (Very low carbon carbon economy. Highest impact expected in terms of (1.5°C+) scenario impact)increased costs passed on through the supply chain. As the world is already experiencing the impacts of extreme Expenditure increase (Very low carbon weather events globally, the increase in frequency and scenario impact) severity of these events in this scenario is assumed to be manageable within ITV’s existing business continuity How we are building our resilience to a 2 oC or less scenario procedures. We are actively seeking to limit the amount of carbon we emit in our business. We continue to focus on increasing our use of renewable energy, assessing the How we are building our resilience to a 2 oC or less scenario maturity of our suppliers in relation to managing climate related risks and partnering with peers to support an industry-wide transition approach. Examples of how we are building our resilience include:Within the international ITV Studios business, the environment and potential weather events are key considerations when making decisions on filming • Consolidating our London offices from three sites to two;locations and as part of risk assessments. Should a situation arise, we would respond on a case-by-case basis, supported by our existing business continuity • Focusing our office and productions investment on improving resiliencemeasures, which include insurance, evacuation protocols to ensure we keep talent and crew safe, and sourcing alternative filming locations. This resilience and agility continue to be tested. • Adopting a centralised approach to procuring and maintaining electric vehicles and the supporting infrastructure. We have implemented a Weather Notification System to enhance our response to extreme weather events. Including real time monitoring of meteorological • Transitioning to the cloud, using partners aligned to our Net Zero targets and data centres powered by renewable energydata, customised alerts tailored to production areas, and direct notifications to allow for proactive awareness. Metrics Targets Metrics Targets • Scope 1, 2 and 3 footprint; • 46.2% reduction of scope 1 and 2 by 2030; 28% reduction of • Data on cost of damage from extreme weather events (by geography), to assess our • Targets being developed • percentage of our electricity coming from a renewable energy tariff;scope 3 by 2030 (base year 2019); exposure to the risk and the priority areas • number of key suppliers aligned with our targets• 100% of our electricity coming from renewable tariff by • Insurance captives 2025; • 100% of our key suppliers aligned with our targets by 2025.Link to existing principal risk Link to existing principal riskOperational Resilience. Not currently linked to a principal risk. However, it is linked to our climate emerging risk.
70 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 71 S CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED T R A T E G I Detailed opportunities C R 3. OPERATIONAL: COST REDUCTIONS AND WIDER BENEFITS OF INNOVATIONS E Our More than TV strategy, and our history of being a climate leader in our sector, put us in a good position to benefit from the opportunities P O that exist as we transition to a sustainable world. We see a number of opportunities taking shape which are linked to our relationship with Context Opportunity Impact R audiences and advertisers, and to the operational changes we are making. While these opportunities are not significant to our financial T success, we believe it is important to capitalise on these in order to ensure ITV continues shaping culture for good; remains attractive to talent, By developing targets to reduce emissions involved in the production of our Alignment to corporate strategy – high content, we have an opportunity to develop innovative and more efficient Cost saving – minimal/moderate* customers and partners; retains its reputation for social care; and is resilient to risk. ways to produce and deliver our content. These changes can also improve our resilience and reduce costs, as well as opening new creative opportunities. 1. AUDIENCES (REPUTATIONAL BENEFITS) Time horizon Short – Longer term Context Opportunity Impact How we are capitalising Our social purpose agenda of shaping culture for good is core to ITV’s Alignment to corporate strategy – high strategy. We have a strong track record in using our brand, reach, talent and We continue to focus on innovative ways to produce and deliver our content: programming to engage a mass audience on climate related themes and Importance to social purpose of shaping culture for good – high • Remote production technology (e.g. FIFA Women’s Football World Cup, Men’s Rugby World Cup and Love Island) solutions. Potential increase in audience / viewership – minimal / moderate • Testing virtual production technologies for scripted productions By reflecting the challenges that people are facing in modern Britain, we can • Cloud based editing to reduce travel and post production energy use remain relevant and attractive to a mass audience, supporting brand • Monitor clean mobile power solutions that are coming to market and have begun testing and trialling solutions (e.g. battery technology) perceptions and helping to maintain our reach in the market. In addition, we continue to explore ways to reduce our energy expenditure through sustainable technologies e.g. use of solar panels on our office buildings and Time horizon production locations. Whilst these may require initial investment, they will help reduce costs in the longer term and support our energy resilience. Short – Medium term Metrics in development Targets How we are capitalising We are driving a range of actions and innovative practices to reduce our We do not currently have targets in place in this area, as we are still It is difficult to attribute positive perception of the ITV brand to our environmental activity. However, we approach this in a number of ways: production emissions. We will explore setting new indicators, for instance developing the indicators that are most relevant. • Run monthly audience surveys to monitor how the ITV brand is perceived, which includes questions on our environmental credentials around the share of our productions using remote production technologies, amount of fuel avoided due to large scale battery technology, or any other key • Track the impact of campaigns and their effect on the perception of the ITV brand (e.g. Love Island and eBay partnership) practices, if they prove helpful in our transition. An update of our activity and Metrics in development Targets decarbonisation levers in this area can be found as part of our Climate Transition Plan. • ITV brand perception; bespoke indicators relating to specific campaigns, We do not currently set specific targets in this area. allowing ITV to track the level of engagement across the audience Resilience Our approach to developing these new ERM CVS provided limited assurance of our e continue to focus on ensuring ITV metrics is still evolving, as we identify the full carbon footprint in 2023 following 2. COMMERCIAL: GROWING OUR REVENUE FROM NET ZERO ALIGNED BRANDS, PRODUCTS AND SERVICES W approaches and methodologies that are the ISAE3000 methodology. o remains resilient to a 2 C or lower scenario by most useful in driving business decisions, Context Opportunity Impact continuing to review the actions we’re taking, developing new metrics, improving our data meeting stakeholders’ needs and emerging Explanation of trends in line We expect to see growth in the volume of advertising for brands, products Alignment to corporate strategy – high industry standards. and services aligned to the Net Zero transition over the coming years. By quality in these areas, upskilling teams and with targets establishing ourselves as a reputable and trusted environment for Commercial opportunity – moderate engaging with others in the industry. Our Following best practice in setting In 2023, our Scope 1 and 2 footprint has advertisers to showcase their sustainability credentials, we can grow the strategic objectives within our Transition plan reduced by 52% compared to 2019, ahead volume of advertising with existing clients and new low carbon businesses. focus on enhancing our climate resilience our Net Zero ambition of our targeted trajectory of 17% reduction. Time horizon across the business. Our emissions reduction targets were Main drivers include a shift to renewable Short – Medium term updated in 2022 to align with the Net Zero electricity tariffs across a majority of our As we continue to evolve our climate definition of the Science Based Target sites, a transition to low emission fleet How we are capitalising scenario analysis, this will help to improve initiative (SBTi). This year, our additional 2050 vehicles, and ongoing modernisation of We have created a ‘sustainability fund’ which we are trialling with one of our media agency partners which they can use to support sustainable advertisers in ITV’s overall resilience and preparedness to targets to reduce all of our emissions by 90% our sites. Business travel emissions remain their portfolio, offering them additional airtime with ITV to help them grow their business through advertising. mitigate against climate risks in varying (base year 2019) have been validated by firmly ahead of our targets, with a 45% Metrics in development Targets degrees of potential outcomes. ITV’s SBTi. Our 2030 targets, which were validated reduction from 2019, ahead of the 10% strategy remains flexible and will be annually by SBTi in 2020, remain unchanged. reduction that was targeted. The most The metrics in this area are in development. We do not currently have targets in this area, as we are still exploring the reviewed to make sure that it remains material Scope 3 category is Purchased appropriate methodology for developing indicators, and their integration into resilient in the face of ITV’s risks. Goods and Services, which has decreased our existing activity. ITV emissions reduction targets in 2023 by 13% compared to 2019, Metrics and Targets Emission reduction 2030 2050 slightly ahead of our targeted trajectory Scope 1 and 2 46.2% 90-95% of 10% reduction. Our Journey to date Scope 3 28% Given that we are still working on improving Setting ambitious targets and reporting on the data quality of this category, with plans our progress accurately and transparently to increase the share of Company level data are critical to our successful sustainability We use metrics that are applicable to past, in the short term, we are focusing on our transition. As part of our Climate Transition current and future data, meaning that they supplier engagement and decarbonisation Plan, we are establishing more granular are consistent across our business and allow activities as a priority. decarbonisation levers that can be for trend analysis. Our methodology aligns integrated into our business planning. ITV to GHG Protocol Corporate Accounting and does not currently implement an internal Reporting Standard, and best practice carbon price, but we recognise the value this approaches that relate to our sector. may present in the future. All details can be found in our Basis of Reporting. We have not implemented We have also started developing new any changes in the KPI calculation indicators to better navigate and monitor the methodologies compared to previous years. climate related risks and opportunities as well as our impact in accelerating the economy-wide transition to Net Zero.
70 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 71 S CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED T R A T E G I Detailed opportunities C R 3. OPERATIONAL: COST REDUCTIONS AND WIDER BENEFITS OF INNOVATIONS E Our More than TV strategy, and our history of being a climate leader in our sector, put us in a good position to benefit from the opportunities P O that exist as we transition to a sustainable world. We see a number of opportunities taking shape which are linked to our relationship with Context Opportunity Impact R audiences and advertisers, and to the operational changes we are making. While these opportunities are not significant to our financial T success, we believe it is important to capitalise on these in order to ensure ITV continues shaping culture for good; remains attractive to talent, By developing targets to reduce emissions involved in the production of our Alignment to corporate strategy – high content, we have an opportunity to develop innovative and more efficient Cost saving – minimal/moderate* customers and partners; retains its reputation for social care; and is resilient to risk. ways to produce and deliver our content. These changes can also improve our resilience and reduce costs, as well as opening new creative opportunities. 1. AUDIENCES (REPUTATIONAL BENEFITS)Time horizon Short – Longer term Context Opportunity Impact How we are capitalising Our social purpose agenda of shaping culture for good is core to ITV’s Alignment to corporate strategy – high strategy. We have a strong track record in using our brand, reach, talent and We continue to focus on innovative ways to produce and deliver our content: programming to engage a mass audience on climate related themes and Importance to social purpose of shaping culture for good – high • Remote production technology (e.g. FIFA Women’s Football World Cup, Men’s Rugby World Cup and Love Island) solutions. Potential increase in audience / viewership – minimal / moderate• Testing virtual production technologies for scripted productions By reflecting the challenges that people are facing in modern Britain, we can • Cloud based editing to reduce travel and post production energy use remain relevant and attractive to a mass audience, supporting brand • Monitor clean mobile power solutions that are coming to market and have begun testing and trialling solutions (e.g. battery technology) perceptions and helping to maintain our reach in the market. In addition, we continue to explore ways to reduce our energy expenditure through sustainable technologies e.g. use of solar panels on our office buildings and Time horizon production locations. Whilst these may require initial investment, they will help reduce costs in the longer term and support our energy resilience. Short – Medium term Metrics in development Targets How we are capitalisingWe are driving a range of actions and innovative practices to reduce our We do not currently have targets in place in this area, as we are still It is difficult to attribute positive perception of the ITV brand to our environmental activity. However, we approach this in a number of ways:production emissions. We will explore setting new indicators, for instance developing the indicators that are most relevant. • Run monthly audience surveys to monitor how the ITV brand is perceived, which includes questions on our environmental credentialsaround the share of our productions using remote production technologies, amount of fuel avoided due to large scale battery technology, or any other key • Track the impact of campaigns and their effect on the perception of the ITV brand (e.g. Love Island and eBay partnership)practices, if they prove helpful in our transition. An update of our activity and Metrics in development Targets decarbonisation levers in this area can be found as part of our Climate Transition Plan. • ITV brand perception; bespoke indicators relating to specific campaigns, We do not currently set specific targets in this area. allowing ITV to track the level of engagement across the audience Resilience Our approach to developing these new ERM CVS provided limited assurance of our e continue to focus on ensuring ITV metrics is still evolving, as we identify the full carbon footprint in 2023 following 2. COMMERCIAL: GROWING OUR REVENUE FROM NET ZERO ALIGNED BRANDS, PRODUCTS AND SERVICES Wapproaches and methodologies that are the ISAE3000 methodology. o remains resilient to a 2 C or lower scenario by most useful in driving business decisions, Context Opportunity Impactcontinuing to review the actions we’re taking, developing new metrics, improving our data meeting stakeholders’ needs and emerging Explanation of trends in line We expect to see growth in the volume of advertising for brands, products Alignment to corporate strategy – highindustry standards. and services aligned to the Net Zero transition over the coming years. By quality in these areas, upskilling teams and with targets establishing ourselves as a reputable and trusted environment for Commercial opportunity – moderateengaging with others in the industry. Our Following best practice in setting In 2023, our Scope 1 and 2 footprint has advertisers to showcase their sustainability credentials, we can grow the strategic objectives within our Transition plan reduced by 52% compared to 2019, ahead volume of advertising with existing clients and new low carbon businesses.focus on enhancing our climate resilience our Net Zero ambitionof our targeted trajectory of 17% reduction. Time horizon across the business. Our emissions reduction targets were Main drivers include a shift to renewable Short – Medium term updated in 2022 to align with the Net Zero electricity tariffs across a majority of our As we continue to evolve our climate definition of the Science Based Target sites, a transition to low emission fleet How we are capitalisingscenario analysis, this will help to improve initiative (SBTi). This year, our additional 2050 vehicles, and ongoing modernisation of We have created a ‘sustainability fund’ which we are trialling with one of our media agency partners which they can use to support sustainable advertisers in ITV’s overall resilience and preparedness to targets to reduce all of our emissions by 90% our sites. Business travel emissions remain their portfolio, offering them additional airtime with ITV to help them grow their business through advertising.mitigate against climate risks in varying (base year 2019) have been validated by firmly ahead of our targets, with a 45% Metrics in development Targets degrees of potential outcomes. ITV’s SBTi. Our 2030 targets, which were validated reduction from 2019, ahead of the 10% strategy remains flexible and will be annually by SBTi in 2020, remain unchanged. reduction that was targeted. The most The metrics in this area are in development. We do not currently have targets in this area, as we are still exploring the reviewed to make sure that it remains material Scope 3 category is Purchased appropriate methodology for developing indicators, and their integration into resilient in the face of ITV’s risks. Goods and Services, which has decreased our existing activity. ITV emissions reduction targets in 2023 by 13% compared to 2019, Metrics and Targets Emission reduction 2030 2050 slightly ahead of our targeted trajectory Scope 1 and 2 46.2% 90-95% of 10% reduction. Our Journey to date Scope 3 28% Given that we are still working on improving Setting ambitious targets and reporting on the data quality of this category, with plans our progress accurately and transparently to increase the share of Company level data are critical to our successful sustainability We use metrics that are applicable to past, in the short term, we are focusing on our transition. As part of our Climate Transition current and future data, meaning that they supplier engagement and decarbonisation Plan, we are establishing more granular are consistent across our business and allow activities as a priority. decarbonisation levers that can be for trend analysis. Our methodology aligns integrated into our business planning. ITV to GHG Protocol Corporate Accounting and does not currently implement an internal Reporting Standard, and best practice carbon price, but we recognise the value this approaches that relate to our sector. may present in the future. All details can be found in our Basis of Reporting. We have not implemented We have also started developing new any changes in the KPI calculation indicators to better navigate and monitor the methodologies compared to previous years. climate related risks and opportunities as well as our impact in accelerating the economy-wide transition to Net Zero.
72 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 73 S T LONG-TERM VIABILITY STATEMENT (LTVS) DISCLOSURE R A T E G I How we assess prospects Based on this review a set of hypothetical Assumptions Applied Taking into account current operational and financial performance, the Board has analysed the impact of the following hypothetically severe C R severe but plausible scenarios were but plausible scenarios. These scenarios were assessed in isolation and as combinations of two or three risks and, although not regarded as E and risks For the LTVS, we have assumed: P developed. These scenarios have then been plausible but as a reverse stress test, an assessment of all scenarios occurring simultaneously was undertaken: O The Board continually assesses ITV’s R prospects and risks at its meetings, including modelled against the first three years of the • EBITA impacts from LTVS scenarios flow T long range financial plan and cash forecast, through to cash in full except for tax the following: both individually and collectively, in order to savings at 25%, with the exception of Scenario Modelled Link to Principal risks or Accounting judgements and estimates • Holding ‘Strategy Days’ twice a year, to assess viability. settlement impacts (in scenarios 4 and 5) 1+2 A significant and sustained downturn in advertising revenue from Principal Risk 1: Streaming; oversee the delivery of the Strategy and and Scenario 5 remedial costs which are 2024, as a result of a decline in the advertising market and linear Whilst all principal risks identified could assumed to be disallowable for tax viewing, driven by macroeconomic factors or increased Principal Risk 3: Commercial; consider changes or new initiatives to further improve the ITV Strategy. have an impact on ITV’s performance, the purposes competition from large streamers. In this scenario we also fail to Principal Risk 4: Changing Viewer Habits; scenarios reflect the specific risks which • Any settlements related to ongoing replace the advertising revenue lost as result of the confirmed Principal Risk 5: Content Pipeline; • Considering ad-hoc topics on aspects of restrictions on High in Fat, Salt or Sugar (HFSS) and potential the strategy at Board meetings. could potentially impact the Group’s litigation or fines will be treated as restrictions on other advertising categories (e.g. gambling and Principal Risk 6: Partnerships; and financial position and viability during the exceptional items (and therefore excluded high carbon products). • Performing a robust assessment of the period to 31 December 2026. from covenant calculations) Principal Risk 8: Policy & Regulation principal and emerging risks twice a year. Additionally, our Streaming strategy fails to fully deliver the Further detail on how we mitigate these risks is provided in the The output from this modelling was reviewed • No acquisitions are made (consistent with expected consumption hours (for the digital advertising element) principal risk and uncertainties section (pages 55 to 64) As part of the assessment of prospects and ‘Base case’) or subscriber growth (for the SVOD element), impacting revenue by the Audit and Risk Committee in detail, risks, the Board and management routinely with a report from the Committee to the • Management and employee Incentive Advertising revenues year on year (including digital advertising receive briefings and consider topics related Board to support the Board’s review and payments (such as the annual bonus) are revenues) (2024 vs 2023 – 3%; 2025 vs 2024 – 4%; 2026 vs 2025 – 4%) to changing viewer habits, competitor approval. In reaching its view, the Board and assumed to reflect the Impact of the LTVS Total EBITA impact in 2024 is £62 million, followed by an impact of strategies, the broadcasting advertising Committee also considered external views, scenario assumptions on earnings £130 million in 2025 and £203 million in 2026. market and developments in the global including analyst and other industry • Dividends of 5.0p per share maintained Business area impacted: Media & Entertainment content market. It is also kept informed of commentary, to understand the wider market throughout, resulting in around £180 ITV’s resilience to environmental and climate views on the Group’s future prospects, and million of dividends paid out per year related risks; technological advancements in 3 A number of key programme brands within the ITV Studios Principal Risk 4: Changing Viewer Habits the external auditor’s findings and following the disposal of ITV’s 50% division are not recommissioned and new format growth does the areas of Generative Artificial Intelligence conclusions on this matter. shareholding in BritBox International. not materialise Principal Risk 5: Content Pipeline (AI) and how the ITV Strategy responds to • Identified cost savings continue to deliver Further detail on how we mitigate these risks is provided in the these; and sessions led by external analysts The scenario assumes key shows come to an end from 2024 (2024 principal risk and uncertainties section (pages 55 to 64) on investors’ perceptions of the ITV business Assessment period for viability to plan EBITA impact: c. £28 million; 2025 EBITA impact c. £58 million and The Board is of the view that a three year 2026 EBITA impact: c. £77 million). The Board and management continued to assessment period (to 31 December 2026) We have also assumed that the revolving Business area impacted: Studios closely scrutinise the impact of the current continues to be the most appropriate. The credit facilities of £500 million and £100 macroeconomic environment on the factors the Board considered in adopting this million are available throughout the period 4 ITV is subject to a cyber-attack which results in a major Principal Risk 3: Commercial business. This included identifying cost timeframe were as follows: and that the Credit Suisse CDS facility of operational disruption, critical system outage or loss of £300 million (which matures in June 2026) intellectual property (IP), customer or business data Principal Risk 7: Data interventions/mitigations to respond to • ITV’s long range financial and strategic and the EUR 600 million Eurobond (which possible severe downside scenarios; and This scenario assumes that a class action is filed against ITV, Principal Risk 10: Cyber Security planning cycle matures in September 2026) are re-financed increasing the focus and detail provided in (and not repaid from cash reserves). The following a major cyber attack which results in a blank screen Principal Risk 15: Operational Resilience financial performance reviews and • Visibility over ITV’s advertising business is causing £100 million of lost advertising revenue, which requires a short term. Advertising remains cyclical intention is to refinance a significant substantial compensation payment and results in a fine from the Further detail on how we mitigate these risks is provided in the reforecasting to track performance. proportion of the 2026 full year financing principal risk and uncertainties section (pages 55 to 64) and closely linked to the UK and global Information Commissioner’s Office (ICO). How we assess viability economic growth and impacted by the arrangements well before maturity. Business area impacted: Group uncertain macroeconomic environment. When assessing the longer-term viability of • The commissioning process and life cycle ITV, we considered 5 Settlements for ongoing litigation are significantly higher than The complexity and potential scale of the ongoing litigation cases of programming gives the Studios division estimated, resulting in large one-off cash payments result in a lack of certainty in the final liabilities and payments. • ITV’s strategy and business plan (pages 2 a more medium-term outlook. However, while non-returning brands are replaced This scenario assumes a higher than provisioned cash outflow in Further detail of the accounting judgements and estimates applied and 10); 2024 and 2025 in respect of settlements for ongoing litigation. to ongoing litigation and earnouts are provided in Section 1 to the • The principal risks and uncertainties with new commissions, over time there is Financial Statements. An overview the assessments performed by less visibility as programmes can Business area impacted: Group the Audit and Risk Committee with respect to these accounting (pages 55 to 64); experience changes in viewer demand or judgements is provided within the Audit and Risk Committee report • The Group’s financing facilities including come to a natural expiration from pages 106 to 116 covenant clauses and future funding plans (page 50); • Technology in the media industry continues to rapidly change the demand 6 A combination of scenarios 1 to 3 above occurring simultaneously. Principal Risk 1: Streaming; • The long range financial plan and cash for content and also how it is consumed forecast; and This scenario would result in an EBITA impact of £90m in 2024, Principal Risk 3: Commercial; • ITV’s business model does not typically £188m in 2025 and £280 million in 2026. Neither covenant is breached Principal Risk 4: Changing Viewer Habits; • Other sensitivity factors or risks which necessitate investment in large capital at any time during the assessment period and liquidity headroom have the potential to materially impact projects that would require a longer-term is maintained Principal Risk 5: Content Pipeline; liquidity and/or covenant headroom in the horizon assessment or returns Business area impacted: Group Principal Risk 6: Partnerships; and assessment period. • Pension funding, which is one of ITV’s key Principal Risk 8: Policy & Regulation funding obligations, is agreed triennially Further detail on how we mitigate these risks is provided in the principal with the Trustees of the pension scheme risk and uncertainties section (pages 55 to 64) We have considered the impact of climate change risks and do not believe they would have a significant financial impact on the business in the assessment period. Please refer to our Climate-related Financial Disclosures section for further details.
72 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 73 S T LONG-TERM VIABILITY STATEMENT (LTVS) DISCLOSURE R A T E G I How we assess prospects Based on this review a set of hypothetical Assumptions AppliedTaking into account current operational and financial performance, the Board has analysed the impact of the following hypothetically severe C R severe but plausible scenarios were but plausible scenarios. These scenarios were assessed in isolation and as combinations of two or three risks and, although not regarded as E and risksFor the LTVS, we have assumed: P developed. These scenarios have then been plausible but as a reverse stress test, an assessment of all scenarios occurring simultaneously was undertaken: O The Board continually assesses ITV’s R prospects and risks at its meetings, including modelled against the first three years of the • EBITA impacts from LTVS scenarios flow T long range financial plan and cash forecast, through to cash in full except for tax the following:both individually and collectively, in order to savings at 25%, with the exception of Scenario Modelled Link to Principal risks or Accounting judgements and estimates • Holding ‘Strategy Days’ twice a year, to assess viability.settlement impacts (in scenarios 4 and 5) 1+2A significant and sustained downturn in advertising revenue from Principal Risk 1: Streaming; oversee the delivery of the Strategy and and Scenario 5 remedial costs which are 2024, as a result of a decline in the advertising market and linear Whilst all principal risks identified could assumed to be disallowable for tax viewing, driven by macroeconomic factors or increased Principal Risk 3: Commercial; consider changes or new initiatives to further improve the ITV Strategy.have an impact on ITV’s performance, the purposescompetition from large streamers. In this scenario we also fail to Principal Risk 4: Changing Viewer Habits; scenarios reflect the specific risks which • Any settlements related to ongoing replace the advertising revenue lost as result of the confirmed Principal Risk 5: Content Pipeline; • Considering ad-hoc topics on aspects of restrictions on High in Fat, Salt or Sugar (HFSS) and potential the strategy at Board meetings. could potentially impact the Group’s litigation or fines will be treated as restrictions on other advertising categories (e.g. gambling and Principal Risk 6: Partnerships; and financial position and viability during the exceptional items (and therefore excluded high carbon products). • Performing a robust assessment of the period to 31 December 2026.from covenant calculations) Principal Risk 8: Policy & Regulation principal and emerging risks twice a year. Additionally, our Streaming strategy fails to fully deliver the Further detail on how we mitigate these risks is provided in the The output from this modelling was reviewed • No acquisitions are made (consistent with expected consumption hours (for the digital advertising element) principal risk and uncertainties section (pages 55 to 64) As part of the assessment of prospects and ‘Base case’) or subscriber growth (for the SVOD element), impacting revenue by the Audit and Risk Committee in detail, risks, the Board and management routinely with a report from the Committee to the • Management and employee Incentive Advertising revenues year on year (including digital advertising receive briefings and consider topics related Board to support the Board’s review and payments (such as the annual bonus) are revenues) (2024 vs 2023 – 3%; 2025 vs 2024 – 4%; 2026 vs 2025 – 4%) to changing viewer habits, competitor approval. In reaching its view, the Board and assumed to reflect the Impact of the LTVS Total EBITA impact in 2024 is £62 million, followed by an impact of strategies, the broadcasting advertising Committee also considered external views, scenario assumptions on earnings£130 million in 2025 and £203 million in 2026. market and developments in the global including analyst and other industry • Dividends of 5.0p per share maintained Business area impacted: Media & Entertainment content market. It is also kept informed of commentary, to understand the wider market throughout, resulting in around £180 ITV’s resilience to environmental and climate views on the Group’s future prospects, and million of dividends paid out per year related risks; technological advancements in 3 A number of key programme brands within the ITV Studios Principal Risk 4: Changing Viewer Habits the external auditor’s findings and following the disposal of ITV’s 50% division are not recommissioned and new format growth does the areas of Generative Artificial Intelligence conclusions on this matter. shareholding in BritBox International.not materialise Principal Risk 5: Content Pipeline (AI) and how the ITV Strategy responds to • Identified cost savings continue to deliver Further detail on how we mitigate these risks is provided in the these; and sessions led by external analysts The scenario assumes key shows come to an end from 2024 (2024 principal risk and uncertainties section (pages 55 to 64) on investors’ perceptions of the ITV businessAssessment period for viabilityto planEBITA impact: c. £28 million; 2025 EBITA impact c. £58 million and The Board is of the view that a three year 2026 EBITA impact: c. £77 million). The Board and management continued to assessment period (to 31 December 2026) We have also assumed that the revolving Business area impacted: Studios closely scrutinise the impact of the current continues to be the most appropriate. The credit facilities of £500 million and £100 macroeconomic environment on the factors the Board considered in adopting this million are available throughout the period 4ITV is subject to a cyber-attack which results in a major Principal Risk 3: Commercial business. This included identifying cost timeframe were as follows:and that the Credit Suisse CDS facility of operational disruption, critical system outage or loss of £300 million (which matures in June 2026) intellectual property (IP), customer or business data Principal Risk 7: Data interventions/mitigations to respond to • ITV’s long range financial and strategic and the EUR 600 million Eurobond (which possible severe downside scenarios; and This scenario assumes that a class action is filed against ITV, Principal Risk 10: Cyber Security planning cycle matures in September 2026) are re-financed increasing the focus and detail provided in (and not repaid from cash reserves). The following a major cyber attack which results in a blank screen Principal Risk 15: Operational Resilience financial performance reviews and • Visibility over ITV’s advertising business is causing £100 million of lost advertising revenue, which requires a short term. Advertising remains cyclical intention is to refinance a significant substantial compensation payment and results in a fine from the Further detail on how we mitigate these risks is provided in the reforecasting to track performance.proportion of the 2026 full year financing principal risk and uncertainties section (pages 55 to 64) and closely linked to the UK and global Information Commissioner’s Office (ICO). How we assess viabilityeconomic growth and impacted by the arrangements well before maturity. Business area impacted: Group uncertain macroeconomic environment. When assessing the longer-term viability of • The commissioning process and life cycle ITV, we considered 5 Settlements for ongoing litigation are significantly higher than The complexity and potential scale of the ongoing litigation cases of programming gives the Studios division estimated, resulting in large one-off cash payments result in a lack of certainty in the final liabilities and payments. • ITV’s strategy and business plan (pages 2 a more medium-term outlook. However, while non-returning brands are replaced This scenario assumes a higher than provisioned cash outflow in Further detail of the accounting judgements and estimates applied and 10); 2024 and 2025 in respect of settlements for ongoing litigation. to ongoing litigation and earnouts are provided in Section 1 to the • The principal risks and uncertainties with new commissions, over time there is Financial Statements. An overview the assessments performed by less visibility as programmes can Business area impacted: Group the Audit and Risk Committee with respect to these accounting (pages 55 to 64); experience changes in viewer demand or judgements is provided within the Audit and Risk Committee report • The Group’s financing facilities including come to a natural expiration from pages 106 to 116 covenant clauses and future funding plans (page 50); • Technology in the media industry continues to rapidly change the demand 6 A combination of scenarios 1 to 3 above occurring simultaneously. Principal Risk 1: Streaming; • The long range financial plan and cash for content and also how it is consumed forecast; and This scenario would result in an EBITA impact of £90m in 2024, Principal Risk 3: Commercial; • ITV’s business model does not typically £188m in 2025 and £280 million in 2026. Neither covenant is breached Principal Risk 4: Changing Viewer Habits; • Other sensitivity factors or risks which necessitate investment in large capital at any time during the assessment period and liquidity headroom have the potential to materially impact projects that would require a longer-term is maintained Principal Risk 5: Content Pipeline; liquidity and/or covenant headroom in the horizon assessment or returnsBusiness area impacted: Group Principal Risk 6: Partnerships; and assessment period. • Pension funding, which is one of ITV’s key Principal Risk 8: Policy & Regulation funding obligations, is agreed triennially Further detail on how we mitigate these risks is provided in the principal with the Trustees of the pension scheme risk and uncertainties section (pages 55 to 64) We have considered the impact of climate change risks and do not believe they would have a significant financial impact on the business in the assessment period. Please refer to our Climate-related Financial Disclosures section for further details.
74 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 75 LONG-TERM VIABILITY STATEMENT (LTVS) DISCLOSURE CONTINUED G CHAIR’S GOVERNANCE STATEMENT O VE R NAN Viability assessment Potential Mitigations Viability Statement C Our balance sheet and liquidity position In the unlikely event that all scenarios were to Based on the above, the Board has a E remains strong. At 31st December 2023, this impact ITV concurrently, ITV would breach reasonable expectation that ITV will remain comprised unrestricted cash of £340.5 it’s RCF Net Debt / EBITDA covenant in H2 viable and be able to continue operations million; undrawn Revolving Credit Facilities 2026 with a ratio of 3.94x compared to the and meet its liabilities as they fall due over (RCF) of £500 million and £100 million threshold of 3.5x. The threshold is not the three year-period ending 31 December available throughout the viability period; and breached in any other half-yearly period 2026. The assessment has been made with undrawn bilateral facility/CDS of £300 during the assessment period. ITV could reference to ITV’s strategy and the current million maturing in June 2026 (assumed to eliminate the need for any further position and prospects and risks. be replaced with a new facility). management action in H2 2026 by exercising its option under the terms of the RCF to The Strategic Report was approved by the During the viability period, the €600 million increase the covenant threshold to 4.0x for Board and signed on its behalf by: Eurobond maturing September 2026 is up to 2 consecutive half-yearly periods. assumed to be refinanced. Interest cover remains greater than 3.0x CHRIS KENNEDY throughout the viability period. GROUP CFO & COO We have considered both the individual 07 March 2024 scenarios and various combinations of the scenarios in order to assess viability. Our ANDREW COSSLETT modelling concludes that If all scenarios CHAIR were to occur concurrently (considered implausible), management action would be required to ensure the leverage covenant in the Revolving Credit Facility (RCF) is not breached in 2026. Dear Shareholder Engaging with our stakeholders, I am pleased to present our Corporate including our workforce Throughout the year, Governance Report for 2023. As a Board we focus on how we engage ITV was focused on with our stakeholders and how we deliver Year in review a positive impact for them. Relationships delivering its strategic The Board remains committed to with our stakeholders in the UK and priorities, with the maintaining effective corporate governance internationally are vital to building a executive team investing and integrity, enabling us to deliver our successful and sustainable business. strategy for the long-term benefit of our My statement in the Strategic Report sets in a dynamic programme stakeholders. out the ways in which we engaged with of digital modernisation. stakeholders during 2023. Throughout the year, ITV was focused on The Board has been kept delivering its strategic priorities, with the Shareholder feedback is regularly considered well informed of executive team investing in a dynamic during Board meetings and is an important programme of digital modernisation. factor in decision-making. We meet regularly Management’s plans, The Board has been kept well informed with shareholders, through one-to-one particularly following of management’s plans, particularly meetings, conferences and at the Annual following the launch of ITVX and our General Meeting. The 2023 Annual General the launch of ITVX and vision for streaming and content. Meeting was a physical meeting, with the our vision for streaming opportunity for shareholders to ask and content. We held two Board Strategy days, one in questions before and during the meeting. June to review the Strategy and a second in December to hear an update on progress and The health and wellbeing of our colleagues consider the rapidly changing environment. is a significant priority. As part of the open two-way dialogue with colleagues there Diversity is a Board appointed Workforce Engagement We fully recognise the importance of Director. Their role is to work closely with diversity and inclusion at all levels, through the colleague Ambassador network and the entire organisation including the Board. regularly provide feedback to the Board. We are encouraged by the significant Edward Bonham Carter, our Senior progress against the core initiatives of ITV’s Independent Director, has acted in this role Diversity Acceleration Plan, launched in July since 2019 and stepped down in April. The 2020. It’s encouraging to see management’s Board would like to convey our thanks to him commitment and achievements receive for serving in this role for the past four years. public recognition. We are pleased with our Graham Cooke has taken over the position gender and ethnic diversity representation and for information on Graham’s role and on the Board, 45.45% and 18.2% work, and the Board’s workforce engagement respectively, exceeding the FCA Listing activities, please see pages 94 to 95. Rules, Hampton-Alexander and Parker targets. For more detail you can refer to our The Board sought to balance the interests of UK workforce diversity data in the Diversity all stakeholders throughout the year. Please and Inclusion report. see page 83 for examples of key strategic issues considered and Board decisions taken in 2023, and pages 92 to 93 for an explanation of how the Board has had regard to the section 172 matters (including certain key stakeholder considerations).
74 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 75 LONG-TERM VIABILITY STATEMENT (LTVS) DISCLOSURE CONTINUED G CHAIR’S GOVERNANCE STATEMENT O VE R NAN Viability assessmentPotential MitigationsViability Statement C Our balance sheet and liquidity position In the unlikely event that all scenarios were to Based on the above, the Board has a E remains strong. At 31st December 2023, this impact ITV concurrently, ITV would breach reasonable expectation that ITV will remain comprised unrestricted cash of £340.5 it’s RCF Net Debt / EBITDA covenant in H2 viable and be able to continue operations million; undrawn Revolving Credit Facilities 2026 with a ratio of 3.94x compared to the and meet its liabilities as they fall due over (RCF) of £500 million and £100 million threshold of 3.5x. The threshold is not the three year-period ending 31 December available throughout the viability period; and breached in any other half-yearly period 2026. The assessment has been made with undrawn bilateral facility/CDS of £300 during the assessment period. ITV could reference to ITV’s strategy and the current million maturing in June 2026 (assumed to eliminate the need for any further position and prospects and risks. be replaced with a new facility). management action in H2 2026 by exercising its option under the terms of the RCF to The Strategic Report was approved by the During the viability period, the €600 million increase the covenant threshold to 4.0x for Board and signed on its behalf by: Eurobond maturing September 2026 is up to 2 consecutive half-yearly periods. assumed to be refinanced. Interest cover remains greater than 3.0x CHRIS KENNEDY throughout the viability period.GROUP CFO & COO We have considered both the individual 07 March 2024 scenarios and various combinations of the scenarios in order to assess viability. Our ANDREW COSSLETT modelling concludes that If all scenarios CHAIR were to occur concurrently (considered implausible), management action would be required to ensure the leverage covenant in the Revolving Credit Facility (RCF) is not breached in 2026. Dear Shareholder Engaging with our stakeholders, I am pleased to present our Corporate including our workforce Throughout the year, Governance Report for 2023. As a Board we focus on how we engage ITV was focused on with our stakeholders and how we deliver Year in review a positive impact for them. Relationships delivering its strategic The Board remains committed to with our stakeholders in the UK and priorities, with the maintaining effective corporate governance internationally are vital to building a executive team investing and integrity, enabling us to deliver our successful and sustainable business. strategy for the long-term benefit of our My statement in the Strategic Report sets in a dynamic programme stakeholders. out the ways in which we engaged with of digital modernisation. stakeholders during 2023. Throughout the year, ITV was focused on The Board has been kept delivering its strategic priorities, with the Shareholder feedback is regularly considered well informed of executive team investing in a dynamic during Board meetings and is an important programme of digital modernisation. factor in decision-making. We meet regularly Management’s plans, The Board has been kept well informed with shareholders, through one-to-one particularly following of management’s plans, particularly meetings, conferences and at the Annual following the launch of ITVX and our General Meeting. The 2023 Annual General the launch of ITVX and vision for streaming and content. Meeting was a physical meeting, with the our vision for streaming opportunity for shareholders to ask and content. We held two Board Strategy days, one in questions before and during the meeting. June to review the Strategy and a second in December to hear an update on progress and The health and wellbeing of our colleagues consider the rapidly changing environment. is a significant priority. As part of the open two-way dialogue with colleagues there Diversity is a Board appointed Workforce Engagement We fully recognise the importance of Director. Their role is to work closely with diversity and inclusion at all levels, through the colleague Ambassador network and the entire organisation including the Board. regularly provide feedback to the Board. We are encouraged by the significant Edward Bonham Carter, our Senior progress against the core initiatives of ITV’s Independent Director, has acted in this role Diversity Acceleration Plan, launched in July since 2019 and stepped down in April. The 2020. It’s encouraging to see management’s Board would like to convey our thanks to him commitment and achievements receive for serving in this role for the past four years. public recognition. We are pleased with our Graham Cooke has taken over the position gender and ethnic diversity representation and for information on Graham’s role and on the Board, 45.45% and 18.2% work, and the Board’s workforce engagement respectively, exceeding the FCA Listing activities, please see pages 94 to 95. Rules, Hampton-Alexander and Parker targets. For more detail you can refer to our The Board sought to balance the interests of UK workforce diversity data in the Diversity all stakeholders throughout the year. Please and Inclusion report. see page 83 for examples of key strategic issues considered and Board decisions taken in 2023, and pages 92 to 93 for an explanation of how the Board has had regard to the section 172 matters (including certain key stakeholder considerations).
76 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 77 CHAIRMAN’S GOVERNANCE STATEMENT CONTINUED G BOARD OF DIRECTORS O VE R NAN CAROLYN MCCALL CHRIS KENNEDY C The 2018 Committee membership Chief Executive Group CFO and COO E A Audit and Risk UK Corporate N Nominations Governance Code R Remuneration (the Code) Terms of engagement for the Non- Appointed Chief Executive and to the Board on Appointed as Group CFO on 21 February 2019 and executive Directors and written 8 January 2018 as Group CFO and COO on 2 December 2021 responsibilities for the Chair, Chief Executive During 2023, the Company fully complied with all the provisions of the Code. and Senior Independent Director are Key areas of expertise: Business transformation, Key areas of expertise: Business transformation, The Code (July 2018), issued by the Financial Reporting Council (FRC), available on our website: Creative Industry, Digital, Media and Media IP, Creative Industry, Digital, Finance and Treasury, and associated guidance are available on the FRC website at www.frc.org.uk. www.itvplc.com/investors/governance Regulation and Public Policy, Strategy, People and Audit, Sustainability and ESG, Media and Media IP, Talent Strategy, Technology and Data The Board notes the release by the FRC of the revised Corporate Governance Code Key skills and experience: Carolyn has an Key skills and experience: Chris has a strong 2024 and will work to ensure full compliance with all elements of the new Code over impressive track record in media and experience of media background, holding senior management leading digital transformational change both in an positions over a 17-year career at EMI. Chris’ the next couple of years. ANDREW international and regulated environment. She has experience in executing and driving strategy has COSSLETT clear strategic acumen and a strong record of played a key role in ITV’s digital acceleration into driving operational excellence and delivering value Phase Two of the More than TV strategy, and R N to shareholders. Carolyn created the More Than TV ensuring ITV’s transformation into a successful Taking each of the main headings of the Code: Chair, Chair of the strategy when she joined in 2018. Carolyn has been digitally led media and entertainment company, as Nominations instrumental in accelerating the strategy into well as driving a rationalisation/cost savings Culture Committee Phase Two, having successfully executed Phase initiative. He was previously Chief Financial Officer BOARD LEADERSHIP AND COMPANY PURPOSE One. She continues to execute the strategy of Micro Focus International plc, ARM Holdings and Good performance relies on the Company’s effectively through her strong leadership of the easyJet plc where he spent five years and was culture being aligned with its purpose, values The Board’s ultimate objective is the long-term sustainable success of the Company ensuring ITV’s transformation into a voted FTSE 100 CFO in 2015. As the business and strategy. As ITV continues to become an Appointed to the Board on 1 June 2022 and as successful digitally led media and entertainment continues to evolve and develop, he took on the Company. Read more about our strategy in the Strategic Report and how the Board Chairman on 29 September 2022 company. Previously she was Chief Executive of broader role of Chief Operating Officer and Chief increasingly digital business and adopts new achieves this through, amongst other things, stakeholder and workforce easyJet plc for seven years and spent over 20 years Finance Officer in December 2021. ways of working to improve agility, the Board engagement (pages 84 to 91) and establishing a clear and aligned Company Key areas of expertise: Business transformation, Media and Media IP, Strategy, Remuneration, at the Guardian Media Group holding a number of Current external appointments: Non-executive recognises the importance of continuing to purpose, strategy and values. Please also see pages 96 to 99 for how the Board senior roles, including CEO of Guardian News and foster and monitor the culture across the People and Talent Director, Chair of the Audit Committee and assesses and monitors culture. Media and then four years as Chief Executive of member of the Nomination Committee, Whitbread organisation. Please see pages 96 to 99 for Key skills and experience: Andrew is an Guardian Media Group. She has previously served experienced chair who has spent his career in a as a Non-executive Director of Lloyds TSB, Tesco plc; Non-executive Director of the Great Ormond the key ways in which the Board and Street Hospital for Children NHS Foundation Trust; Committees monitored culture during 2023. DIVISION OF RESPONSIBILITIES range of consumer facing sectors. His early career plc and New Look Group plc. In 2008, Carolyn was was with Unilever in a variety of branding and awarded an OBE for her services to women in Trustee of the EMI Group Archive Trust. The Board consists of two Executive Directors, eight independent Non-executive marketing roles. He then spent 14 years at business and in 2016 a Damehood for her services Changes on the Board Directors and the Non-executive Chair, who was considered independent on Cadbury Schweppes in senior international roles to the aviation industry. Through the Nominations Committee, we appointment to the Board. For Board meeting attendance, please see page 82. before becoming Chief Executive Officer (CEO) for InterContinental Hotels Group (IHG). Andrew Current external appointments: Non-executive focus on Board succession and composition Additional external appointments of Board members during 2023 received prior Director, Bridgepoint Group plc; Trustee of the to ensure we have the appropriate balance of Board approval. The Directors’ other time commitments are in line with the key was at IHG for six years, creating value by leveraging the power of its brands alongside Development Board of the Royal Academy of Arts. EDWARD skills, independence, experience and diversity. institutional investor and investor body guidelines. executing a programme of significant BONHAM CARTER transformational and cultural change. He served A N R During the year Mary Harris, Anna Manz and COMPOSITION, SUCCESSION AND EVALUATION as CEO for Fitness First, where he was Duncan Painter stepped down and we instrumental in successfully repositioning the SALMAN AMIN Senior Independent appointed two new Non-executive Directors, The Nominations Committee Report sets out its activities and areas of focus during business and brand. Andrew served as a Director, Workforce Marjorie Kaplan in September and Dawn 2023, including Board and management level succession planning and recruitment, non-executive director of the Rugby Football R N Engagement Director Allen in October. Board composition and skills, Board and Company diversity progress updates and Union (RFU) from 2012, where he was appointed (up to June 2023) chair from 2016 until 2021. Andrew received a Independent the Board evaluation which took place during the year. CBE for services to the RFU in the 2022 New Non-executive 2024 Annual General Meeting Year’s Honours List. Director Appointed to the Board on 11 October 2018 The 2024 AGM will be held on Thursday 2 May, AUDIT, RISK AND INTERNAL CONTROL Current external appointments: Chair, Key areas of expertise: Business transformation, at 11.00. The meeting arrangements are Kingfisher plc Finance and Treasury, Sustainability and ESG, available to view on the Company’s website. The Audit and Risk Committee Report describes the work of the Committee and Strategy, People and Talent, Audit, Remuneration how it discharges its roles and responsibilities. The Committee reviewed the Appointed to the Board on 9 January 2017 Key skills and experience: Edward brings to the I would like to take this opportunity to thank enterprise risk management framework, as well as assessing management’s review Key areas of expertise: Business transformation, Board a wide range of City experience and my fellow Board members, the Management and strengthening of the Group’s internal controls, increasing its focus on IT general Digital, Media and Media IP, Strategy, invaluable insight in the understanding of stock team and our colleagues in the wider controls. The Committee also monitored the effectiveness of the external auditor, Remuneration, People and Talent, Sustainability markets and investor expectations. He was workforce, who served during another the internal auditor and the quality of audits. The Company’s disclosures regarding and ESG previously Vice Chairman of Jupiter Fund challenging year for the Group. As we risk management and internal controls are on page 112 , and details of how the Key skills and experience: Salman brings to the Management plc (2014) having joined Jupiter in Committee focused on audit quality are set out on pages 114 and 115. Board a wealth of experience in global businesses 1994 as a UK fund manager and held the position of navigate 2024 the Board will continue to work Chief Investment Officer from 1999 to 2010 and with the management team to deliver on our having worked for over 30 years managing global Group Chief Executive until 2014. He started his strategic initiatives, ensure the wellbeing of REMUNERATION brand advertising and media spend. Previously career at Schroders as an investment analyst our colleagues and build a successful and he was COO, Global Commercial Division at before moving to Electra Investment Trust where SC Johnson & Son, and has held positions at he was a fund manager. sustainable business for all stakeholders. The Remuneration Report describes the work of the Remuneration Committee and Procter & Gamble and PepsiCo. sets out how executive remuneration is aligned to the Company’s purpose, values Current external appointments: Senior ANDREW COSSLETT and strategy. It also describes how the Committee considered workforce Current external appointments: Chief Executive Independent Director, Land Securities Group plc; CHAIR remuneration and related policies in its decision-making regarding executive Officer, Pladis. Trustee, The Esmee Fairbairn Foundation; 7 March 2024 remuneration. Chairman, Netwealth Investments Ltd.
76 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 77 CHAIRMAN’S GOVERNANCE STATEMENT CONTINUED G BOARD OF DIRECTORS O VE R NAN CAROLYN MCCALL CHRIS KENNEDY C The 2018 Committee membership Chief Executive Group CFO and COO E A Audit and Risk UK Corporate N Nominations Governance Code R Remuneration (the Code) Terms of engagement for the Non- Appointed Chief Executive and to the Board on Appointed as Group CFO on 21 February 2019 and executive Directors and written 8 January 2018 as Group CFO and COO on 2 December 2021 responsibilities for the Chair, Chief Executive During 2023, the Company fully complied with all the provisions of the Code. and Senior Independent Director are Key areas of expertise: Business transformation, Key areas of expertise: Business transformation, The Code (July 2018), issued by the Financial Reporting Council (FRC), available on our website: Creative Industry, Digital, Media and Media IP, Creative Industry, Digital, Finance and Treasury, and associated guidance are available on the FRC website at www.frc.org.uk.www.itvplc.com/investors/governance Regulation and Public Policy, Strategy, People and Audit, Sustainability and ESG, Media and Media IP, Talent Strategy, Technology and Data The Board notes the release by the FRC of the revised Corporate Governance Code Key skills and experience: Carolyn has an Key skills and experience: Chris has a strong 2024 and will work to ensure full compliance with all elements of the new Code over impressive track record in media and experience of media background, holding senior management leading digital transformational change both in an positions over a 17-year career at EMI. Chris’ the next couple of years. ANDREW international and regulated environment. She has experience in executing and driving strategy has COSSLETT clear strategic acumen and a strong record of played a key role in ITV’s digital acceleration into driving operational excellence and delivering value Phase Two of the More than TV strategy, and R N to shareholders. Carolyn created the More Than TV ensuring ITV’s transformation into a successful Taking each of the main headings of the Code:Chair, Chair of the strategy when she joined in 2018. Carolyn has been digitally led media and entertainment company, as Nominations instrumental in accelerating the strategy into well as driving a rationalisation/cost savings Culture Committee Phase Two, having successfully executed Phase initiative. He was previously Chief Financial Officer BOARD LEADERSHIP AND COMPANY PURPOSE One. She continues to execute the strategy of Micro Focus International plc, ARM Holdings and Good performance relies on the Company’s effectively through her strong leadership of the easyJet plc where he spent five years and was culture being aligned with its purpose, values The Board’s ultimate objective is the long-term sustainable success of the Company ensuring ITV’s transformation into a voted FTSE 100 CFO in 2015. As the business and strategy. As ITV continues to become an Appointed to the Board on 1 June 2022 and as successful digitally led media and entertainment continues to evolve and develop, he took on the Company. Read more about our strategy in the Strategic Report and how the Board Chairman on 29 September 2022 company. Previously she was Chief Executive of broader role of Chief Operating Officer and Chief increasingly digital business and adopts new achieves this through, amongst other things, stakeholder and workforce easyJet plc for seven years and spent over 20 years Finance Officer in December 2021. ways of working to improve agility, the Board engagement (pages 84 to 91) and establishing a clear and aligned Company Key areas of expertise: Business transformation, Media and Media IP, Strategy, Remuneration, at the Guardian Media Group holding a number of Current external appointments: Non-executive recognises the importance of continuing to purpose, strategy and values. Please also see pages 96 to 99 for how the Board senior roles, including CEO of Guardian News and foster and monitor the culture across the People and Talent Director, Chair of the Audit Committee and assesses and monitors culture. Media and then four years as Chief Executive of member of the Nomination Committee, Whitbread organisation. Please see pages 96 to 99 for Key skills and experience: Andrew is an Guardian Media Group. She has previously served experienced chair who has spent his career in a as a Non-executive Director of Lloyds TSB, Tesco plc; Non-executive Director of the Great Ormond the key ways in which the Board and Street Hospital for Children NHS Foundation Trust; Committees monitored culture during 2023. DIVISION OF RESPONSIBILITIESrange of consumer facing sectors. His early career plc and New Look Group plc. In 2008, Carolyn was was with Unilever in a variety of branding and awarded an OBE for her services to women in Trustee of the EMI Group Archive Trust. The Board consists of two Executive Directors, eight independent Non-executive marketing roles. He then spent 14 years at business and in 2016 a Damehood for her services Changes on the BoardDirectors and the Non-executive Chair, who was considered independent on Cadbury Schweppes in senior international roles to the aviation industry. Through the Nominations Committee, we appointment to the Board. For Board meeting attendance, please see page 82. before becoming Chief Executive Officer (CEO) for InterContinental Hotels Group (IHG). Andrew Current external appointments: Non-executive focus on Board succession and composition Additional external appointments of Board members during 2023 received prior Director, Bridgepoint Group plc; Trustee of the to ensure we have the appropriate balance of Board approval. The Directors’ other time commitments are in line with the key was at IHG for six years, creating value by leveraging the power of its brands alongside Development Board of the Royal Academy of Arts. EDWARD skills, independence, experience and diversity. institutional investor and investor body guidelines.executing a programme of significant BONHAM CARTER transformational and cultural change. He served A N R During the year Mary Harris, Anna Manz and COMPOSITION, SUCCESSION AND EVALUATIONas CEO for Fitness First, where he was Duncan Painter stepped down and we instrumental in successfully repositioning the SALMAN AMIN Senior Independent appointed two new Non-executive Directors, The Nominations Committee Report sets out its activities and areas of focus during business and brand. Andrew served as a Director, Workforce Marjorie Kaplan in September and Dawn 2023, including Board and management level succession planning and recruitment, non-executive director of the Rugby Football R N Engagement Director Allen in October.Board composition and skills, Board and Company diversity progress updates and Union (RFU) from 2012, where he was appointed (up to June 2023) chair from 2016 until 2021. Andrew received a Independent the Board evaluation which took place during the year.CBE for services to the RFU in the 2022 New Non-executive 2024 Annual General Meeting Year’s Honours List. Director Appointed to the Board on 11 October 2018 The 2024 AGM will be held on Thursday 2 May, AUDIT, RISK AND INTERNAL CONTROLCurrent external appointments: Chair, Key areas of expertise: Business transformation, at 11.00. The meeting arrangements are Kingfisher plc Finance and Treasury, Sustainability and ESG, available to view on the Company’s website.The Audit and Risk Committee Report describes the work of the Committee and Strategy, People and Talent, Audit, Remuneration how it discharges its roles and responsibilities. The Committee reviewed the Appointed to the Board on 9 January 2017 Key skills and experience: Edward brings to the I would like to take this opportunity to thank enterprise risk management framework, as well as assessing management’s review Key areas of expertise: Business transformation, Board a wide range of City experience and my fellow Board members, the Management and strengthening of the Group’s internal controls, increasing its focus on IT general Digital, Media and Media IP, Strategy, invaluable insight in the understanding of stock team and our colleagues in the wider controls. The Committee also monitored the effectiveness of the external auditor, Remuneration, People and Talent, Sustainability markets and investor expectations. He was workforce, who served during another the internal auditor and the quality of audits. The Company’s disclosures regarding and ESG previously Vice Chairman of Jupiter Fund challenging year for the Group. As we risk management and internal controls are on page 112 , and details of how the Key skills and experience: Salman brings to the Management plc (2014) having joined Jupiter in Committee focused on audit quality are set out on pages 114 and 115. Board a wealth of experience in global businesses 1994 as a UK fund manager and held the position of navigate 2024 the Board will continue to work Chief Investment Officer from 1999 to 2010 and with the management team to deliver on our having worked for over 30 years managing global Group Chief Executive until 2014. He started his strategic initiatives, ensure the wellbeing of REMUNERATION brand advertising and media spend. Previously career at Schroders as an investment analyst our colleagues and build a successful and he was COO, Global Commercial Division at before moving to Electra Investment Trust where SC Johnson & Son, and has held positions at he was a fund manager. sustainable business for all stakeholders.The Remuneration Report describes the work of the Remuneration Committee and Procter & Gamble and PepsiCo. sets out how executive remuneration is aligned to the Company’s purpose, values Current external appointments: Senior ANDREW COSSLETT and strategy. It also describes how the Committee considered workforce Current external appointments: Chief Executive Independent Director, Land Securities Group plc; CHAIR remuneration and related policies in its decision-making regarding executive Officer, Pladis. Trustee, The Esmee Fairbairn Foundation; 7 March 2024remuneration. Chairman, Netwealth Investments Ltd.
78 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 79 BOARD OF DIRECTORS CONTINUED G MANAGEMENT BOARD O VE R NAN MARGARET EWING GRAHAM COOKE DAWN ALLEN JULIAN BELLAMY CAROLYN MCCALL RUFUS RADCLIFFE C Managing Director, Chief Executive Managing Director, E A N A N A ITV Studios Streaming and Independent Independent Independent Interactive Non-executive Non-executive Non-executive Director, Chair of the Director, Workforce Director Audit and Risk Engagement Director Committee (from June 2023) Appointed to the Board on 31 October 2017 Appointed to the Board on 1 May 2020 Appointed to the Board on 2 October 2023 Appointed: February 2016 Appointed: January 2018 Appointed: April 2017 Key areas of expertise: Business transformation, Key areas of expertise: Business transformation, Key areas of expertise: Business transformation, Experience: Julian joined ITV in 2014 as Experience: Biography on page 77. Experience: Rufus joined ITV as Group Marketing Finance and Treasury, Audit, Sustainability and Digital, Media and Media IP, Strategy, Technology Digital, Finance and Treasury, Audit, Strategy, Managing Director of ITV Studios in the UK. and Research Director in 2011. He was promoted to ESG, Strategy, Regulation and Public Policy and Data Technology and Data He was promoted to Managing Director of ITV Chief Marketing Officer and appointed to the Key skills and experience: Margaret has extensive Key skills and experience: Graham has extensive Studios and appointed to the Management Board Management Board in 2017. experience in financial accounting, corporate technical and digital experience, a focus in Key skills and experience: Dawn has extensive in February 2016. In 2019 he took on additional responsibility for the financial, commercial and international experience KEVIN LYGO finance, strategic and corporate planning having user-centric product design, coupled with in-depth having held global roles in large scale businesses He has responsibility for running ITV’s global Managing Director, Direct to Consumer division as Chief Marketing served as a Managing Partner of Deloitte LLP and knowledge of the e-commerce and digital sectors. across consumer-related sector. She joined Tate & production and distribution business that Media & Officer and Director of Direct to Consumer. In Chief Financial Officer of BAA plc and Trinity Mirror He is the founder of Qubit, the leading provider of Lyle PLC in 2022 as Chief Financial Officer where creates, produces and sells finished programmes Entertainment October 2020 he was appointed Managing Director plc. Margaret also held Non-executive Director and e-commerce personalisation technology. Prior to she has been heavily involved in developing the and formats in the UK and internationally. of On Demand, one of the two business units Audit Committee positions with Standard founding Qubit, he spent five years working at global strategy, digital capabilities and processes. Julian’s previous roles included Creative Director making up the newly created Media & Chartered plc and Whitbread plc and was an Google. His most recent role there was as global Prior to this she was Global CFO & VP, Global and Head of Commissioning at Discovery Entertainment Division. external member of the Audit and Risk Committee leader on Google’s strategy for conversion rate Transformation at Mars where, during a 25-year Networks International, Head of Programming at Rufus now leads our streaming, interactive and of the John Lewis Partnership. Margaret was a improvement. Graham has been working with web career, she held a number of key senior financial Channel 4 and prior to that he ran BBC3 and E4. data teams. managing partner of public policy regulation for technology since 1995, designing and building roles in Europe and the US including Global He also spent time as Channel 4’s Head of Factual Deloitte UK. Margaret’s skills and experience give websites with emergent technology. Divisional CFO, Food, Drinks and Multi Sales and Entertainment and was a commissioning editor of Appointed: August 2010 Before joining ITV, Rufus spent 10 years at Channel her substantial insight into the Company’s Current external appointments: Director, Regional CFO Wrigley Americas. Channel 4 News and Current Affairs. 4, and prior to that held various positions at reporting and risk management processes. Experience: Kevin joined ITV as Managing Director McCann Erickson and JWT. Qubit Digital; Non-executive Director, RWS Current external appointments: Chief Financial of ITV Studios and a member of the Management Current external appointments: Non-executive Holdings PLC. Officer, Tate & Lyle PLC Board in 2010. He became Director of Television in Director and Chair of the Audit and Compliance February 2016 and in October 2020 he was Committee and member of the Nominations appointed Managing Director of the newly created Committee of International Consolidated Airlines Media & Entertainment Division. Group, S.A.; Senior Independent Director, Chair of the Audit and Risk Committee and member of the GIDON KATZ MARJORIE KAPLAN DAVID OSBORN As well as having overall responsibility for the CHRIS KENNEDY Nominations Committee of ConvaTec Group plc. Chief People Officer Media & Entertainment Division, Kevin continues to Group CFO and COO Independent Independent run the Broadcast business unit (one of the two Non-executive Non-executive business units making up the Division) and to Director Director oversee the commissioning of popular programming delivering ITV’s USP of mass SHARMILA NEBHRAJANI simultaneous reach. R N Kevin’s previous roles included Director of Television and Content at Channel 4, Director of Independent Programmes at Channel 5 and a number of Non-executive Appointed to the Board on 17 July 2022 Appointed to the Board 1 September 2023 Appointed: October 2014 positions at the BBC, including Head of Appointed: February 2019 Director, Chair of Key areas of expertise: Creative Industry, Digital, Key areas of expertise: Business Transformation, Experience: David joined ITV as the HR Director Independent Commissioning for Entertainment. Experience: Biography on page 77. the Remuneration Media and Media IP, Strategy, Technology and Data Creative Industry, Media and Media IP, Strategy for ITV Studios in 2011, leading the HR agenda for Committee the ITV Studios Division through the early stages Key skills and experience: Gidon has extensive Key skills and experience: Marjorie has extensive of transformation. digital and streaming services experience, along brand, content and audience strategy experience Appointed to the Board on 10 December 2020 with in-depth knowledge of tech product and having spent 20 years as a senior executive in the In 2014 he was promoted to Group HR Director and KELLY WILLIAMS Key areas of expertise: Business transformation, platform businesses having been responsible for global media industry at Discovery, now Warner appointed to the Management Board. To reflect an Managing Director, Digital, Finance and Treasury, Audit, Sustainability the transformation of Now TV in the UK and the Bros Discovery, where she oversaw dramatic increased portfolio, in 2022 David became Chief Commercial and ESG, Media and Media IP, Regulation and Public development and highly successful launch of growth at multiple major networks in the US, People Officer and is responsible for the People Policy, Strategy, Remuneration, People and Talent Peacock. He joined Roku in 2022 as Senior Vice building new franchises and unlocking revenue Strategy for ITV globally, ensuring People decisions President of Consumer at Roku, prior to joining opportunities across platforms and then was are central to everything we do at ITV. He has Key skills and experience: Sharmila has strong Roku he was President of Direct to Consumer for responsible for strategy, coordination and responsibility for Health, Safety and Security and public sector, commercial, government and NBCU, launching Peacock in the U.S. Before moving execution of the International Division’s global Duty of Care for all who work at ITV, behind the non-profit experience across a wide range of to the U.S, Gidon led Sky’s streaming service ‘Now’ content activities across the portfolio worldwide. scenes and in front of the camera. In addition, he sectors, including utilities, financial services, for six years, having previously launched Virgin She has substantial experience in both the US and leads the Human Resources, Workplace Services media, global health and medical research. Earlier Media’s VOD service. He holds a BA/MA from the Europe with a track record as a change agent, and Pensions teams. Appointed: December 2014 in her career, she held the post of Chief Operating University of Cambridge and an MSc in transforming and growing global brands and Officer at BBC Future Media & Technology, where International Relations from The London School of businesses, and building vibrant organisations. Prior to joining ITV David has worked across Experience: Kelly joined ITV in 2011 as Group she managed the business functions of bbc.co.uk, Economics and Political Science. a number of different industries and sectors Commercial Director. He was promoted to including the launch of the iPlayer. Sharmila Current external appointments: Head of Faculty including Marks and Spencer Plc, Mars Inc., Managing Director Commercial and appointed to studied medicine at the University of Oxford, is a Current external appointments: President of at Merryck & Co; Non-executive Director of Visa International, Vodafone and EMI Music. the Management Board in 2014. He is the Chair of Chartered Accountant and was awarded an OBE in Consumer Experience, Roku ProSiebenSat.1 Media SE in Germany, ARTDAI Thinkbox, the marketing body for commercial TV in 2014 for services to medical research. and Trustee at The Grierson Trust. the UK, a member of the BARB Strategy Board and sits on the RTL AdAliance International Board. Current external appointments: Non-executive Director, Chair of the Remuneration Committee, He has responsibility for all commercial advertising Member of the Corporate Sustainability and deals across the ITV family of channels. Nominations Committees, Severn Trent plc; Prior to joining ITV, Kelly was the Sales Director Non-executive Director, member of the Audit and at Channel 5 and prior to that held various positions Risk, Remuneration and Nominations Committees, at UKTV, Sky and Thames Television. Halma plc; Non-executive Director and Chair of the Audit and Risk Committee, Coutts & Co; Chairman of National Institute for Health and Care Excellence; Non-executive Director, University of Oxford; and World Fellow, Yale University.
78 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 79 BOARD OF DIRECTORS CONTINUED G MANAGEMENT BOARD O VE R NAN MARGARET EWINGGRAHAM COOKEDAWN ALLEN JULIAN BELLAMY CAROLYN MCCALL RUFUS RADCLIFFE C Managing Director, Chief Executive Managing Director, E A NA NA ITV Studios Streaming and Independent Independent Independent Interactive Non-executive Non-executive Non-executive Director, Chair of the Director, Workforce Director Audit and Risk Engagement Director Committee(from June 2023) Appointed to the Board on 31 October 2017Appointed to the Board on 1 May 2020 Appointed to the Board on 2 October 2023 Appointed: February 2016 Appointed: January 2018 Appointed: April 2017 Key areas of expertise: Business transformation, Key areas of expertise: Business transformation, Key areas of expertise: Business transformation, Experience: Julian joined ITV in 2014 as Experience: Biography on page 77.Experience: Rufus joined ITV as Group Marketing Finance and Treasury, Audit, Sustainability and Digital, Media and Media IP, Strategy, Technology Digital, Finance and Treasury, Audit, Strategy, Managing Director of ITV Studios in the UK. and Research Director in 2011. He was promoted to ESG, Strategy, Regulation and Public Policy and DataTechnology and Data He was promoted to Managing Director of ITV Chief Marketing Officer and appointed to the Key skills and experience: Margaret has extensive Key skills and experience: Graham has extensive Studios and appointed to the Management Board Management Board in 2017. experience in financial accounting, corporate technical and digital experience, a focus in Key skills and experience: Dawn has extensive in February 2016.In 2019 he took on additional responsibility for the financial, commercial and international experience KEVIN LYGO finance, strategic and corporate planning having user-centric product design, coupled with in-depth having held global roles in large scale businesses He has responsibility for running ITV’s global Managing Director, Direct to Consumer division as Chief Marketing served as a Managing Partner of Deloitte LLP and knowledge of the e-commerce and digital sectors. across consumer-related sector. She joined Tate & production and distribution business that Media & Officer and Director of Direct to Consumer. In Chief Financial Officer of BAA plc and Trinity Mirror He is the founder of Qubit, the leading provider of Lyle PLC in 2022 as Chief Financial Officer where creates, produces and sells finished programmes EntertainmentOctober 2020 he was appointed Managing Director plc. Margaret also held Non-executive Director and e-commerce personalisation technology. Prior to she has been heavily involved in developing the and formats in the UK and internationally.of On Demand, one of the two business units Audit Committee positions with Standard founding Qubit, he spent five years working at global strategy, digital capabilities and processes. Julian’s previous roles included Creative Director making up the newly created Media & Chartered plc and Whitbread plc and was an Google. His most recent role there was as global Prior to this she was Global CFO & VP, Global and Head of Commissioning at Discovery Entertainment Division. external member of the Audit and Risk Committee leader on Google’s strategy for conversion rate Transformation at Mars where, during a 25-year Networks International, Head of Programming at Rufus now leads our streaming, interactive and of the John Lewis Partnership. Margaret was a improvement. Graham has been working with web career, she held a number of key senior financial Channel 4 and prior to that he ran BBC3 and E4. data teams. managing partner of public policy regulation for technology since 1995, designing and building roles in Europe and the US including Global He also spent time as Channel 4’s Head of Factual Deloitte UK. Margaret’s skills and experience give websites with emergent technology.Divisional CFO, Food, Drinks and Multi Sales and Entertainment and was a commissioning editor of Appointed: August 2010 Before joining ITV, Rufus spent 10 years at Channel her substantial insight into the Company’s Current external appointments: Director, Regional CFO Wrigley Americas.Channel 4 News and Current Affairs.4, and prior to that held various positions at reporting and risk management processes. Experience: Kevin joined ITV as Managing Director McCann Erickson and JWT. Qubit Digital; Non-executive Director, RWS Current external appointments: Chief Financial of ITV Studios and a member of the Management Current external appointments: Non-executive Holdings PLC.Officer, Tate & Lyle PLCBoard in 2010. He became Director of Television in Director and Chair of the Audit and Compliance February 2016 and in October 2020 he was Committee and member of the Nominations appointed Managing Director of the newly created Committee of International Consolidated Airlines Media & Entertainment Division. Group, S.A.; Senior Independent Director, Chair of the Audit and Risk Committee and member of the GIDON KATZMARJORIE KAPLAN DAVID OSBORN As well as having overall responsibility for the CHRIS KENNEDY Nominations Committee of ConvaTec Group plc.Chief People Officer Media & Entertainment Division, Kevin continues to Group CFO and COO Independent Independent run the Broadcast business unit (one of the two Non-executive Non-executive business units making up the Division) and to DirectorDirector oversee the commissioning of popular programming delivering ITV’s USP of mass SHARMILA NEBHRAJANI simultaneous reach. R N Kevin’s previous roles included Director of Television and Content at Channel 4, Director of Independent Programmes at Channel 5 and a number of Non-executive Appointed to the Board on 17 July 2022Appointed to the Board 1 September 2023 Appointed: October 2014 positions at the BBC, including Head of Appointed: February 2019 Director, Chair of Key areas of expertise: Creative Industry, Digital, Key areas of expertise: Business Transformation, Experience: David joined ITV as the HR Director Independent Commissioning for Entertainment.Experience: Biography on page 77. the Remuneration Media and Media IP, Strategy, Technology and DataCreative Industry, Media and Media IP, Strategy for ITV Studios in 2011, leading the HR agenda for Committee the ITV Studios Division through the early stages Key skills and experience: Gidon has extensive Key skills and experience: Marjorie has extensive of transformation. digital and streaming services experience, along brand, content and audience strategy experience Appointed to the Board on 10 December 2020with in-depth knowledge of tech product and having spent 20 years as a senior executive in the In 2014 he was promoted to Group HR Director and KELLY WILLIAMS Key areas of expertise: Business transformation, platform businesses having been responsible for global media industry at Discovery, now Warner appointed to the Management Board. To reflect an Managing Director, Digital, Finance and Treasury, Audit, Sustainability the transformation of Now TV in the UK and the Bros Discovery, where she oversaw dramatic increased portfolio, in 2022 David became Chief Commercial and ESG, Media and Media IP, Regulation and Public development and highly successful launch of growth at multiple major networks in the US, People Officer and is responsible for the People Policy, Strategy, Remuneration, People and TalentPeacock. He joined Roku in 2022 as Senior Vice building new franchises and unlocking revenue Strategy for ITV globally, ensuring People decisions President of Consumer at Roku, prior to joining opportunities across platforms and then was are central to everything we do at ITV. He has Key skills and experience: Sharmila has strong Roku he was President of Direct to Consumer for responsible for strategy, coordination and responsibility for Health, Safety and Security and public sector, commercial, government and NBCU, launching Peacock in the U.S. Before moving execution of the International Division’s global Duty of Care for all who work at ITV, behind the non-profit experience across a wide range of to the U.S, Gidon led Sky’s streaming service ‘Now’ content activities across the portfolio worldwide. scenes and in front of the camera. In addition, he sectors, including utilities, financial services, for six years, having previously launched Virgin She has substantial experience in both the US and leads the Human Resources, Workplace Services media, global health and medical research. Earlier Media’s VOD service. He holds a BA/MA from the Europe with a track record as a change agent, and Pensions teams. Appointed: December 2014 in her career, she held the post of Chief Operating University of Cambridge and an MSc in transforming and growing global brands and Officer at BBC Future Media & Technology, where International Relations from The London School of businesses, and building vibrant organisations.Prior to joining ITV David has worked across Experience: Kelly joined ITV in 2011 as Group she managed the business functions of bbc.co.uk, Economics and Political Science.a number of different industries and sectors Commercial Director. He was promoted to including the launch of the iPlayer. Sharmila Current external appointments: Head of Faculty including Marks and Spencer Plc, Mars Inc., Managing Director Commercial and appointed to studied medicine at the University of Oxford, is a Current external appointments: President of at Merryck & Co; Non-executive Director of Visa International, Vodafone and EMI Music.the Management Board in 2014. He is the Chair of Chartered Accountant and was awarded an OBE in Consumer Experience, RokuProSiebenSat.1 Media SE in Germany, ARTDAI Thinkbox, the marketing body for commercial TV in 2014 for services to medical research.and Trustee at The Grierson Trust. the UK, a member of the BARB Strategy Board and sits on the RTL AdAliance International Board. Current external appointments: Non-executive Director, Chair of the Remuneration Committee, He has responsibility for all commercial advertising Member of the Corporate Sustainability and deals across the ITV family of channels. Nominations Committees, Severn Trent plc; Prior to joining ITV, Kelly was the Sales Director Non-executive Director, member of the Audit and at Channel 5 and prior to that held various positions Risk, Remuneration and Nominations Committees, at UKTV, Sky and Thames Television. Halma plc; Non-executive Director and Chair of the Audit and Risk Committee, Coutts & Co; Chairman of National Institute for Health and Care Excellence; Non-executive Director, University of Oxford; and World Fellow, Yale University.
80 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 81 MANAGEMENT BOARD CONTINUED G CORPORATE GOVERNANCE O VE R NAN KYLA MULLINS ADE RAWCLIFFE SIMON The wrien responsibilities of the Chair, Senior Independent C General Counsel and Group Director of FARNSWORTH E Company Secretary Diversity and Chief Technology Director and Chief Executive are available on the ITV plc website: Inclusion Officer www.itvplc.com OUR GOVERNANCE STRUCTURE Appointed: January 2019 Appointed: September 2020 Appointed: January 2024 Experience: Kyla joined ITV as General Counsel Experience: Ade joined ITV as Head of Diversity Experience: Simon joined ITV as Chief Technology and Company Secretary and member of the Commissioning in 2017. She was later promoted to officer and member of the Management Board in Management Board in 2019. Director of Creative Diversity, before taking on the January 2024. He has overall responsibility for role of Group Director of Diversity and Inclusion technology strategy and implementation The PLC Board She has responsibility for legal, company and joining the Management Board in 2020. secretariat, compliance and regulatory matters Prior to joining ITV, he served as News UK’s EVP, Responsible for providing leadership to the Group’s business, including setting the Group’s purpose, strategy and values and promoting its across the ITV Group. Ade has responsibility for all diversity and inclusion Chief Technology Officer and prior to that held key long‑term sustainable success. Prior to joining ITV, Kyla held senior legal positions related matters across the Group, including roles at Discovery Globecast Australia and Telstra in the media, entertainment, strategic outsourcing leading, developing and growing ITV’s Diversity, Broadcast Services. and aviation sectors. She was General Counsel and Equity and Inclusion strategy on and off screen. Company Secretary at easyJet plc and Mitie Group Prior to joining ITV, Ade spent over ten years at PLC Board Committees plc; Global General Counsel of EMI Music; and Channel 4, most recently leading Creative Diversity, The terms of reference for each Committee are documented and agreed by the PLC Board. These terms of reference are reviewed annually Group Legal Director at ITV plc and Granada Media. where she supported and nurtured the careers of and are available on our website: www.itvplc.com/investors/governance/terms‑of‑reference. Kyla is currently Chair of Independent Television diverse creative talent and sought out and News (ITN) and is also a Non-executive Director commissioned a slate of developments which on the Board of Northern Ballet. encouraged diversity, risk-taking and innovation. Ade is currently a Board Member of Independent Nominations Remuneration Audit and Risk Disclosure Our Ambassador Television News (ITN) Trustee of BAFTA, Chair of Committee Committee Committee Committee Network BAFTA’s Learning, Inclusion and Talent Committee, See the See the See the Audit and Risk Committee Consists of the Chair of Discusses and PAUL MOORE and a Trustee of the National Trust. Nominations Remuneration Report. the Board, Chief inputs into Group Committee Report. Executive, Audit and Risk significant Communications Report. Committee Chair, Group proposals and and Corporate CFO & COO, and General initiatives Affairs Director MAGNUS BROOKE Counsel and Company impacting our Director of Strategy, Secretary. The Director colleagues. of Investor Relations Policy and Regulation Our designated Duty of Care Operating Board also attends meetings. Workforce The Committee assists Engagement Consisting of key Management Board the Company in meeting Appointed: July 2018 members, including the Chief its disclosure Director reports Executive and the independent Chief obligations, and reviews back to the Board Experience: Paul joined ITV as Group on the Network’s Communications and Corporate Affairs Director Psychological Officer. The Operating and approves regulatory Board oversees the Group’s duty of and other activities and his and a member of the Management Board in 2018. engagement with Appointed: February 2021 care processes on screen and across announcements before He has responsibility for all Group communications ITV, monitors and assesses the publication but post the the Network. including corporate and internal communications, Experience: Magnus joined ITV in 2006 and processes in place to ensure they Board’s approval given public affairs, programme publicity and the Social was promoted to the Management Board in continue to be effective and evolve subject to final agreed Purpose strategy. February 2021. as necessary. The Operating Board changes. Prior to joining ITV, Paul was the Communications He has Board responsibility for ITV’s strategy, meetings are chaired by the Chief and Public Affairs Director at easyJet plc for eight policy and regulatory teams, which includes Executive, and the Audit and Risk years and before this worked for FirstGroup and overseeing ITV’s corporate strategy development Committee Chair attends on behalf Virgin Atlantic Airways where he was Director of and leading on interaction with UK and European of the Board. Corporate Affairs for ten years. Paul first started regulators, government and parliamentary his career as a civil servant and worked for the committees. Department of Transport. Chief Executive From 2014 to 2019 Magnus was Chairman of the Board of the Brussels based Association of Responsible for the day‑to‑day running of the Group’s business and performance, the development and implementation of strategy and Commercial Television in Europe, which represents promoting our culture and standards. Europe’s commercial broadcasters to the EU institutions. Magnus is a Director and Chair of the Remuneration Committee of Everyone TV (formerly DUK) which runs the Freeview and Management Board Freesat platforms and he was a Non-executive Led by the Chief Executive, the Management Board members are collectively responsible for overseeing and driving the overarching Group Director of the news provider ITN for three years financial and operational performance and executing on the strategic initiatives required to deliver the Group’s strategy set by the Board. from 2019 to 2022. The Management Board balances the needs and resources of the business divisions to make decisions based on what’s best for ITV as a whole. Prior to joining ITV Magnus was Head of the BBC Director General’s Office. He began his career as a solicitor specialising in regulatory and competition law at City of London law firm Ashurst, where he Studios Board Media & Entertainment Board also trained. Responsible for developing and implementing strategic Responsible for developing and implementing strategic objectives and operational plans for the ITV Studios business, objectives for the Media & Entertainment business (Broadcast, monitoring operational and financial performance, and Commercial, Streaming (ITVX), Interactive and Data business assessing and managing risk, in line with the Group’s risk units), monitoring operational and financial performance, and management framework. assessing and managing risk, in line with the Group’s risk management framework.
80 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 81 MANAGEMENT BOARD CONTINUED G CORPORATE GOVERNANCE O VE R NAN KYLA MULLINS ADE RAWCLIFFESIMON The wrien responsibilities of the Chair, Senior Independent C General Counsel and Group Director of FARNSWORTH E Company SecretaryDiversity and Chief Technology Director and Chief Executive are available on the ITV plc website: InclusionOfficer www.itvplc.com OUR GOVERNANCE STRUCTURE Appointed: January 2019 Appointed: September 2020 Appointed: January 2024 Experience: Kyla joined ITV as General Counsel Experience: Ade joined ITV as Head of Diversity Experience: Simon joined ITV as Chief Technology and Company Secretary and member of the Commissioning in 2017. She was later promoted to officer and member of the Management Board in Management Board in 2019.Director of Creative Diversity, before taking on the January 2024. He has overall responsibility for role of Group Director of Diversity and Inclusion technology strategy and implementation The PLC Board She has responsibility for legal, company and joining the Management Board in 2020. secretariat, compliance and regulatory matters Prior to joining ITV, he served as News UK’s EVP, Responsible for providing leadership to the Group’s business, including setting the Group’s purpose, strategy and values and promoting its across the ITV Group.Ade has responsibility for all diversity and inclusion Chief Technology Officer and prior to that held key long‑term sustainable success. Prior to joining ITV, Kyla held senior legal positions related matters across the Group, including roles at Discovery Globecast Australia and Telstra in the media, entertainment, strategic outsourcing leading, developing and growing ITV’s Diversity, Broadcast Services. and aviation sectors. She was General Counsel and Equity and Inclusion strategy on and off screen. Company Secretary at easyJet plc and Mitie Group Prior to joining ITV, Ade spent over ten years at PLC Board Committees plc; Global General Counsel of EMI Music; and Channel 4, most recently leading Creative Diversity, The terms of reference for each Committee are documented and agreed by the PLC Board. These terms of reference are reviewed annually Group Legal Director at ITV plc and Granada Media. where she supported and nurtured the careers of and are available on our website: www.itvplc.com/investors/governance/terms‑of‑reference. Kyla is currently Chair of Independent Television diverse creative talent and sought out and News (ITN) and is also a Non-executive Director commissioned a slate of developments which on the Board of Northern Ballet.encouraged diversity, risk-taking and innovation. Ade is currently a Board Member of Independent Nominations Remuneration Audit and Risk Disclosure Our Ambassador Television News (ITN) Trustee of BAFTA, Chair of CommitteeCommittee Committee Committee Network BAFTA’s Learning, Inclusion and Talent Committee, See the See the See the Audit and Risk Committee Consists of the Chair of Discusses and PAUL MOORE and a Trustee of the National Trust.Nominations Remuneration Report. the Board, Chief inputs into Group Committee Report. Executive, Audit and Risk significant Communications Report. Committee Chair, Group proposals and and Corporate CFO & COO, and General initiatives Affairs DirectorMAGNUS BROOKE Counsel and Company impacting our Director of Strategy, Secretary. The Director colleagues. of Investor Relations Policy and Regulation Our designated Duty of Care Operating Board also attends meetings. Workforce The Committee assists Engagement Consisting of key Management Board the Company in meeting Appointed: July 2018 members, including the Chief its disclosure Director reports Executive and the independent Chief obligations, and reviews back to the Board Experience: Paul joined ITV as Group on the Network’s Communications and Corporate Affairs Director Psychological Officer. The Operating and approves regulatory Board oversees the Group’s duty of and other activities and his and a member of the Management Board in 2018. engagement with Appointed: February 2021 care processes on screen and across announcements before He has responsibility for all Group communications ITV, monitors and assesses the publication but post the the Network. including corporate and internal communications, Experience: Magnus joined ITV in 2006 and processes in place to ensure they Board’s approval given public affairs, programme publicity and the Social was promoted to the Management Board in continue to be effective and evolve subject to final agreed Purpose strategy.February 2021. as necessary. The Operating Board changes. Prior to joining ITV, Paul was the Communications He has Board responsibility for ITV’s strategy, meetings are chaired by the Chief and Public Affairs Director at easyJet plc for eight policy and regulatory teams, which includes Executive, and the Audit and Risk years and before this worked for FirstGroup and overseeing ITV’s corporate strategy development Committee Chair attends on behalf Virgin Atlantic Airways where he was Director of and leading on interaction with UK and European of the Board. Corporate Affairs for ten years. Paul first started regulators, government and parliamentary his career as a civil servant and worked for the committees. Department of Transport. Chief Executive From 2014 to 2019 Magnus was Chairman of the Board of the Brussels based Association of Responsible for the day‑to‑day running of the Group’s business and performance, the development and implementation of strategy and Commercial Television in Europe, which represents promoting our culture and standards. Europe’s commercial broadcasters to the EU institutions. Magnus is a Director and Chair of the Remuneration Committee of Everyone TV (formerly DUK) which runs the Freeview and Management Board Freesat platforms and he was a Non-executive Led by the Chief Executive, the Management Board members are collectively responsible for overseeing and driving the overarching Group Director of the news provider ITN for three years financial and operational performance and executing on the strategic initiatives required to deliver the Group’s strategy set by the Board. from 2019 to 2022. The Management Board balances the needs and resources of the business divisions to make decisions based on what’s best for ITV as a whole. Prior to joining ITV Magnus was Head of the BBC Director General’s Office. He began his career as a solicitor specialising in regulatory and competition law at City of London law firm Ashurst, where he Studios Board Media & Entertainment Board also trained. Responsible for developing and implementing strategic Responsible for developing and implementing strategic objectives and operational plans for the ITV Studios business, objectives for the Media & Entertainment business (Broadcast, monitoring operational and financial performance, and Commercial, Streaming (ITVX), Interactive and Data business assessing and managing risk, in line with the Group’s risk units), monitoring operational and financial performance, and management framework. assessing and managing risk, in line with the Group’s risk management framework.
82 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 83 CORPORATE GOVERNANCE CONTINUED G O VE R NAN PLC Board and Committee membership and attendance C PLC Board and Committee membership and attendance at scheduled meetings in 2023 is set out below. KEY STRATEGIC MATTERS CONSIDERED BY THE BOARD IN 2023 E In addition, chaired by the Senior Independent Director, the Non-executive Directors met without the Chair or management during the year to Stakeholder groups discuss the Chair’s performance, and also met with the Chair without the management present, on an informal basis throughout the year to S Shareholders (including debt providers) C Colleagues P Partners discuss matters relevant to the Group. The Non-executive Directors met with the Chief Executive to discuss Management Board talent and succession. CZ Citizens PP Programme participants VC Viewers and subscribers * Indicates where a Director has attended all or part of a PLC Board CT Customers (including advertisers) LR Legislators and regulators Attendance at scheduled meetings or Committee meeting by invitation (i.e. when not a member or prior to being a Director). The Executive Directors did not attend Committee members PLC Board1 Audit and Risk Remuneration Nominations Disclosure parts of any Committee meetings where to do so would result in PERFORMANCE Link to principal risks Link to key stakeholders Andrew Cosslett (Chair) 8/8 5/5* 5/5 4/4 4/4 a conflict of interest. A number of ad hoc Board and Committee meetings were held Reviews of capital structure, liquidity, investor proposition and valuation 1, 2, 3, 4, 5, 6, 8, 11 S LR Dawn Allen2 2/8 1/5 - - - during 2023 though these are not reflected in this table. Reviewed and approved trading results and financial reporting 9 S LR Salman Amin 8/8 - 5/5 4/4 - 1. In June and December half-day strategy sessions were held with a scheduled Board meeting held on the same day. Together these Reviewed and approved the budget and five year plan All principal risks 3 are included in the table as one meeting S C P CZ PP VC CT LR Edward Bonham Carter 8/8 5/5 3/5 4/4 - Graham Cooke4 8/8 5/5 - 2/4 - 2. Dawn Allen joined the Board on 2 October 2023 Evaluation of business operations to optimise opportunities and performance including deep dives 2,3,4,6 S C P 3. Edward Bonham Carter joined the Remuneration Committee in into value drivers Margaret Ewing9 8/8 5/5 - 2/4 3/4 April 2023 4. Graham Cooke, Margaret Ewing and Sharmila Nebhrajani joined Partnerships and distribution review 6 P VC 5 Mary Harris 2/8 1/5 - 2/4 - the Nominations Committee in April 2023 6 5. Mary Harris stepped down from the Board on 3 May 2023 Programme of cost and complexity reduction 11 S C P VC CT Marjorie Kaplan 3/8 - - - - Gidon Katz 8/8 - - - - 6. Marjorie Kaplan joined the Board on 1 September 2023 Evaluation of merger, acquisition and divestment opportunities and review of investments 2, 3, 6, 11 S P 7. Anna Manz stepped down from the Board on 31 August 2023 Chris Kennedy 8/8 5/5 3/5* 1/4* 4/4 8. Duncan Painter stepped down from the Board on 30 November Consideration and approval of material contracts 9 S P 7 2023 Anna Manz 5/8 3/5 3/5 - - 9. Margaret Ewing was unable to attend a Disclosure Committee Principal risks and emerging risks review and updates All principal risks S C P CT LR Carolyn McCall 8/8 2/5* 1/4* 4/4 because of another commitment 4 ITV Together programme improving ways of working for the business 11,13 C VC CT Sharmila Nebhrajani 8/8 - 5/5 2/4 - Duncan Painter8 7/8 - 4/5 - - Investor engagement and insight N/A S C LR SUPERCHARGE STREAMING BOARD COMPOSITION Evolving the ITV strategy and progress in delivering the vision for an integrated ad-funded/ 1, 2, 3, 4, 5, 6, 11 S C P VC CT LR subscription streaming platform for the ITVX launch Recruitment and retention of talent to develop, implement and promote the ITVX strategy 12 S C GENDER ETHNICITY DISABILITY BOARD TENURE AGE OPTIMISE BROADCAST Planet V progress, linear addressable, video on demand and linear integration 2,3,4,5 S P VC CT A review of the Commercial trading model 3 S CT LR Future proofing – Next Generation Platform 10, 15 S C P EXPAND STUDIOS GLOBALLY Men 6 People of Colour 2 Disability or long-term 0–2 years 4 36–45 1 Women 5 White 9 health condition 1 2–5 years 2 46–55 2 Evolution of Studios strategy – continued international expansion, new streamer markets and 2, 11, 12 P VC CT No disability or long-term 5–9 years 5 56–65 5 changing rights models, monetisation of the Global Partnership Division health condition 10 66–75 3 REGULATION Continued focus on key policy and regulatory issues, including the PSB review, Media Bill and 8,9 S C LR * BOARD SKILLS AND EXPERIENCE MANAGEMENT BOARD COMPOSITION corporate governance reforms. These continue to be kept under close review along with other issues that could have a potential short, medium and long-term impact on the business Business transformation 10 GENDER ETHNICITY DISABILITY Creative industry 4 OTHER Speaking Up monitoring and update 13 C CZ PP VC Digital 7 Finance and Treasury Social Purpose strategy including environmental targets and mental health and ‘giving back’ 4, 13 S C CZ VC CT 5 campaigns Audit 5 Crisis management processes and protocols 15 S C CZ VC CT Sustainability and ESG 5 Legal and compliance updates, including CMA investigations and Phillip Schofield KC review 8,9 S C CT Media and Media IP 8 Review and annual approval of relevant Group compliance, HR and governance policies 8,9,13 S LR Regulation and Public Policy 3 Men 8 People of Colour 1 Disability or long-term Climate-related risks and short to medium-term impacts, reporting on ESG matters 4, 8, 11 Women 2 White 9 health condition 2 S C CZ VC CT Strategy 11 No disability or long-term Diversity and Inclusion, how this aligns and supports the ITV Strategy 9, 11, 13 S C CZ VC health condition 8 (continue to drive mainstream disability accessibility and building an inclusive culture) Technology and Data 4 Cyber Security – fraud prevention strategy 10 S C P CZ PP VC CT LR Remuneration 4 * Carolyn McCall and Chris Kennedy are not included in these tables. They are included in the Board composition numbers above. Transformation Office progress review and updates 11 S C People and Talent 4 For further information on principal risks please see pages 57 to 64.
82 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 83 CORPORATE GOVERNANCE CONTINUED G O VE R NAN PLC Board and Committee membership and attendance C PLC Board and Committee membership and attendance at scheduled meetings in 2023 is set out below. KEY STRATEGIC MATTERS CONSIDERED BY THE BOARD IN 2023 E In addition, chaired by the Senior Independent Director, the Non-executive Directors met without the Chair or management during the year to Stakeholder groups discuss the Chair’s performance, and also met with the Chair without the management present, on an informal basis throughout the year to S Shareholders (including debt providers)C Colleagues P Partners discuss matters relevant to the Group. The Non-executive Directors met with the Chief Executive to discuss Management Board talent and succession. CZ Citizens PP Programme participants VC Viewers and subscribers * Indicates where a Director has attended all or part of a PLC Board CT Customers (including advertisers) LR Legislators and regulators Attendance at scheduled meetings or Committee meeting by invitation (i.e. when not a member or prior to being a Director). The Executive Directors did not attend Committee membersPLC Board1 Audit and Risk Remuneration NominationsDisclosureparts of any Committee meetings where to do so would result in PERFORMANCE Link to principal risks Link to key stakeholders Andrew Cosslett (Chair)8/85/5*5/54/44/4a conflict of interest. A number of ad hoc Board and Committee meetings were held Reviews of capital structure, liquidity, investor proposition and valuation 1, 2, 3, 4, 5, 6, 8, 11 S LR Dawn Allen22/81/5---during 2023 though these are not reflected in this table. Reviewed and approved trading results and financial reporting 9 S LR Salman Amin8/8-5/54/4-1. In June and December half-day strategy sessions were held with a scheduled Board meeting held on the same day. Together these Reviewed and approved the budget and five year plan All principal risks 3are included in the table as one meeting S C P CZ PP VC CT LR Edward Bonham Carter 8/85/53/54/4- Graham Cooke48/85/5-2/4-2. Dawn Allen joined the Board on 2 October 2023 Evaluation of business operations to optimise opportunities and performance including deep dives 2,3,4,6 S C P 3. Edward Bonham Carter joined the Remuneration Committee in into value drivers Margaret Ewing98/85/5-2/43/4April 2023 4. Graham Cooke, Margaret Ewing and Sharmila Nebhrajani joined Partnerships and distribution review 6 P VC 5 Mary Harris2/81/5-2/4-the Nominations Committee in April 2023 Marjorie Kaplan63/8----5. Mary Harris stepped down from the Board on 3 May 2023Programme of cost and complexity reduction 11 S C P VC CT Gidon Katz8/8----6. Marjorie Kaplan joined the Board on 1 September 2023Evaluation of merger, acquisition and divestment opportunities and review of investments 2, 3, 6, 11 S P 7. Anna Manz stepped down from the Board on 31 August 2023 Chris Kennedy 8/85/53/5*1/4*4/48. Duncan Painter stepped down from the Board on 30 November Consideration and approval of material contracts 9 S P 72023 Anna Manz5/83/53/5-- 9. Margaret Ewing was unable to attend a Disclosure Committee Principal risks and emerging risks review and updates All principal risks S C P CT LR Carolyn McCall 8/82/5*1/4*4/4because of another commitment 4 ITV Together programme improving ways of working for the business 11,13 C VC CT Sharmila Nebhrajani8/8-5/52/4- Duncan Painter87/8-4/5-- Investor engagement and insight N/A S C LR SUPERCHARGE STREAMING BOARD COMPOSITION Evolving the ITV strategy and progress in delivering the vision for an integrated ad-funded/ 1, 2, 3, 4, 5, 6, 11 S C P VC CT LR subscription streaming platform for the ITVX launch Recruitment and retention of talent to develop, implement and promote the ITVX strategy 12 S C GENDERETHNICITYDISABILITYBOARD TENUREAGE OPTIMISE BROADCAST Planet V progress, linear addressable, video on demand and linear integration 2,3,4,5 S P VC CT A review of the Commercial trading model 3 S CT LR Future proofing – Next Generation Platform 10, 15 S C P EXPAND STUDIOS GLOBALLY Men 6 People of Colour 2 Disability or long-term 0–2 years 4 36–45 1 Women 5 White 9health condition 1 2–5 years 2 46–55 2Evolution of Studios strategy – continued international expansion, new streamer markets and 2, 11, 12 P VC CT No disability or long-term 5–9 years 5 56–65 5changing rights models, monetisation of the Global Partnership Division health condition 10 66–75 3 REGULATION Continued focus on key policy and regulatory issues, including the PSB review, Media Bill and 8,9 S C LR * BOARD SKILLS AND EXPERIENCEMANAGEMENT BOARD COMPOSITIONcorporate governance reforms. These continue to be kept under close review along with other issues that could have a potential short, medium and long-term impact on the business Business transformation10GENDERETHNICITYDISABILITY Creative industry4 OTHER Speaking Up monitoring and update 13 C CZ PP VC Digital7 Finance and Treasury Social Purpose strategy including environmental targets and mental health and ‘giving back’ 4, 13 S C CZ VC CT 5 campaigns Audit5 Crisis management processes and protocols 15 S C CZ VC CT Sustainability and ESG5 Legal and compliance updates, including CMA investigations and Phillip Schofield KC review 8,9 S C CT Media and Media IP8 Review and annual approval of relevant Group compliance, HR and governance policies 8,9,13 S LR Regulation and Public Policy3 Men 8 People of Colour 1 Disability or long-term Climate-related risks and short to medium-term impacts, reporting on ESG matters 4, 8, 11 Women 2 White 9health condition 2 S C CZ VC CT Strategy11 No disability or long-term Diversity and Inclusion, how this aligns and supports the ITV Strategy 9, 11, 13 S C CZ VC health condition 8 (continue to drive mainstream disability accessibility and building an inclusive culture) Technology and Data4 Cyber Security – fraud prevention strategy 10 S C P CZ PP VC CT LR Remuneration4* Carolyn McCall and Chris Kennedy are not included in these tables. They are included in the Board composition numbers above. Transformation Office progress review and updates 11 S C People and Talent4 For further information on principal risks please see pages 57 to 64.
84 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 85 G STAKEHOLDER ENGAGEMENT O VE R NAN Complying with the 2018 Corporate Governance Code, we ensure that we engage C CUSTOMERS (INCLUDING ADVERTISERS) E with our stakeholders as it is fundamental to the successful delivery of our Description Link to strategic priorities strategy. The Board’s clear understanding of stakeholders’ issues, expectations Customers (including sponsorship, content buyers and advertiser relationships) are integral to Expand Studios globally; and perspectives ensures that stakeholder views are carefully considered during monetising our content and delivering on our strategy. Supercharge Streaming: see Our Strategy decision-making processes. Forms of engagement Outcomes and impact on principal decisions Meetings and presentations • Strengthened customer proposition and priorities for the • Attendance by Board members at the ITV 2023 Palooza event in November, reflecting on supercharged streaming strategy. Board discussions one year of ITVX, launching the Head First award, an advertiser-facing wellbeing initiative, benefited from Gidon Katz’s streaming knowledge and The Board both directly engages with relevant stakeholders and assesses details provided by management and other colleagues to allow the and celebrating ways ITV had helped to build brands during the year through creativity and expertise Directors to understand how organisational decisions have taken stakeholder interests into account and also to influence future addressable advertising • Board support for the launch of addressable advertising decision-making. The General Counsel and Company Secretary supports the Board in ensuring that due consideration is given to stakeholder • Meetings between the Executive Directors and their industry counterparts (many of whom initiatives on both ITVX and linear. Board discussions on this issues and papers submitted to the Board detail the impact of proposals on key stakeholder groups are also buyers of Studios content) topic benefited from Graham Cooke and Duncan Painter’s • Regular engagement by the Chief Executive and various members of the Management digital and commercial expertise At least once a year, the Board identifies its key stakeholders, reviews the issues that matter to them most and discusses potential Board with advertisers and agencies through key ITV and industry events • Endorsement of: innovative initiatives in response to enhancements to engagement with them. The Board also has the opportunity to give feedback on areas needing more focus as part of our • Meetings between members of the Management Board and senior ITV employees with advertisers’ and agencies’ desired outcomes, assessments Board evaluation. Our Section 172 statement on pages 92 to 93 includes examples of how the Board and its Committees had regard for potential buyers of Studios content and recommendations to deliver growth in Studios; and stakeholder interests through its discussions and decision-making during the year. recommendations to manage risk and opportunities • Annual Northern ITV Showcase event associated with the growing subscription streaming market The table below sets out the key stakeholders which the Board has identified as being important to ITV’s success and some of the key Board and Committee reviews and assessments • Investment in ITV AdVentures Media for Equity initiative, • Review of the advertising market and content spend offering TV advertising to potential leading, high-growth, engagement mechanisms used in 2023. digital-first companies in the UK in return for equity • Board strategy sessions on: the evolving commercial strategy to address ITV advertising • Investment in, and creation of, new Studios labels to cater to clients’ needs; video on demand and linear addressable advertising to support ITV’s growing markets and customer base streaming ambitions, including feedback from clients, subscription streaming market growth and impact on Studios, including analysis of major subscription streaming buyers • Global Producers Retreat allow feedback about learning, VIEWERS AND SUBSCRIBERS across territories, regular ITVX’s launch updates collaboration and sharing of creative ideas • Regular Board updates on key relationships and developments in the advertising market, Description Link to strategic priorities including ITV’s engagement and relationship initiatives with its advertisers and agencies, Through regular engagement, the Board recognises the evolution of ITV’s relationship with and potential growth opportunities for the Studios business Optimise Broadcast; viewers, which has been pivotal in shaping the Company’s strategy. Supercharge Streaming: • Regular reports on Commercial and Studios performance by the Chief Executive to the rest see Our Strategy of the Board Key issues or priorities identified Read more Forms of engagement Outcomes and impact on principal decisions • Continue to promote ITVX for the content investments made during the year Board and Committee reviews and assessments • Growing, enhancing and integrating our ad-funded and Our Business Model (from page 2) subscription streaming services on ITVX, through • Mitigate the risk of detrimental advertising market changes (a principal risk) • Analysis of target audiences and viewing habits, as part of Board strategy sessions, • Maintaining commercial broadcaster relationships and further developing scripted talent (a particularly with the focus of increasing reach for our ITVX product investment in product, content, distribution, data, tech and Key Performance Indicators (from page 14) analytics priority for streamers in some markets) • Regular Chief Executive reports to the Board on viewing and subscription figures • Continue to educate our customers on the effectiveness of TV advertising (including impact Risks and Uncertainties (from page 55) • Use of one content budget for the M&E division as a whole to • Board session on viewer performance, including subscriber trends as well as marketing enable the business to optimise its content (including its of TV advertising versus online advertising) updates regarding new viewers’ and subscribers’ experiences on the ITVX platform windowing) strategy and enhance its experience for viewers • Delivering audience profile and size to optimise advertising sales • Reviews by Management and Divisional Boards, on which Executive Directors sit, of viewer • Decision to make changes to schedules to enhance viewing • Further creation and exploitation of IP to drive viewing and enhance IP monetisation sentiment, concerns and/or data through internal research studies; monitoring of linear performance opportunities viewing figures; compliance reports and Ofcom reports • Reviews by members of the Management Board and senior ITV employees of feedback • Board discussions benefited from Graham Cooke and from viewer services (which serves as a conduit for viewers to channel their comments and/ Duncan Painter’s technical, digital and commercial or concerns) and monitoring the complaint process expertise. The Board also benefited from Gidon Katz and Marjorie Kaplan’s streaming knowledge and expertise Key issues or priorities identified Read more • Changing viewer habits (a principal risk) • Driving awareness, through programming and campaigns, of key social, environmental and Our Business Model (from page 2) topical issues with ITV playing an important role as a trustworthy and accurate source of Key Performance Indicators (from page 14) information • Authentic representation of the diversity of modern Britain on-screen Social Purpose strategy (from page 32) Risks and Uncertainties (from page 55)
84 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 85 G STAKEHOLDER ENGAGEMENT O VE R NAN Complying with the 2018 Corporate Governance Code, we ensure that we engage C CUSTOMERS (INCLUDING ADVERTISERS) E with our stakeholders as it is fundamental to the successful delivery of our Description Link to strategic priorities strategy. The Board’s clear understanding of stakeholders’ issues, expectations Customers (including sponsorship, content buyers and advertiser relationships) are integral to Expand Studios globally; and perspectives ensures that stakeholder views are carefully considered during monetising our content and delivering on our strategy. Supercharge Streaming: see Our Strategy decision-making processes. Forms of engagement Outcomes and impact on principal decisions Meetings and presentations • Strengthened customer proposition and priorities for the • Attendance by Board members at the ITV 2023 Palooza event in November, reflecting on supercharged streaming strategy. Board discussions one year of ITVX, launching the Head First award, an advertiser-facing wellbeing initiative, benefited from Gidon Katz’s streaming knowledge and The Board both directly engages with relevant stakeholders and assesses details provided by management and other colleagues to allow the and celebrating ways ITV had helped to build brands during the year through creativity and expertise Directors to understand how organisational decisions have taken stakeholder interests into account and also to influence future addressable advertising • Board support for the launch of addressable advertising decision-making. The General Counsel and Company Secretary supports the Board in ensuring that due consideration is given to stakeholder • Meetings between the Executive Directors and their industry counterparts (many of whom initiatives on both ITVX and linear. Board discussions on this issues and papers submitted to the Board detail the impact of proposals on key stakeholder groups are also buyers of Studios content)topic benefited from Graham Cooke and Duncan Painter’s • Regular engagement by the Chief Executive and various members of the Management digital and commercial expertise At least once a year, the Board identifies its key stakeholders, reviews the issues that matter to them most and discusses potential Board with advertisers and agencies through key ITV and industry events• Endorsement of: innovative initiatives in response to enhancements to engagement with them. The Board also has the opportunity to give feedback on areas needing more focus as part of our • Meetings between members of the Management Board and senior ITV employees with advertisers’ and agencies’ desired outcomes, assessments Board evaluation. Our Section 172 statement on pages 92 to 93 includes examples of how the Board and its Committees had regard for potential buyers of Studios contentand recommendations to deliver growth in Studios; and stakeholder interests through its discussions and decision-making during the year. recommendations to manage risk and opportunities • Annual Northern ITV Showcase event associated with the growing subscription streaming market The table below sets out the key stakeholders which the Board has identified as being important to ITV’s success and some of the key Board and Committee reviews and assessments• Investment in ITV AdVentures Media for Equity initiative, • Review of the advertising market and content spend offering TV advertising to potential leading, high-growth, engagement mechanisms used in 2023. digital-first companies in the UK in return for equity • Board strategy sessions on: the evolving commercial strategy to address ITV advertising • Investment in, and creation of, new Studios labels to cater to clients’ needs; video on demand and linear addressable advertising to support ITV’s growing markets and customer base streaming ambitions, including feedback from clients, subscription streaming market growth and impact on Studios, including analysis of major subscription streaming buyers • Global Producers Retreat allow feedback about learning, VIEWERS AND SUBSCRIBERS across territories, regular ITVX’s launch updates collaboration and sharing of creative ideas • Regular Board updates on key relationships and developments in the advertising market, DescriptionLink to strategic prioritiesincluding ITV’s engagement and relationship initiatives with its advertisers and agencies, Through regular engagement, the Board recognises the evolution of ITV’s relationship with and potential growth opportunities for the Studios business Optimise Broadcast; viewers, which has been pivotal in shaping the Company’s strategy.Supercharge Streaming: • Regular reports on Commercial and Studios performance by the Chief Executive to the rest see Our Strategy of the Board Key issues or priorities identified Read more Forms of engagementOutcomes and impact on principal decisions • Continue to promote ITVX for the content investments made during the year Board and Committee reviews and assessments• Growing, enhancing and integrating our ad-funded and Our Business Model (from page 2) subscription streaming services on ITVX, through • Mitigate the risk of detrimental advertising market changes (a principal risk) • Analysis of target audiences and viewing habits, as part of Board strategy sessions, • Maintaining commercial broadcaster relationships and further developing scripted talent (a particularly with the focus of increasing reach for our ITVX productinvestment in product, content, distribution, data, tech and Key Performance Indicators (from page 14) analytics priority for streamers in some markets) • Regular Chief Executive reports to the Board on viewing and subscription figures• Continue to educate our customers on the effectiveness of TV advertising (including impact Risks and Uncertainties (from page 55) • Use of one content budget for the M&E division as a whole to • Board session on viewer performance, including subscriber trends as well as marketing enable the business to optimise its content (including its of TV advertising versus online advertising) updates regarding new viewers’ and subscribers’ experiences on the ITVX platformwindowing) strategy and enhance its experience for viewers• Delivering audience profile and size to optimise advertising sales • Reviews by Management and Divisional Boards, on which Executive Directors sit, of viewer • Decision to make changes to schedules to enhance viewing • Further creation and exploitation of IP to drive viewing and enhance IP monetisation sentiment, concerns and/or data through internal research studies; monitoring of linear performanceopportunities viewing figures; compliance reports and Ofcom reports • Reviews by members of the Management Board and senior ITV employees of feedback • Board discussions benefited from Graham Cooke and from viewer services (which serves as a conduit for viewers to channel their comments and/Duncan Painter’s technical, digital and commercial or concerns) and monitoring the complaint processexpertise. The Board also benefited from Gidon Katz and Marjorie Kaplan’s streaming knowledge and expertise Key issues or priorities identifiedRead more • Changing viewer habits (a principal risk) • Driving awareness, through programming and campaigns, of key social, environmental and Our Business Model (from page 2) topical issues with ITV playing an important role as a trustworthy and accurate source of Key Performance Indicators (from page 14) information • Authentic representation of the diversity of modern Britain on-screen Social Purpose strategy (from page 32) Risks and Uncertainties (from page 55)
86 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 87 STAKEHOLDER ENGAGEMENT CONTINUED G O VE R NAN C PARTNERS (INCLUDING SUPPLIERS, OTHER BROADCASTERS AND PLATFORM OWNERS) CITIZENS E Description Link to strategic priorities Description Link to strategic priorities Strong relationships with our partners are fundamental to our business and operating model, and Optimise Broadcast: As a public service broadcaster, we strive to reflect, remain in touch with, and shape public Social Purpose: see our Social to ensure we meet the high standards of conduct that we set ourselves. see Our Strategy sentiment and national conversations. Our engagement in this stakeholder category is an integral Purpose strategy part of our Social Purpose strategy. Forms of engagement Outcomes and impact on principal decisions Forms of engagement Outcomes and impact on principal decisions Meetings and presentations • Development of ITV’s Partnership strategy • Executive Directors’ engagements (meetings, conferences) with key suppliers and partners • Consideration of key themes/risks across supplier Meetings and presentations • Deepened understanding of opportunities for climate (including broadcaster and distribution partners) stakeholder groups and how they are being addressed by • Chief Executive met with other broadcaster CEOs to agree further collaboration on our action and storytelling, with plan for further training for • Regular Chief Executive counterpart meetings with key partners management shared Climate Content Pledge, announced at COP26, and joined other broadcaster CEOs wider ELT from Climate Change Committee • Executive Directors held a Commercial Clients event at the Palooza event in November • Strengthened creative talent through new partnerships and in hosting an event on Climate Storytelling for 80 CEOs and senior leaders, including an • Deepened understanding and awareness of ESG and 2023, attended by Board members strong development slates interview with Bill Gates and briefing from the UK Climate Change Committee factors influencing ITV’s corporate purpose, to inform Board • Further collaboration with streaming platforms to drive • Chief Executive hosted and participated in an event for NSPCC’s Childline to raise decisions Board and Committee reviews and assessments reach and consumption awareness of childhood mental health challenges and raise funds • The Climate Action Delivery Group meets quarterly, chaired • Strategy sessions on the impact of the supercharged streaming strategy on third parties • Board support for targeted engagement with distribution by the Group CFO & COO to review ITV’s quarterly carbon (including PSBs, suppliers and platform owners) Board and Committee reviews and assessments emissions data across Scopes 1,2 and 3 (business travel) partners to define approach to the supercharged streaming • Board oversight of significant contracts with suppliers or partners strategy • Group CFO & COO’s overall responsibility for ITV’s climate action agenda and leadership of and to bring a leadership team together to update on their ITV’s Climate Action Delivery Group divisional goals and progress against Climate Action Plans, • Board update on engagement with third-party suppliers, including supplier management • Endorsement of partnership initiatives to develop and to oversee delivery of ITV’s Climate Transition Plan. policies, processes and controls commercial addressable propositions and support ITV’s • Board receipt of annual updates on Social Purpose, the Group’s climate-related agenda, including risk, opportunities and targets, and Diversity and Inclusion (including progress Ongoing commitment to The Climate Content Pledge (with • Chief Executive reports on key/strategic partner relationships and Group CFO & COO data strategy other major broadcasters) to promote climate story-telling against ITV’s Diversity Acceleration Plan). The Board agreed ITV’s ongoing commitment to reports on important negotiations with key partnerships, at every Board meeting • Understanding and management of the risks related to our mental wellbeing as our primary social cause on-screen • Board review of ITV’s Modern Slavery Statement in February, including report on steps relationships with/positions of our partners • Mental Health in the Media conference series hosted by ITV • Board sessions to assess the key risks to ITV, including environmental risk, their potential taken to identify, address and prevent modern slavery in our operations and supply chains impact, ITV’s resilience and opportunities for improvement to encourage the TV and advertising industries to take a • Audit and Risk Committee review of the Group’s supplier payment practices and the • Audit and Risk Committee monitoring of compliance with and integrity of, and progress on deeper look at mental health on-screen and off-screen procedures in place to safeguard both ITV and suppliers from fraud climate change reporting targets and reported metrics, particularly with regards to TCFD; • ITV developed an Inclusive Language Guide as an internal reports to the Board on its outcome (see page 114) tool to create a shared way to communicate inclusively. • The Management Board receives a monthly update on ESG (as part of standard Board Colleagues accessed the guide over 3,000 times in 2023 reports) and a quarterly review of climate action data and progress. M&E and Studios • ITV’s Cultural Advisory Council, which Chief Executive and Boards receive twice yearly updates on climate action Management Board members attend, comprising a group of • The Management Board approved first ITV’s Climate Transition Plan which is published on independent external advisers from a range of different 20th March 2024 industries and specialisms who advise, challenge and counsel ITV on its diversity and inclusion activities • Commitment to The Climate Content Pledge (with other major broadcasters) to promote climate story-telling on-screen • Delivery of outcomes is supported by Board members’ active consumption of our national and regional news services, with follow-up discussions and liaisons on future plans with Management Board members and senior leaders Key issues or priorities identified Read more • Harnessing our unique mass-reach platform and the power of our programmes to raise Task Force on Climate‑related Financial Disclosures awareness and action on issues that are important and help shape culture for good, with particular emphasis on mental health (from page 65) • Our sustainability and commitment to climate action, embedding sustainability into Social Purpose strategy (from page 32) business and usual processes alongside targeted initiatives to reduce carbon and support a circular economy Our Climate Transition Plan • Our contribution to wider society through our Better Futures programme, including (itvplc.com/socialpurpose/climateaction charitable fundraising through Soccer Aid for UNICEF and volunteering • Our focus and commitment to increasing on and off-screen diversity through our Diversity Acceleration Plan
86 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 87 STAKEHOLDER ENGAGEMENT CONTINUED G O VE R NAN C PARTNERS (INCLUDING SUPPLIERS, OTHER BROADCASTERS AND PLATFORM OWNERS)CITIZENS E DescriptionLink to strategic prioritiesDescription Link to strategic priorities Strong relationships with our partners are fundamental to our business and operating model, and Optimise Broadcast: As a public service broadcaster, we strive to reflect, remain in touch with, and shape public Social Purpose: see our Social to ensure we meet the high standards of conduct that we set ourselves.see Our Strategy sentiment and national conversations. Our engagement in this stakeholder category is an integral Purpose strategy part of our Social Purpose strategy. Forms of engagementOutcomes and impact on principal decisions Forms of engagement Outcomes and impact on principal decisions Meetings and presentations • Development of ITV’s Partnership strategy • Executive Directors’ engagements (meetings, conferences) with key suppliers and partners • Consideration of key themes/risks across supplier Meetings and presentations • Deepened understanding of opportunities for climate (including broadcaster and distribution partners)stakeholder groups and how they are being addressed by • Chief Executive met with other broadcaster CEOs to agree further collaboration on our action and storytelling, with plan for further training for • Regular Chief Executive counterpart meetings with key partnersmanagementshared Climate Content Pledge, announced at COP26, and joined other broadcaster CEOs wider ELT from Climate Change Committee • Executive Directors held a Commercial Clients event at the Palooza event in November • Strengthened creative talent through new partnerships and in hosting an event on Climate Storytelling for 80 CEOs and senior leaders, including an • Deepened understanding and awareness of ESG and 2023, attended by Board membersstrong development slates interview with Bill Gates and briefing from the UK Climate Change Committeefactors influencing ITV’s corporate purpose, to inform Board • Further collaboration with streaming platforms to drive • Chief Executive hosted and participated in an event for NSPCC’s Childline to raise decisions Board and Committee reviews and assessmentsreach and consumption awareness of childhood mental health challenges and raise funds• The Climate Action Delivery Group meets quarterly, chaired • Strategy sessions on the impact of the supercharged streaming strategy on third parties • Board support for targeted engagement with distribution by the Group CFO & COO to review ITV’s quarterly carbon (including PSBs, suppliers and platform owners)Board and Committee reviews and assessments emissions data across Scopes 1,2 and 3 (business travel) partners to define approach to the supercharged streaming • Board oversight of significant contracts with suppliers or partners strategy• Group CFO & COO’s overall responsibility for ITV’s climate action agenda and leadership of and to bring a leadership team together to update on their ITV’s Climate Action Delivery Group divisional goals and progress against Climate Action Plans, • Board update on engagement with third-party suppliers, including supplier management • Endorsement of partnership initiatives to develop and to oversee delivery of ITV’s Climate Transition Plan. policies, processes and controls commercial addressable propositions and support ITV’s • Board receipt of annual updates on Social Purpose, the Group’s climate-related agenda, including risk, opportunities and targets, and Diversity and Inclusion (including progress Ongoing commitment to The Climate Content Pledge (with • Chief Executive reports on key/strategic partner relationships and Group CFO & COO data strategy other major broadcasters) to promote climate story-telling against ITV’s Diversity Acceleration Plan). The Board agreed ITV’s ongoing commitment to reports on important negotiations with key partnerships, at every Board meeting• Understanding and management of the risks related to our mental wellbeing as our primary social causeon-screen • Board review of ITV’s Modern Slavery Statement in February, including report on steps relationships with/positions of our partners • Mental Health in the Media conference series hosted by ITV • Board sessions to assess the key risks to ITV, including environmental risk, their potential taken to identify, address and prevent modern slavery in our operations and supply chainsimpact, ITV’s resilience and opportunities for improvementto encourage the TV and advertising industries to take a • Audit and Risk Committee review of the Group’s supplier payment practices and the • Audit and Risk Committee monitoring of compliance with and integrity of, and progress on deeper look at mental health on-screen and off-screen procedures in place to safeguard both ITV and suppliers from fraud climate change reporting targets and reported metrics, particularly with regards to TCFD; • ITV developed an Inclusive Language Guide as an internal reports to the Board on its outcome (see page 114) tool to create a shared way to communicate inclusively. • The Management Board receives a monthly update on ESG (as part of standard Board Colleagues accessed the guide over 3,000 times in 2023 reports) and a quarterly review of climate action data and progress. M&E and Studios • ITV’s Cultural Advisory Council, which Chief Executive and Boards receive twice yearly updates on climate action Management Board members attend, comprising a group of • The Management Board approved first ITV’s Climate Transition Plan which is published on independent external advisers from a range of different 20th March 2024 industries and specialisms who advise, challenge and counsel ITV on its diversity and inclusion activities • Commitment to The Climate Content Pledge (with other major broadcasters) to promote climate story-telling on-screen • Delivery of outcomes is supported by Board members’ active consumption of our national and regional news services, with follow-up discussions and liaisons on future plans with Management Board members and senior leaders Key issues or priorities identified Read more • Harnessing our unique mass-reach platform and the power of our programmes to raise Task Force on Climate‑related Financial Disclosures awareness and action on issues that are important and help shape culture for good, with particular emphasis on mental health (from page 65) • Our sustainability and commitment to climate action, embedding sustainability into Social Purpose strategy (from page 32) business and usual processes alongside targeted initiatives to reduce carbon and support a circular economy Our Climate Transition Plan • Our contribution to wider society through our Better Futures programme, including (itvplc.com/socialpurpose/climateaction charitable fundraising through Soccer Aid for UNICEF and volunteering • Our focus and commitment to increasing on and off-screen diversity through our Diversity Acceleration Plan
88 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 89 STAKEHOLDER ENGAGEMENT CONTINUED G O VE R NAN C LEGISLATORS AND REGULATORS PROGRAMME PARTICIPANTS E Description Link to strategic priorities Description Link to strategic priorities The Board is committed to its responsibility as a public service broadcaster (PSB) and conducting Availability of viewer content: The safety of participants is of paramount importance to the Board. The Board takes its duty of Expand Studios globally: business in line with the appropriate laws and regulation, to ensure we operate in an ethical and see Our Strategy care to them very seriously, and obtains regular assurance over the support and processes in see Our Strategy responsible way. place to safeguard their physical and mental health and wellbeing. ITV’s approach to risk management is led from ITV Plc Board level, assisted by specialists who drive good practice within Forms of engagement Outcomes and impact on principal decisions the business. ITV production teams are trained in the identification and management of health Meetings and presentations • Collaboration and focus on important societal issues such and safety risks, and in producing programme-specific risk assessments. Our continuous review • Meetings with government ministers and officials and shadow ministers on key issues of as social mobility and diversity of risk involves our central risk support team and external experts as required, in considering all concern, initiatives or consultation. This includes meetings between the Chief Executive • Extensive interaction with government, Ofcom and stages of the production process, including pre-filming screening, care during production, and and the Secretary of State for Department for Culture, Media and Sports (DCMS), Shadow parliament in relation to the renewal of ITV’s PSB licences aftercare of participants after filming and broadcast. Secretary of State for Culture, Media and Sport and regular meetings between the Chief and securing endorsement of the scope of the Media Bill Executive and the Minister of State for Media, Tourism and Creative Industries Forms of engagement Outcomes and impact on principal decisions • Counterpart meetings with Ofcom on a wide range of policy and regulatory issues (which Meetings and presentations • Observation of the mental health protection of Love Island included Chairs’ and regular Chief Executives’ meetings) (series 9) programme participants conducted by an • Chief Executive attendance at Mental Health Advisory Group (MHAG) meeting, which three • Regular engagement with the Audit and Risk Committee Chair in relevant stakeholder other Management Board members regularly attend (two of whom are members of the Independent Consultant Clinical Psychologist forums (including with leaders from the Department for Business and Trade, FRC, Audit Advisory Group) throughout the year • Formal Social Media guideline introduced to protect Love Committee Chairs Independent Forum, 100 Group and Big 4 audit firms) regarding the Island participants and their families from the adverse proposals for corporate governance and audit reform • Chief Executive chairs the Duty of Care Operating Board which includes Management Board members and is attended by specialist advisers including ITV’s Independent Chief effects of social media • Participation by the Chief Executive as a member of the Prime Minister’s Build Back Better Medical Officer and Independent Consultant Clinical Psychologist and, on behalf of the • Meetings with mental health advisers who support ITV Business Council Board, the Chair of the Audit and Risk Committee productions on-set to ensure there was clarity of roles and • Participation by the Chief Executive on the government’s Levelling Up Council • Annual duty of care presentation to the Audit and Risk Committee, which in 2023 was accountabilities especially with regards to healthcare • Periodic engagement by senior ITV employees with other regulators including the CMA, ICO attended by the Chair and other members of the Board of Directors regulatory, privacy and ethical obligations and the European Commission • An annual review of ITV’s guidance on protecting • Chief Executive participation at the ITV All Party Parliamentary Group Board and Committee reviews and assessments programme participants and contributors • Hosted the Conservative Arts & Creative Industries Network, Labour Creatives in • Regular Board updates on duty of care processes and issues, and on the Duty of Care • Participant Aftercare Programme (PAP) is a company- MediaCity, and ITV Summer Parliamentary reception Operating Board’s discussions and activities (including feedback from ITV’s Mental Health funded counselling service, extended to offer support to Advisory Group and updates on the ITV2/CALM partnership), through updates from the participants under 18, and to News, Daytime, Scripted, and Board and Committee reviews and assessments Audit and Risk Committee Chair, who is a standing attendee of the Duty of Care Continuing Drama productions • Updates from the Chief Executive on policy and regulation at every Board meeting Operating Board • Developed standards and vetting procedure for engaging • Regular reports to the Board and Audit and Risk Committee on compliance and significant • Appointment of an Independent Chief Medical Advisor and an Independent Consultant mental health advisers to support productions litigation matters Clinical Psychologist to ITV • In an industry first, ITV initiated a training programme in • Board briefings on ITV’s PSB strategy, Cabinet reshuffle and ministerial meetings • Board review of progress against ITV’s Diversity Acceleration Plan to accelerate change in partnership with the BBC, and approved by the British diversity and inclusion on screen Psychological Society, to build capacity of registered • Updates to the Audit and Risk Committee from the Committee Chair and external auditor regarding FRC developments and proposed regulatory changes • Board updates on any challenges relating to, or publicity surrounding, duty of care psychologists working in the media in response to an processes relating to any programmes produced or broadcast by ITV acknowledged shortage of appropriately qualified Key issues or priorities identified Read more • Annual Audit and Risk Committee reviews of duty of care and health and safety processes, specialists including duty of care risks and mitigations • Introduced a fast-track arrangement with a specialist • HFSS advertising ban and other possible advertising restrictions Our Business Model (from page 2) • Board review of minutes from the Duty of Care Operating Board meetings, as well as hospital to support participants in severe distress • Media Bill updates to the operating model, cadence of meetings and Duty of Care Charter • An online Duty of Care training programme was developed • PSB regulation and the PSB licence renewal process Social Purpose strategy (from page 32) • The Board considered the internal audit reivew of our safeguarding processes and and launched in Q3 2023 • Legal and regulatory compliance (including tax) – (non-compliance is a principal risk) effectiveness of policies • A programme of assurance visits by ITV’s Duty of Care Team Risks and Uncertainties (from page 55) and HR, allowing for a two-way sharing of good practice, • Regulatory policy changes (a principal risk) promotion of a standardised approach and encouragement • Monitoring potential change to the AVMS Directive in 2025/6 of early engagement and notification of incidents have taken place, and will continue into Q1 24 • Introduced a 24/7 help line by a health provider for participants or their family members to contact in order to close the gap in out-of-hours service • Monthly Duty of Care/Welfare Team meetings to share best practice with productions • Regular peer mentoring by two Independent Consultant Clinical Psychologists to support mental health advisers working on higher risk and ITV formats • Regular consultation with ITV’s Independent Chief Medical Officer and Consultant Clinical Psychologist to manage high profile and high risk healthcare incidents • On-screen campaign to discourage online trolling was developed and ran across key reality shows Key issues or priorities identified Read more • Internal review of duty of care to ensure there is a Group-wide approach Our Business Model (from page 2) • Evaluation of the role and professional development of Welfare Producers • Review the impact of social media on participants Risks and Uncertainties (from page 55 ) • Review processes in place to support senior talent Social Purpose strategy (from page 32) • Review policies for working with highly vulnerable contributors • Ensure there is consistent and high quality collection and analysis of welfare data Our People (from page 40)
88 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 89 STAKEHOLDER ENGAGEMENT CONTINUED G O VE R NAN C LEGISLATORS AND REGULATORSPROGRAMME PARTICIPANTS E DescriptionLink to strategic prioritiesDescription Link to strategic priorities The Board is committed to its responsibility as a public service broadcaster (PSB) and conducting Availability of viewer content: The safety of participants is of paramount importance to the Board. The Board takes its duty of Expand Studios globally: business in line with the appropriate laws and regulation, to ensure we operate in an ethical and see Our Strategy care to them very seriously, and obtains regular assurance over the support and processes in see Our Strategy responsible way. place to safeguard their physical and mental health and wellbeing. ITV’s approach to risk management is led from ITV Plc Board level, assisted by specialists who drive good practice within Forms of engagementOutcomes and impact on principal decisionsthe business. ITV production teams are trained in the identification and management of health Meetings and presentations • Collaboration and focus on important societal issues such and safety risks, and in producing programme-specific risk assessments. Our continuous review • Meetings with government ministers and officials and shadow ministers on key issues of as social mobility and diversityof risk involves our central risk support team and external experts as required, in considering all concern, initiatives or consultation. This includes meetings between the Chief Executive • Extensive interaction with government, Ofcom and stages of the production process, including pre-filming screening, care during production, and and the Secretary of State for Department for Culture, Media and Sports (DCMS), Shadow parliament in relation to the renewal of ITV’s PSB licences aftercare of participants after filming and broadcast. Secretary of State for Culture, Media and Sport and regular meetings between the Chief and securing endorsement of the scope of the Media Bill Executive and the Minister of State for Media, Tourism and Creative IndustriesForms of engagement Outcomes and impact on principal decisions • Counterpart meetings with Ofcom on a wide range of policy and regulatory issues (which Meetings and presentations • Observation of the mental health protection of Love Island included Chairs’ and regular Chief Executives’ meetings) (series 9) programme participants conducted by an • Chief Executive attendance at Mental Health Advisory Group (MHAG) meeting, which three • Regular engagement with the Audit and Risk Committee Chair in relevant stakeholder other Management Board members regularly attend (two of whom are members of the Independent Consultant Clinical Psychologist forums (including with leaders from the Department for Business and Trade, FRC, Audit Advisory Group) throughout the year • Formal Social Media guideline introduced to protect Love Committee Chairs Independent Forum, 100 Group and Big 4 audit firms) regarding the Island participants and their families from the adverse proposals for corporate governance and audit reform• Chief Executive chairs the Duty of Care Operating Board which includes Management Board members and is attended by specialist advisers including ITV’s Independent Chief effects of social media • Participation by the Chief Executive as a member of the Prime Minister’s Build Back Better Medical Officer and Independent Consultant Clinical Psychologist and, on behalf of the • Meetings with mental health advisers who support ITV Business Council Board, the Chair of the Audit and Risk Committee productions on-set to ensure there was clarity of roles and • Participation by the Chief Executive on the government’s Levelling Up Council• Annual duty of care presentation to the Audit and Risk Committee, which in 2023 was accountabilities especially with regards to healthcare • Periodic engagement by senior ITV employees with other regulators including the CMA, ICO attended by the Chair and other members of the Board of Directorsregulatory, privacy and ethical obligations and the European Commission • An annual review of ITV’s guidance on protecting • Chief Executive participation at the ITV All Party Parliamentary GroupBoard and Committee reviews and assessments programme participants and contributors • Hosted the Conservative Arts & Creative Industries Network, Labour Creatives in • Regular Board updates on duty of care processes and issues, and on the Duty of Care • Participant Aftercare Programme (PAP) is a company- MediaCity, and ITV Summer Parliamentary receptionOperating Board’s discussions and activities (including feedback from ITV’s Mental Health funded counselling service, extended to offer support to Advisory Group and updates on the ITV2/CALM partnership), through updates from the participants under 18, and to News, Daytime, Scripted, and Board and Committee reviews and assessmentsAudit and Risk Committee Chair, who is a standing attendee of the Duty of Care Continuing Drama productions • Updates from the Chief Executive on policy and regulation at every Board meetingOperating Board • Developed standards and vetting procedure for engaging • Regular reports to the Board and Audit and Risk Committee on compliance and significant • Appointment of an Independent Chief Medical Advisor and an Independent Consultant mental health advisers to support productions litigation matters Clinical Psychologist to ITV • In an industry first, ITV initiated a training programme in • Board briefings on ITV’s PSB strategy, Cabinet reshuffle and ministerial meetings• Board review of progress against ITV’s Diversity Acceleration Plan to accelerate change in partnership with the BBC, and approved by the British diversity and inclusion on screen Psychological Society, to build capacity of registered • Updates to the Audit and Risk Committee from the Committee Chair and external auditor regarding FRC developments and proposed regulatory changes• Board updates on any challenges relating to, or publicity surrounding, duty of care psychologists working in the media in response to an processes relating to any programmes produced or broadcast by ITV acknowledged shortage of appropriately qualified Key issues or priorities identifiedRead more• Annual Audit and Risk Committee reviews of duty of care and health and safety processes, specialists including duty of care risks and mitigations • Introduced a fast-track arrangement with a specialist • HFSS advertising ban and other possible advertising restrictionsOur Business Model (from page 2)• Board review of minutes from the Duty of Care Operating Board meetings, as well as hospital to support participants in severe distress • Media Bill updates to the operating model, cadence of meetings and Duty of Care Charter • An online Duty of Care training programme was developed • PSB regulation and the PSB licence renewal process Social Purpose strategy (from page 32)• The Board considered the internal audit reivew of our safeguarding processes and and launched in Q3 2023 • Legal and regulatory compliance (including tax) – (non-compliance is a principal risk)effectiveness of policies • A programme of assurance visits by ITV’s Duty of Care Team Risks and Uncertainties (from page 55) and HR, allowing for a two-way sharing of good practice, • Regulatory policy changes (a principal risk) promotion of a standardised approach and encouragement • Monitoring potential change to the AVMS Directive in 2025/6 of early engagement and notification of incidents have taken place, and will continue into Q1 24 • Introduced a 24/7 help line by a health provider for participants or their family members to contact in order to close the gap in out-of-hours service • Monthly Duty of Care/Welfare Team meetings to share best practice with productions • Regular peer mentoring by two Independent Consultant Clinical Psychologists to support mental health advisers working on higher risk and ITV formats • Regular consultation with ITV’s Independent Chief Medical Officer and Consultant Clinical Psychologist to manage high profile and high risk healthcare incidents • On-screen campaign to discourage online trolling was developed and ran across key reality shows Key issues or priorities identified Read more • Internal review of duty of care to ensure there is a Group-wide approach Our Business Model (from page 2) • Evaluation of the role and professional development of Welfare Producers • Review the impact of social media on participants Risks and Uncertainties (from page 55 ) • Review processes in place to support senior talent Social Purpose strategy (from page 32) • Review policies for working with highly vulnerable contributors • Ensure there is consistent and high quality collection and analysis of welfare data Our People (from page 40)
90 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 91 STAKEHOLDER ENGAGEMENT CONTINUED G O VE R NAN C SHAREHOLDERS (INDIVIDUAL AND INSTITUTIONAL), BOND HOLDERS AND OTHER PROVIDERS OF DEBT AND ANALYSTS COLLEAGUES E Description Link to strategic priorities Description Link to strategic priorities Delivering for our investors (equity and debt) and understanding their views and interests ensures Deliver value for shareholders: The workforce is integral to the day-to-day operations and the practical execution of strategy. Delivery of strategy: the business continues to be successful in the long term and therefore can deliver for all our see Our Strategy Effective engagement mechanisms provide the Board with important insights and priorities, as see Our Strategy stakeholders. well as ensuring the workforce voice is considered in the Board’s decision-making. Forms of engagement Outcomes and impact on principal decisions Forms of engagement Outcomes and impact on principal decisions Meetings and presentations • Consideration of feedback to inform, amongst other things, Meetings and presentations • Board discussions benefited from the Workforce • Chief Executive and Group CFO & COO presented the full year results and the Interim ITV’s long-term strategy, five year plan, dividend policy, • Regular participation by the Workforce Engagement Director and Management Board Engagement Director’s direct insight into sentiment and results and took questions from analysts capital allocation and approach to ESG and other members at Ambassador meetings (our former workforce advisory panel) topics that matter most to colleagues • Chair, Chief Executive and Group CFO & COO held regular meetings with our largest governance issues • Regular Chief Executive’s vodcast to update and discuss regulatory and other challenges • Ambassadors have been consulted on a range of business shareholders • Board discussion on investor sentiment and action for for ITV issues during 2023 including: ITV Together; 2023 • The Chief Executive and Group CFO & COO held meetings with target investors based in the management to conduct further analysis of ITV’s existing • Board members engaged directly with senior management and colleagues from across the Engagement and Culture survey; Speaking Up; 2023 new UK, US and parts of Europe and prospective investor base with the evolution of the business approach to Mandatory training; and 2023/24 Annual Pay equity story Review • The Chief Executive and Group CFO & COO both attended investor conferences during the • Announcement of the Board’s intention to pay an interim • Full Engagement and Culture survey (September 2023), and Line Manager Capability survey • Consideration of feedback to inform, amongst other things, year. These included the Citi, UBS, JP Morgan TMT, Barclays TMT and Morgan Stanley TMT dividend of 1.7p and propose a final dividend of 3.3p for 2023 (Summer 2023) communication with colleagues, development conferences opportunities and action planning by the Management • Chair, Chief Executive and Group CFO & COO held a Fund Managers’ dinner in November • Maintained investment grade credit ratings; refinanced the Board and Committee reviews and assessments £230 million bond which matured in December 2023 with a • Regular Workforce Engagement Director updates to the Board Board and Senior Leadership Team, and localised planning with a small group of senior fund managers £230 million Term Loan maturing July 2027; extended the by line managers across the business • Chief Executive and Group CFO & COO held meetings with equity sales teams and analysts maturity of the £500 million RCF; and agreed a new £100 • Employee engagement included as part of Chief Executive report at every Board meeting • The Workforce Engagement Director listened to the • The Board attended the AGM, with an opportunity for shareholders to ask questions RCF with Lloyds which mature across 2028 and 2029 • Board receipt of vodcasts from the Chief Executive to colleagues feedback and issues raised by the Ambassadors and shared before, during and after the meeting • Board and Management Board receipt of feedback from ITV’s staff networks, through them with the Board • The Remuneration Committee Chair met with Columbia Threadneedle, Dimensional Fund regular updates on Social Purpose and Diversity and Inclusion • Ongoing engagement, feedback and discussion with Advisors and Schroders to discuss the Remuneration Policy renewal • Nominations Committee session on talent and succession planning colleagues regarding their views on the successful delivery • Regular dialogue throughout 2023 between the Group CFO & COO, Group Finance Director • Theme from Line Manager Capability survey results addressed by a series of leadership of the Diversity Acceleration Plan and Group Treasurer, and the Rating Agencies and The Core Banking Group development labs and ongoing management training • Opportunity for Board members to talk to employees openly and transparently about the Remuneration Board and Committee reviews and assessments Committee’s approach to reward at ITV and gain insight into • Group CFO & COO reports on analyst consensus, latest shareholder feedback, changes in priorities for colleagues through the Ambassador Q&A and share register and key shareholder engagement activities undertaken by the Executive discussion session on remuneration Directors and Investor Relations team • ITV Fast Forward events with insightful topics and speakers • Board updates from the Company’s brokers and advisers on market performance, bid • Board review of feedback and results from the 2023 career defence and capital structure, and on shareholder sentiment regarding ITV’s performance, and development pulse survey strategy and dividend policy • Investment in people initiatives, including diversity and • Board members’ careful scrutiny of analyst reports throughout the year inclusion training, and ways of working • Update to the Board on ITV’s Climate Disclosures, assurance over its carbon footprint and • Investment in mental health and wellbeing support for actions being taken to prepare for further climate-related regulations colleagues • Assurance over ITV’s bench strength and succession Key issues or priorities identified Read more pipeline and continued progress to broaden diversity across • Strategy and investment priorities the business and endorsement of our 2023 people priorities Our Business Model (from page 2) • Strategic progress and delivery against strategic and financial KPIs and targets Key issues or priorities identified Read more • Capital allocation and leverage Investor Proposition (page 4) • Share price performance • Transparent and honest culture and ethos Risks and Uncertainties (from page 55) Social Purpose strategy (from page 32) • ESG data and performance • Flexible and digital ways of working Task Force on Climate-related Financial Disclosures • Mental health and wellbeing support Social Purpose strategy (from page 32) (from page 65) • Progress on our Diversity Acceleration Plan commitments Engaging with our Workforce (from page 94) • Retention and recruitment of talent (a principal risk) • Internal cultural change (a principal risk)
90 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 91 STAKEHOLDER ENGAGEMENT CONTINUED G O VE R NAN C SHAREHOLDERS (INDIVIDUAL AND INSTITUTIONAL), BOND HOLDERS AND OTHER PROVIDERS OF DEBT AND ANALYSTSCOLLEAGUES E DescriptionLink to strategic prioritiesDescription Link to strategic priorities Delivering for our investors (equity and debt) and understanding their views and interests ensures Deliver value for shareholders: The workforce is integral to the day-to-day operations and the practical execution of strategy. Delivery of strategy: the business continues to be successful in the long term and therefore can deliver for all our see Our Strategy Effective engagement mechanisms provide the Board with important insights and priorities, as see Our Strategy stakeholders. well as ensuring the workforce voice is considered in the Board’s decision-making. Forms of engagementOutcomes and impact on principal decisionsForms of engagement Outcomes and impact on principal decisions Meetings and presentations • Consideration of feedback to inform, amongst other things, Meetings and presentations • Board discussions benefited from the Workforce • Chief Executive and Group CFO & COO presented the full year results and the Interim ITV’s long-term strategy, five year plan, dividend policy, • Regular participation by the Workforce Engagement Director and Management Board Engagement Director’s direct insight into sentiment and results and took questions from analystscapital allocation and approach to ESG and other members at Ambassador meetings (our former workforce advisory panel)topics that matter most to colleagues • Chair, Chief Executive and Group CFO & COO held regular meetings with our largest governance issues• Regular Chief Executive’s vodcast to update and discuss regulatory and other challenges • Ambassadors have been consulted on a range of business shareholders • Board discussion on investor sentiment and action for for ITV issues during 2023 including: ITV Together; 2023 • The Chief Executive and Group CFO & COO held meetings with target investors based in the management to conduct further analysis of ITV’s existing • Board members engaged directly with senior management and colleagues from across the Engagement and Culture survey; Speaking Up; 2023 new UK, US and parts of Europeand prospective investor base with the evolution of the business approach to Mandatory training; and 2023/24 Annual Pay equity story Review • The Chief Executive and Group CFO & COO both attended investor conferences during the • Announcement of the Board’s intention to pay an interim • Full Engagement and Culture survey (September 2023), and Line Manager Capability survey • Consideration of feedback to inform, amongst other things, year. These included the Citi, UBS, JP Morgan TMT, Barclays TMT and Morgan Stanley TMT dividend of 1.7p and propose a final dividend of 3.3p for 2023(Summer 2023)communication with colleagues, development conferences opportunities and action planning by the Management • Chair, Chief Executive and Group CFO & COO held a Fund Managers’ dinner in November • Maintained investment grade credit ratings; refinanced the Board and Committee reviews and assessments £230 million bond which matured in December 2023 with a • Regular Workforce Engagement Director updates to the Board Board and Senior Leadership Team, and localised planning with a small group of senior fund managers£230 million Term Loan maturing July 2027; extended the by line managers across the business • Chief Executive and Group CFO & COO held meetings with equity sales teams and analystsmaturity of the £500 million RCF; and agreed a new £100 • Employee engagement included as part of Chief Executive report at every Board meeting• The Workforce Engagement Director listened to the • The Board attended the AGM, with an opportunity for shareholders to ask questions RCF with Lloyds which mature across 2028 and 2029• Board receipt of vodcasts from the Chief Executive to colleaguesfeedback and issues raised by the Ambassadors and shared before, during and after the meeting• Board and Management Board receipt of feedback from ITV’s staff networks, through them with the Board • The Remuneration Committee Chair met with Columbia Threadneedle, Dimensional Fund regular updates on Social Purpose and Diversity and Inclusion • Ongoing engagement, feedback and discussion with Advisors and Schroders to discuss the Remuneration Policy renewal• Nominations Committee session on talent and succession planningcolleagues regarding their views on the successful delivery • Regular dialogue throughout 2023 between the Group CFO & COO, Group Finance Director • Theme from Line Manager Capability survey results addressed by a series of leadership of the Diversity Acceleration Plan and Group Treasurer, and the Rating Agencies and The Core Banking Group development labs and ongoing management training• Opportunity for Board members to talk to employees openly and transparently about the Remuneration Board and Committee reviews and assessments Committee’s approach to reward at ITV and gain insight into • Group CFO & COO reports on analyst consensus, latest shareholder feedback, changes in priorities for colleagues through the Ambassador Q&A and share register and key shareholder engagement activities undertaken by the Executive discussion session on remuneration Directors and Investor Relations team • ITV Fast Forward events with insightful topics and speakers • Board updates from the Company’s brokers and advisers on market performance, bid • Board review of feedback and results from the 2023 career defence and capital structure, and on shareholder sentiment regarding ITV’s performance, and development pulse survey strategy and dividend policy • Investment in people initiatives, including diversity and • Board members’ careful scrutiny of analyst reports throughout the year inclusion training, and ways of working • Update to the Board on ITV’s Climate Disclosures, assurance over its carbon footprint and • Investment in mental health and wellbeing support for actions being taken to prepare for further climate-related regulations colleagues • Assurance over ITV’s bench strength and succession Key issues or priorities identifiedRead more pipeline and continued progress to broaden diversity across • Strategy and investment priorities the business and endorsement of our 2023 people priorities Our Business Model (from page 2) • Strategic progress and delivery against strategic and financial KPIs and targetsKey issues or priorities identifiedRead more • Capital allocation and leverage Investor Proposition (page 4) • Share price performance• Transparent and honest culture and ethos Risks and Uncertainties (from page 55) Social Purpose strategy (from page 32) • ESG data and performance• Flexible and digital ways of working Task Force on Climate-related Financial Disclosures • Mental health and wellbeing support Social Purpose strategy (from page 32) (from page 65) • Progress on our Diversity Acceleration Plan commitments Engaging with our Workforce (from page 94) • Retention and recruitment of talent (a principal risk) • Internal cultural change (a principal risk)
92 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 93 G OUR COMMITMENT TO SECTION 172(1) O VE R NAN Set out below are a couple of examples of some of the key strategic issues considered by the Board during the year and in reaching their The Directors consider that they have acted, in good faith, in a way that C decision, how the Directors have had regard to the S172 factors of: E is most likely to promote the success of the Company for the benefit of its members and stakeholders as a whole, having regard (among other maers) ITVX to the maers set out in Section 172(1)(a-f) of the Companies Act 2006. The Board regularly considers stakeholder groups and their most significant issues, views and interests as well as the financial and long‑term To promote the success of The Board identified that Following extensive analysis, To ensure that ITVX impact of key actions throughout its decision‑making process. The Board also undertakes a formal assessment on an annual basis of whether ITV, the Board carries out digital viewing continues to modelling and careful continued to deliver the the key stakeholders identified remain appropriate. frequent market reviews, grow at the expense of live consideration, which included desired outcome post launch, keeps abreast with emerging linear viewing. To adapt to the financial implications and the Board kept close review trends and where judged these viewing habits, the impact on key stakeholders, on the technology and necessary, will modify the Board transformed M&E customers, investors and product plans for its Strategy in order to deliver its strategy to be streaming-led, colleagues, the Board continued rollout. It noted plan and safeguard the and evolved Content strategy recognised that ITVX, an the increased engagement long-term business impact to grow engagement with integrated AVOD/SVOD with clients, partners and Long‑term impact Interests of Fostering business Impact on Maintaining Acting fairly and the interests of its ITV’s streaming service. platform, would best customers needed to colleagues relationships community reputation for high between members members and stakeholders. compliment the evolved promote awareness and and environment standards of strategy, address the ongoing ensure the product’s success. business conduct changes in viewing habits, Internal deep dive sessions and accelerate the delivery of were held to understand ITV’s strategic priorities and ITVX’s performance long-term value. ITV’s new throughout the year and The below table outlines other areas of this report which detail how the Directors have had regard to the S172 factors streaming service ITVX was challenges it encountered. launched at the end of 2022. Where deemed necessary, S172 Factor Further Information Can Be Found S172 Factor Further Information Can Be Found activities were tailored in order to ensure its delivery A B and safeguard the long-term Business Model: Business Model: The likely pages 2 to 3 Interest of employees pages 2 to 3 success of ITV. consequence of any decisions in the long Our Strategys: Stakeholder Engagement: term pages 10 to 13 pages 84 to 91 Stakeholder Engagement: People and Culture: ITV TOGETHER pages 84 to 91 pages 40 to 41 and 96 to 99 Remuneration Report: pages 117 to 142 C D Business Model: Business Model : Fostering the pages 2 to 3 Impact of operations pages 2 to 3 In 2022, the Board approved The Board believe that The Board received regular The Board were then kept Company’s business on the community and ITV Together, a global collaborative and connected updates during and after the apprised throughout the year relationships with Stakeholder Engagement: environment Stakeholder Engagement: transformation programme digital ways of working launch period taking into on the project’s development suppliers, customers pages 84 to 91 pages 84 to 91 to evolve the way ITV worked, delivered by ITV Together will consideration the impact on and implementation plan. It and others Our People: TCFD Report: bringing in a simpler, modern deliver and have a positive colleagues and the disruption received regular updates on and connected way of long-term impact to the to the business as existing management communication pages 40 to 41 pages 65 to 71 working in a simplified business and safeguard the systems were migrated onto and engagement plans with technology landscape. interest of its shareholders. the Oracle Fusion system. colleagues, partners and Accordingly, following an suppliers. Feedback from E F in-depth analysis of the colleagues were sought to Business Model: Business Model: Maintaining a pages 2 to 3 Acting fairly between pages 2 to 3 readiness of programme improve functionality. When reputation for high members of the it approved the launch of the Board became aware of standards of business TCFD: Company Stakeholder Engagement: Wave 1 of the programme certain challenges being conduct pages 65 to 71 pages 84 to 91 in April 2023. faced by colleagues, Risk Management: Remuneration Report: implementation plans were revised and communicated to page 112 pages 117 to 142 the Group. This demonstrated Audit Commiƒee Report: the Board’s commitment to pages 106 to 116 keep in forefront, interest of the colleagues as well as its other stakeholders.
92 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 93 G OUR COMMITMENT TO SECTION 172(1) O VE R NAN Set out below are a couple of examples of some of the key strategic issues considered by the Board during the year and in reaching their The Directors consider that they have acted, in good faith, in a way that C decision, how the Directors have had regard to the S172 factors of: E is most likely to promote the success of the Company for the benefit of its members and stakeholders as a whole, having regard (among other maers) ITVX to the maers set out in Section 172(1)(a-f) of the Companies Act 2006. The Board regularly considers stakeholder groups and their most significant issues, views and interests as well as the financial and long‑term To promote the success of The Board identified that Following extensive analysis, To ensure that ITVX impact of key actions throughout its decision‑making process. The Board also undertakes a formal assessment on an annual basis of whether ITV, the Board carries out digital viewing continues to modelling and careful continued to deliver the the key stakeholders identified remain appropriate.frequent market reviews, grow at the expense of live consideration, which included desired outcome post launch, keeps abreast with emerging linear viewing. To adapt to the financial implications and the Board kept close review trends and where judged these viewing habits, the impact on key stakeholders, on the technology and necessary, will modify the Board transformed M&E customers, investors and product plans for its Strategy in order to deliver its strategy to be streaming-led, colleagues, the Board continued rollout. It noted plan and safeguard the and evolved Content strategy recognised that ITVX, an the increased engagement long-term business impact to grow engagement with integrated AVOD/SVOD with clients, partners and Long‑term impactInterests of Fostering business Impact on Maintaining Acting fairly and the interests of its ITV’s streaming service. platform, would best customers needed to colleaguesrelationshipscommunity reputation for high between membersmembers and stakeholders. compliment the evolved promote awareness and and environmentstandards of strategy, address the ongoing ensure the product’s success. business conduct changes in viewing habits, Internal deep dive sessions and accelerate the delivery of were held to understand ITV’s strategic priorities and ITVX’s performance long-term value. ITV’s new throughout the year and The below table outlines other areas of this report which detail how the Directors have had regard to the S172 factorsstreaming service ITVX was challenges it encountered. launched at the end of 2022. Where deemed necessary, S172 FactorFurther Information Can Be FoundS172 FactorFurther Information Can Be Found activities were tailored in order to ensure its delivery AB and safeguard the long-term Business Model: Business Model: The likely pages 2 to 3Interest of employeespages 2 to 3 success of ITV. consequence of any decisions in the long Our Strategys: Stakeholder Engagement: termpages 10 to 13pages 84 to 91 Stakeholder Engagement: People and Culture: ITV TOGETHER pages 84 to 91pages 40 to 41 and 96 to 99 Remuneration Report: pages 117 to 142 CD Business Model: Business Model : Fostering the pages 2 to 3 Impact of operations pages 2 to 3In 2022, the Board approved The Board believe that The Board received regular The Board were then kept Company’s business on the community and ITV Together, a global collaborative and connected updates during and after the apprised throughout the year relationships with Stakeholder Engagement: environment Stakeholder Engagement: transformation programme digital ways of working launch period taking into on the project’s development suppliers, customers pages 84 to 91pages 84 to 91to evolve the way ITV worked, delivered by ITV Together will consideration the impact on and implementation plan. It and othersOur People: TCFD Report: bringing in a simpler, modern deliver and have a positive colleagues and the disruption received regular updates on and connected way of long-term impact to the to the business as existing management communication pages 40 to 41 pages 65 to 71 working in a simplified business and safeguard the systems were migrated onto and engagement plans with technology landscape. interest of its shareholders. the Oracle Fusion system. colleagues, partners and Accordingly, following an suppliers. Feedback from EF in-depth analysis of the colleagues were sought to Business Model: Business Model: Maintaining a pages 2 to 3Acting fairly between pages 2 to 3readiness of programme improve functionality. When reputation for high members of the it approved the launch of the Board became aware of standards of business TCFD: Company Stakeholder Engagement: Wave 1 of the programme certain challenges being conductpages 65 to 71pages 84 to 91 in April 2023. faced by colleagues, Risk Management: Remuneration Report: implementation plans were revised and communicated to page 112pages 117 to 142 the Group. This demonstrated Audit Commiƒee Report: the Board’s commitment to pages 106 to 116 keep in forefront, interest of the colleagues as well as its other stakeholders.
94 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 95 G ENGAGING WITH OUR WORKFORCE O VE R NAN The Board ensures effective engagement The Workforce Engagement Director also Ambassadors were asked to gather feedback Our Ambassador network C with the workforce using two of the methods Our Ambassador network was established in joined the first (since 2019) in-person from their constituents about awareness, E stipulated under the Code: a designated 2015 and represent colleagues’ interests in Ambassador Forum in Autumn 2023 which knowledge and trust in the Speaking Up Workforce Engagement Director, and a all parts of the Group, shares information was attended by over 80 Ambassadors (UK process and channels. Whilst the majority formal workforce advisory panel (our and helps inform our culture by giving our and International). were aware of the policy and Speak Up Ambassador network). Edward Bonham colleagues a voice. channels, Ambassadors indicated that there Carter had the role from 2019 and was The active two-way dialogue and attendance are varying levels of awareness, confidence succeeded by Graham Cooke in June 2023. • Each Ambassador usually represents at Ambassador meetings also provides an and trust in the process. This will be The Board extends its thanks to Edward for approximately 50 colleagues from their opportunity to share insights into external addressed in the 2024 Q1 Ambassador his valuable contributions. business area, called their constituency factors affecting ITV, which the meetings with a planned in-depth and Ambassadors then share with their practical session to raise awareness and The Board recognises the benefits of • There are approximately 100 Ambassador constituents. Hearing feedback first hand trust in the Speak Up process. The intention personal interaction and informal discussion constituencies which are organised into gives the Workforce Engagement Director a is that the Ambassadors will then be well to both learn more about day-to-day five UK regional groups and c.20 of these broad perspective of company culture, equipped to support their local constituents operations and the practical execution of Ambassadors represent our international morale, and priorities for colleagues and the in understanding the importance of raising strategy, as well as to gather direct insights groups impact of operational changes. concerns via our Speak Up channels. into workforce sentiment. Colleagues have • The Ambassadors normally meet in their direct contact with the Chief Executive groups four times a year and in 2023 the Regular verbal updates on feedback on The Ambassadors were given an overview through her ‘Ask Carolyn’ email address Ambassadors have been engaged in a employee topics and issues of interest and/ of the Engagement and Culture survey and and the Chair has regular meetings with range of programmes and topics. or concern, were provided to the Board by the Mandatory Training and were asked to Management Board members and Divisional Workforce Engagement Director. These encourage their constituents to complete heads, who provide feed-back on workforce Engagement with Ambassadors is primarily regular updates ensure that the employees both the survey and mandatory training. issues. The Committee Chairs also have through in-person meetings on a quarterly voices are considered during Board and The Ambassadors were updated on the new, individual meetings with colleagues in basis. In 2023, 24 meetings were held, 16 of Committee discussions. staggered approach to mandatory training relation to the business of their which were with UK Ambassadors covering and its importance and were asked for Committee meetings. London West, London Central, Leeds and Ambassadors regularly share how valuable feedback and to work with local managers Manchester, and the remaining eight the network is to them and their to ensure full completion in their areas. meetings with international Ambassadors constituents, particularly in relation to having The headline results from the engagement (representing all ITV territories). Of the 24 Board representation at meetings to hear and culture survey were shared with the meetings, nine were attended by the firsthand business and strategic updates Ambassadors and they gave their initial designated Workforce Engagement Director. which they in turn can share more locally. reactions. The Ambassadors have been asked to play a proactive role, partnering with their local line managers; to share, What were the takeaways The Ambassadors have been engaged and explore and agree actions based on local AMBASSADOR FEEDBACK LOOP updated on the ITV Together programme results; and to record local actions on a from Ambassador meetings central IT platform. during 2023? (Oracle Fusion), with the programme team having regularly sought feedback from What are the key areas of focus 2023 has again been a year of change for Ambassadors and their constituencies to colleagues, with an ongoing focus on digital, inform their plans for the initial launch and for engagement in 2024? organisational and strategic transformation. stabilisation period, as well as shaping future The Workforce Engagement Director will Workforce Throughout the year the Ambassadors have communications and engagement activity. continue to attend Ambassador meetings Workforce Workforce Engagement Director Workforce been updated on the More Than TV strategy, This led to the introduction of local super- Engagement Director Engagement Director Engagement Director to engage on important topics, such as collects feedback/ with particular focus on ITVX during its users to champion and support new Speaking Up, ITV’s digital transformation, attends Ambassador provides feedback from insights from Plc Board shares feedback/ launch year, they were asked to share processes and minimise workarounds. Meetings and collects Ambassadors at Plc insights from action planning linked to the 2023 Meeting to share with feedback from their constituents on how the Engagement and Culture survey and feedback/insights Board Meeting ITV Ambassadors Plc Board strategy and ITVX was being perceived in The ever-changing macro-environment and exploring how to further raise the their constituencies as this was a key the continuing impact of increasing living Ambassadors’ profile. strategic focus for the M&E business. costs has continue to be a key focus. The UK Ambassadors were given an insight into ITV’s The Board’s views on key 2023 topics were approach to the pay review process and the regularly shared, including the performance different factors that are considered when of ITVX post its launch in Q4 2022, the the proposed pay offer was shared with changing media and regulatory landscape them. They were asked to give their reactions (subscription streaming market growth, US together with any questions they had. Their writers’ strike, HFSS advertising ban, PSB engagement and feedback were greatly regulation, changes in viewer habits and the appreciated and the final pay offer was advertising market), and how this has amended as a result. affected ITV.
94 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 95 G ENGAGING WITH OUR WORKFORCE O VE R NAN The Board ensures effective engagement The Workforce Engagement Director also Ambassadors were asked to gather feedback Our Ambassador network C with the workforce using two of the methods Our Ambassador network was established in joined the first (since 2019) in-person from their constituents about awareness, E stipulated under the Code: a designated 2015 and represent colleagues’ interests in Ambassador Forum in Autumn 2023 which knowledge and trust in the Speaking Up Workforce Engagement Director, and a all parts of the Group, shares information was attended by over 80 Ambassadors (UK process and channels. Whilst the majority formal workforce advisory panel (our and helps inform our culture by giving our and International). were aware of the policy and Speak Up Ambassador network). Edward Bonham colleagues a voice. channels, Ambassadors indicated that there Carter had the role from 2019 and was The active two-way dialogue and attendance are varying levels of awareness, confidence succeeded by Graham Cooke in June 2023. • Each Ambassador usually represents at Ambassador meetings also provides an and trust in the process. This will be The Board extends its thanks to Edward for approximately 50 colleagues from their opportunity to share insights into external addressed in the 2024 Q1 Ambassador his valuable contributions. business area, called their constituencyfactors affecting ITV, which the meetings with a planned in-depth and Ambassadors then share with their practical session to raise awareness and The Board recognises the benefits of • There are approximately 100 Ambassador constituents. Hearing feedback first hand trust in the Speak Up process. The intention personal interaction and informal discussion constituencies which are organised into gives the Workforce Engagement Director a is that the Ambassadors will then be well to both learn more about day-to-day five UK regional groups and c.20 of these broad perspective of company culture, equipped to support their local constituents operations and the practical execution of Ambassadors represent our international morale, and priorities for colleagues and the in understanding the importance of raising strategy, as well as to gather direct insights groups impact of operational changes. concerns via our Speak Up channels. into workforce sentiment. Colleagues have • The Ambassadors normally meet in their direct contact with the Chief Executive groups four times a year and in 2023 the Regular verbal updates on feedback on The Ambassadors were given an overview through her ‘Ask Carolyn’ email address Ambassadors have been engaged in a employee topics and issues of interest and/ of the Engagement and Culture survey and and the Chair has regular meetings with range of programmes and topics.or concern, were provided to the Board by the Mandatory Training and were asked to Management Board members and Divisional Workforce Engagement Director. These encourage their constituents to complete heads, who provide feed-back on workforce Engagement with Ambassadors is primarily regular updates ensure that the employees both the survey and mandatory training. issues. The Committee Chairs also have through in-person meetings on a quarterly voices are considered during Board and The Ambassadors were updated on the new, individual meetings with colleagues in basis. In 2023, 24 meetings were held, 16 of Committee discussions. staggered approach to mandatory training relation to the business of their which were with UK Ambassadors covering and its importance and were asked for Committee meetings. London West, London Central, Leeds and Ambassadors regularly share how valuable feedback and to work with local managers Manchester, and the remaining eight the network is to them and their to ensure full completion in their areas. meetings with international Ambassadors constituents, particularly in relation to having The headline results from the engagement (representing all ITV territories). Of the 24 Board representation at meetings to hear and culture survey were shared with the meetings, nine were attended by the firsthand business and strategic updates Ambassadors and they gave their initial designated Workforce Engagement Director. which they in turn can share more locally. reactions. The Ambassadors have been asked to play a proactive role, partnering with their local line managers; to share, What were the takeaways The Ambassadors have been engaged and explore and agree actions based on local AMBASSADOR FEEDBACK LOOP updated on the ITV Together programme results; and to record local actions on a from Ambassador meetings central IT platform. during 2023? (Oracle Fusion), with the programme team having regularly sought feedback from What are the key areas of focus 2023 has again been a year of change for Ambassadors and their constituencies to colleagues, with an ongoing focus on digital, inform their plans for the initial launch and for engagement in 2024? organisational and strategic transformation. stabilisation period, as well as shaping future The Workforce Engagement Director will Workforce Throughout the year the Ambassadors have communications and engagement activity. continue to attend Ambassador meetings Workforce Workforce Engagement Director Workforce been updated on the More Than TV strategy, This led to the introduction of local super- Engagement Director Engagement Director Engagement Director to engage on important topics, such as collects feedback/ with particular focus on ITVX during its users to champion and support new Speaking Up, ITV’s digital transformation, attends Ambassador provides feedback from insights from Plc Board shares feedback/launch year, they were asked to share processes and minimise workarounds. Meetings and collects Ambassadors at Plc insights from action planning linked to the 2023 Meeting to share with feedback from their constituents on how the Engagement and Culture survey and feedback/insightsBoard MeetingITV AmbassadorsPlc Boardstrategy and ITVX was being perceived in The ever-changing macro-environment and exploring how to further raise the their constituencies as this was a key the continuing impact of increasing living Ambassadors’ profile. strategic focus for the M&E business. costs has continue to be a key focus. The UK Ambassadors were given an insight into ITV’s The Board’s views on key 2023 topics were approach to the pay review process and the regularly shared, including the performance different factors that are considered when of ITVX post its launch in Q4 2022, the the proposed pay offer was shared with changing media and regulatory landscape them. They were asked to give their reactions (subscription streaming market growth, US together with any questions they had. Their writers’ strike, HFSS advertising ban, PSB engagement and feedback were greatly regulation, changes in viewer habits and the appreciated and the final pay offer was advertising market), and how this has amended as a result. affected ITV.
96 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 97 G VALUES IN ACTION – UNDERSTANDING AND MONITORING OUR CULTURE O VE R NAN The table below sets out the framework of policies and practices which underpin our culture and explains key ways in which the Board and/or Continuing to build and promote a culture of openness and integrity, C Committees monitor and gain insight to ITV’s culture. E with inclusion, diversity and equity at the heart are critical to our success as well as supporting long-term value for our stakeholders. ENGAGEMENT AND FEEDBACK CHANNELS How the Board monitors culture Cultural insight gained Review assessments of the Company’s culture through the 2023 line Understanding strengths and opportunities in ITV’s culture, and that ITV’s manager effectiveness survey, bi-annual engagement and culture survey, values and stated purpose authentically reflect its culture and behaviours. The Board recognises that ITV’s culture is a measurements of organisational culture benchmarked against peers, and key enabler of ITV’s digital transformation, Over the last year we have focused on specific areas: how ITV’s values link to its purpose and behaviour. and therefore understands the importance • The Board received reports on identified cultural initiatives; the conclusions of the Engagement of monitoring and fostering it. Aligning our and Culture survey benchmarks; and updates on the actions arising from these surveys Outcome values and purpose with our strategy is • Ongoing engagement with the international offices demonstrates the alignment with the overall The Board continues to monitor insights gained from the Engagement and Culture survey conducted in 2023. Through updates from the Chief Executive critical to our success. Our business model ITV culture and values (2023 Full Engagement and Culture survey, ongoing Mandatory training, the Board received assurance that ITV’s culture is aligned to its purpose and values, while recognising the cultural evolution required to deliver strategy as ITV is regularly reviewed by the Board to ensure International Ambassadors and Inclusion activity) becomes increasingly digital. The Board, through the Audit and Risk Committee, gets feedback from external and internal auditors on culture and alignment to it continues to deliver our strategy and is • All freelancers complete our Code of Ethics and Conduct mandatory training module, giving them purpose and values across the organisation, as observed whilst undertaking audits and engaging with management. aligned with our purpose. an understanding of the expectations as they relate to our ITV values and culture. We also undertook an Engagement and Culture survey with our freelancer population in Autumn 2023 How the Board monitors culture Cultural insight gained To allow ITV to deliver on our strategic • Continued use of the anti-bullying, harassment and discrimination app called ‘Call It!’ across our Interactions with and feedback from Board members through: (i) the Chief A better understanding of day-to-day operations, the practical execution of priorities and become a truly digitally-led productions, enabling both freelancers and ITV employees to report incidents of bullying, Executive (including access to the regular Chief Executive’s vodcast and Q&A strategy and the cultural context in which colleagues work. Further insight business, our culture needs to continue to harassment and discrimination quickly and anonymously. This is in addition to the ITV-wide Speak and her updates on people priorities and communications at every meeting); into how colleagues have been supported in the move to White City, changes Up channels and (ii) engaging regularly (directly and indirectly) with colleagues through to ways of working with the introduction of the Oracle Fusion transformation, evolve, aligning at all stages in our • Our People and Legal teams have developed a Group policy governance framework to clarify and numerous engagement mechanisms (see page 94 to 95 for details regarding as well as the platform across the Newsrooms. The Chief Executive’s vodcast development with our purpose and values. maintain accountability for owning, improving and approving changes to new and existing policies. the Board’s workforce engagement, including the Workforce Engagement Q&A sessions provide the Board with insight about morale and important We hold regular leader and manager briefings This provides a clear, structured approach to policy development to ensure that policies are Director and Ambassador Network). topics for colleagues, for example ITV’s commitment to diversity and inclusion; to provide updates on our strategic priorities consistent across all business areas, consistently implemented so that they achieve their intended impact of intense external media focus on ITV; and hybrid ways of working. and build understanding of our vision outcome and are aligned with our organisational values. Our People policies are being reviewed in Outcome and purpose. line with this framework and some updates have already been implemented i.e. the new Relationships at Work policy Vodcast viewing figures and feedback are shared with the Chief Executive and used to shape vodcasts and ensure content is what colleagues want to hear. The Board considers culture formally on an • A new cultural data dashboard is being developed following the upgrades to Oracle – Fusion annual basis and through ongoing feedback received, observations from various third parties (e.g. auditors) and its own POLICIES AND PRACTICES interactions with management and their teams during the year, and is able to satisfy How the Board monitors culture Cultural insight gained OUR ITV VALUES KEY HIGHLIGHTS itself that the policies, practices and Regular Board updates and relevant Committee updates on a broad range of A broad understanding of practices and behaviours and how these align behaviours within the Group are aligned with Our ITV values underpin the culture at ITV risk and business integrity matters, including fraud, compliance, bribery, with the purpose, values and strategy of the Group, including an ITV’s purpose (including its Social Purpose), and these are embedded through our 92% 7.7% corruption and modern slavery, and standard supplier protocols and understanding of the approach to supply chain partners and the culture vision, values and strategy. Through the procedures. This is done through review of internal audit reports, Speaking Up of risk ownership in the business. Code of Conduct: Completion rate of Resignation Index data, compliance questionnaires, compliance reports, risk deep dives, Board’s discussion of relevant topics, as well incident reports, policies and training. as the Chief Executive’s focus on people and Creativity Code of Ethics and (down from 9.26% culture in her Board reports, culture is Conduct annual in 2022) Outcome From everyone, for everyone, every day training considered, whether implicitly or explicitly, (up from 89% The Board and its Committees provide appropriate scrutiny and challenge of management and receive assurance over ITV’s approaches to managing risk at each Board meeting. Collaboration in 2022) and business integrity matters. Working together at pace How the Board monitors culture Cultural insight gained We continually look for opportunities to enhance ITV’s approach to consider culture. Inclusion 78% 24 As part of the Board’s culture assessment, reviews of ITV’s values as set out How the Code of Ethics and Conduct promotes the highest standards The Phillip Schofield KC Review concluded Respecting and embracing differences in ITV’s Code of Ethics and Conduct. of ethical business underpinning ITV’s values and corporate culture. that ITV has an effective Disciplinary and of employees Ambassador Grievance procedure which works well in through the ITV Rise meetings during Outcome Integrity & judgement programme have 2023 practice and applied appropriately in most If something doesn’t feel right, speak up stayed on at ITV and (up from 22 The Board was satisfied that ITV’s Code of Ethics and Conduct embodies ITV’s values and culture and will continue to review this code annually to ensure incidents. The review also found that senior had a job title in 2022) it remains aligned to ITV’s purpose (including its Social Purpose), vision, values and strategy and that there is appropriate compliance across the Group. management are wedded to the importance change (promotion) How the Board monitors culture Cultural insight gained of an open culture and has given ITV helpful direction as to how we can improve further. In Completion of mandatory training modules by all Board members on the A deeper understanding of how ITV’s values and standards are response, ITV has created a small working THE ITV WAY 75% 66% Code of Ethics and Conduct, DE&I, Competition Law, Respecting each other communicated and how colleagues are kept safe and secure and act group to review and implement the at work, Fire Safety, Anti-Bribery & Corruption, Data Privacy & Protection, in a compliant way. recommendations. The ITV Way encapsulates the values that feel like they think they have Cyber Security, Economic Crime (money laundering, tax evasion, sanctions), underpin the culture at ITV: belong at ITV access to the learning and Climate Action. Subsequent review of the understanding and embedding and development of the Code of Ethics and Conduct and related policies and standards Make it Brilliant opportunities through this training. We entertain and they need to do Creativity for everyone their job well Outcome connect with millions Make it New All members of the Board will continue to undertake training on an annual basis, to ensure their understanding of how colleagues are kept safe and secure and of people globally, act in a compliant way remains current. Openness to change, with no barriers re ecting and shaping Make it Together culture with brilliant Collaborating and embracing differences content and creativity.
96 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 97 G VALUES IN ACTION – UNDERSTANDING AND MONITORING OUR CULTURE O VE R NAN The table below sets out the framework of policies and practices which underpin our culture and explains key ways in which the Board and/or Continuing to build and promote a culture of openness and integrity, C Committees monitor and gain insight to ITV’s culture. E with inclusion, diversity and equity at the heart are critical to our success as well as supporting long-term value for our stakeholders. ENGAGEMENT AND FEEDBACK CHANNELS How the Board monitors culture Cultural insight gained Review assessments of the Company’s culture through the 2023 line Understanding strengths and opportunities in ITV’s culture, and that ITV’s manager effectiveness survey, bi-annual engagement and culture survey, values and stated purpose authentically reflect its culture and behaviours. The Board recognises that ITV’s culture is a measurements of organisational culture benchmarked against peers, and key enabler of ITV’s digital transformation, Over the last year we have focused on specific areas: how ITV’s values link to its purpose and behaviour. and therefore understands the importance • The Board received reports on identified cultural initiatives; the conclusions of the Engagement of monitoring and fostering it. Aligning our and Culture survey benchmarks; and updates on the actions arising from these surveys Outcome values and purpose with our strategy is • Ongoing engagement with the international offices demonstrates the alignment with the overall The Board continues to monitor insights gained from the Engagement and Culture survey conducted in 2023. Through updates from the Chief Executive critical to our success. Our business model ITV culture and values (2023 Full Engagement and Culture survey, ongoing Mandatory training, the Board received assurance that ITV’s culture is aligned to its purpose and values, while recognising the cultural evolution required to deliver strategy as ITV is regularly reviewed by the Board to ensure International Ambassadors and Inclusion activity)becomes increasingly digital. The Board, through the Audit and Risk Committee, gets feedback from external and internal auditors on culture and alignment to it continues to deliver our strategy and is • All freelancers complete our Code of Ethics and Conduct mandatory training module, giving them purpose and values across the organisation, as observed whilst undertaking audits and engaging with management. aligned with our purpose. an understanding of the expectations as they relate to our ITV values and culture. We also undertook an Engagement and Culture survey with our freelancer population in Autumn 2023 How the Board monitors cultureCultural insight gained To allow ITV to deliver on our strategic • Continued use of the anti-bullying, harassment and discrimination app called ‘Call It!’ across our Interactions with and feedback from Board members through: (i) the Chief A better understanding of day-to-day operations, the practical execution of priorities and become a truly digitally-led productions, enabling both freelancers and ITV employees to report incidents of bullying, Executive (including access to the regular Chief Executive’s vodcast and Q&A strategy and the cultural context in which colleagues work. Further insight business, our culture needs to continue to harassment and discrimination quickly and anonymously. This is in addition to the ITV-wide Speak and her updates on people priorities and communications at every meeting); into how colleagues have been supported in the move to White City, changes Up channels and (ii) engaging regularly (directly and indirectly) with colleagues through to ways of working with the introduction of the Oracle Fusion transformation, evolve, aligning at all stages in our • Our People and Legal teams have developed a Group policy governance framework to clarify and numerous engagement mechanisms (see page 94 to 95 for details regarding as well as the platform across the Newsrooms. The Chief Executive’s vodcast development with our purpose and values. maintain accountability for owning, improving and approving changes to new and existing policies. the Board’s workforce engagement, including the Workforce Engagement Q&A sessions provide the Board with insight about morale and important We hold regular leader and manager briefings This provides a clear, structured approach to policy development to ensure that policies are Director and Ambassador Network).topics for colleagues, for example ITV’s commitment to diversity and inclusion; to provide updates on our strategic priorities consistent across all business areas, consistently implemented so that they achieve their intended impact of intense external media focus on ITV; and hybrid ways of working. and build understanding of our vision outcome and are aligned with our organisational values. Our People policies are being reviewed in Outcome and purpose. line with this framework and some updates have already been implemented i.e. the new Relationships at Work policy Vodcast viewing figures and feedback are shared with the Chief Executive and used to shape vodcasts and ensure content is what colleagues want to hear. The Board considers culture formally on an • A new cultural data dashboard is being developed following the upgrades to Oracle – Fusion annual basis and through ongoing feedback received, observations from various third parties (e.g. auditors) and its own POLICIES AND PRACTICES interactions with management and their teams during the year, and is able to satisfy How the Board monitors culture Cultural insight gained OUR ITV VALUESKEY HIGHLIGHTS itself that the policies, practices and Regular Board updates and relevant Committee updates on a broad range of A broad understanding of practices and behaviours and how these align behaviours within the Group are aligned with Our ITV values underpin the culture at ITV risk and business integrity matters, including fraud, compliance, bribery, with the purpose, values and strategy of the Group, including an ITV’s purpose (including its Social Purpose), and these are embedded through our 92% 7.7% corruption and modern slavery, and standard supplier protocols and understanding of the approach to supply chain partners and the culture vision, values and strategy. Through the procedures. This is done through review of internal audit reports, Speaking Up of risk ownership in the business. Code of Conduct:Completion rate of Resignation Indexdata, compliance questionnaires, compliance reports, risk deep dives, Board’s discussion of relevant topics, as well incident reports, policies and training. as the Chief Executive’s focus on people and CreativityCode of Ethics and (down from 9.26% culture in her Board reports, culture is Conduct annual in 2022)Outcome From everyone, for everyone, every daytraining considered, whether implicitly or explicitly, (up from 89% The Board and its Committees provide appropriate scrutiny and challenge of management and receive assurance over ITV’s approaches to managing risk at each Board meeting. Collaborationin 2022)and business integrity matters. Working together at paceHow the Board monitors culture Cultural insight gained We continually look for opportunities to enhance ITV’s approach to consider culture. Inclusion78% 24 As part of the Board’s culture assessment, reviews of ITV’s values as set out How the Code of Ethics and Conduct promotes the highest standards The Phillip Schofield KC Review concluded Respecting and embracing differencesin ITV’s Code of Ethics and Conduct.of ethical business underpinning ITV’s values and corporate culture. that ITV has an effective Disciplinary and of employees Ambassador Grievance procedure which works well in through the ITV Rise meetings during Outcome Integrity & judgement programme have 2023 practice and applied appropriately in most If something doesn’t feel right, speak up stayed on at ITV and (up from 22 The Board was satisfied that ITV’s Code of Ethics and Conduct embodies ITV’s values and culture and will continue to review this code annually to ensure incidents. The review also found that senior had a job title in 2022)it remains aligned to ITV’s purpose (including its Social Purpose), vision, values and strategy and that there is appropriate compliance across the Group. management are wedded to the importance change (promotion)How the Board monitors culture Cultural insight gained of an open culture and has given ITV helpful direction as to how we can improve further. In Completion of mandatory training modules by all Board members on the A deeper understanding of how ITV’s values and standards are response, ITV has created a small working THE ITV WAY75% 66% Code of Ethics and Conduct, DE&I, Competition Law, Respecting each other communicated and how colleagues are kept safe and secure and act group to review and implement the at work, Fire Safety, Anti-Bribery & Corruption, Data Privacy & Protection, in a compliant way. recommendations.The ITV Way encapsulates the values that feel like they think they have Cyber Security, Economic Crime (money laundering, tax evasion, sanctions), underpin the culture at ITV:belong at ITVaccess to the learning and Climate Action. Subsequent review of the understanding and embedding and development of the Code of Ethics and Conduct and related policies and standards Make it Brilliantopportunities through this training. We entertain and they need to do Creativity for everyone their job well Outcome connect with millions Make it NewAll members of the Board will continue to undertake training on an annual basis, to ensure their understanding of how colleagues are kept safe and secure and of people globally, act in a compliant way remains current. Openness to change, with no barriers re ecting and shaping Make it Together culture with brilliant Collaborating and embracing differences content and creativity.
98 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 99 VALUES IN ACTION – UNDERSTANDING AND MONITORING OUR CULTURE CONTINUED G O VE R NAN C RECRUITMENT AND RETENTION SOCIAL PURPOSE, DIVERSITY EQUITY AND INCLUSION E How the Board monitors culture Cultural insight gained How the Board monitors culture Cultural insight gained Annual review session by the Nominations Committee of senior management As well as a review of succession plans, this session also provided the Board Annual review of ITV’s Social Purpose strategy, performance and plans. How ITV’s Social Purpose campaigns influence culture internally as well talent and succession planning led by the Chief Executive. with opportunity to understand how we had delivered the 2023 ITV people as externally. priorities, with focus on our key people processes, as well as how we are managing the people challenges and risks as we lean into our digital Outcome transformation and phase two of the More Than TV strategy. The Board will continue to monitor key priorities and initiatives in pursuit of ITV’s Social Purpose strategy. Outcome How the Board monitors culture Cultural insight gained The session was led by the Chief Executive, with a robust conversation on senior level succession planning as well as enabling the Nominations Committee Annual review of Diversity Equity and Inclusion. Regular updates on progress The impact the Diversity Acceleration Plan is having on colleague sentiment to ask questions and challenge the strength of the succession plans. Additionally, the pre-read provided the Committee with details on the steps taken on ITV’s Diversity Acceleration Plan and feedback from ITV’s inclusion and ITV’s reputation as having an inclusive culture, and the latter’s appeal to to deliver and execute on the 2023 people plan across our key people processes, including: selection and hiring of key talent; performance management; networks. Regular monitoring by Nominations Committee of progress against future employees. learning & development; and engagement. The paper also outlined any areas of risk as it relates to our people, and how this is being mitigated. diversity targets, with diversity on the Board agenda at least annually. How ITV’s culture is enabling progress to be accelerated through Group-wide Chief Executive attendance at ITV’s Cultural Advisory Council, comprising a diversity and inclusion initiatives. group of independent external advisers from a range of different industries and specialisms who advise, challenge and counsel ITV on its diversity, Equity SAFETY, WELLBEING AND MENTAL HEALTH and inclusion activities. How the Board monitors culture Cultural insight gained Review by Audit and Risk Committee of the improvements to the Group’s risk Insight into the safety behaviours across all business areas (international and Outcome management processes and systems that drive health and safety behaviours UK), including the culture of ownership of risk. The Nominations Committee will continue to monitor progress being made to meet diversity targets to ensure recruitment and succession initiatives support in the areas of operational security, business continuity and duty of care. This ITV’s Diversity, Equity and Inclusion strategy. See pages 37 to 39 for outcomes related to Diversity, Equity and Inclusion. includes the systems in place for our stakeholders to identify and raise health and safety issues, including duty of care and Speaking Up concerns. Outcome Through regular Board updates from the Chief Executive and from the Audit and Risk Committee, the Board will continue to ensure the right processes and SPEAKING UP procedures are in place for the safety of our colleagues, suppliers, programme participants and viewers, and that ITV continues to uphold high standards of duty of care. How the Board monitors culture Cultural insight gained How the Board monitors culture Cultural insight gained The Board receives data on Speaking Up reports received via the independent A perspective on the nature of colleague concerns and trends in the Safecall facility and other relevant channels available across ITV, at every behaviours of colleagues generally. Audit and Risk Committee review of duty of care updates from the Duty of How the mental wellbeing processes and support for colleagues and Board meeting. In addition, the Audit and Risk Committee reviews and Insight into how concerns are handled by ITV and indications of how the Care Operating Board (also reported to the Board), on the processes and stakeholders continue to enhance ITV’s culture where social inclusion is monitors the effectiveness of the Speaking Up policy, processes and alternative routes for raising all risk concerns are being utilised. standards in place for colleague and other relevant stakeholder’s wellbeing. embraced and mental health issues are understood, accepted and framework annually and receives Speaking Up reports at least twice a year Feedback from the Ambassador and Network groups, and Mental Health safeguarded. providing analysis of complaints received, those substantiated, process for Advisory Group (external experts), included guidance and support on ITV’s investigating, themes and actions taken. Feedback is given to the Board. approach to mental health and wellbeing with colleagues, production teams, Review conducted by the internal audit function in 2023 of the effectiveness participants in our programmes and viewers. of the Speaking Up process. Outcome See page 113 for the Speaking Up framework’s implementation in 2023. The Board, through the Chief Executive and Duty of Care Operating Board continues to regularly monitor colleague wellbeing (including mental health) and the efficacy of initiatives on culture. The Audit and Risk Committee Chair attends all Duty of Care Operating Board meetings, on behalf of the Board, providing Board oversight, challenge and support and enabling direct feedback to the Board. In 2023 there was an internal audit on Safeguarding and Outcome Duty of Care controls with a focus on compliance with the provisions under Ofcom’s Broadcasting Code. The review highlighted examples of good practice The Audit and Risk Committee will continue to monitor the effectiveness of the Speaking Up framework, and feed back to the Board on how this has supported in the design and implementation of the controls, but made some key recommendations around operational effectiveness which have been addressed. the openness of ITV’s culture. REMUNERATION How the Board monitors culture Cultural insight gained Review by the Remuneration Committee of the wider employee reward Insight into the role that remuneration and setting performance goals, has on framework, including gender, ethnicity, disability and LGBTQ+ pay gaps, CEO promoting the right behaviours and the extent to which incentives and pay ratios and how our approach to Directors’ remuneration aligns with our rewards are aligned with culture. approach for the overall workforce. Integration of ESG measures into incentive targets. Live Q&A and remuneration discussion for Ambassadors hosted by the Remuneration Committee Chair, which was reported back to the Committee. Outcome The Remuneration Committee will continue to report to the Board on colleague sentiment in relation to retention and reward initiatives.
98 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 99 VALUES IN ACTION – UNDERSTANDING AND MONITORING OUR CULTURE CONTINUED G O VE R NAN C RECRUITMENT AND RETENTIONSOCIAL PURPOSE, DIVERSITY EQUITY AND INCLUSION E How the Board monitors cultureCultural insight gainedHow the Board monitors culture Cultural insight gained Annual review session by the Nominations Committee of senior management As well as a review of succession plans, this session also provided the Board Annual review of ITV’s Social Purpose strategy, performance and plans. How ITV’s Social Purpose campaigns influence culture internally as well talent and succession planning led by the Chief Executive.with opportunity to understand how we had delivered the 2023 ITV people as externally. priorities, with focus on our key people processes, as well as how we are managing the people challenges and risks as we lean into our digital Outcome transformation and phase two of the More Than TV strategy.The Board will continue to monitor key priorities and initiatives in pursuit of ITV’s Social Purpose strategy. Outcome How the Board monitors culture Cultural insight gained The session was led by the Chief Executive, with a robust conversation on senior level succession planning as well as enabling the Nominations Committee Annual review of Diversity Equity and Inclusion. Regular updates on progress The impact the Diversity Acceleration Plan is having on colleague sentiment to ask questions and challenge the strength of the succession plans. Additionally, the pre-read provided the Committee with details on the steps taken on ITV’s Diversity Acceleration Plan and feedback from ITV’s inclusion and ITV’s reputation as having an inclusive culture, and the latter’s appeal to to deliver and execute on the 2023 people plan across our key people processes, including: selection and hiring of key talent; performance management; networks. Regular monitoring by Nominations Committee of progress against future employees. learning & development; and engagement. The paper also outlined any areas of risk as it relates to our people, and how this is being mitigated.diversity targets, with diversity on the Board agenda at least annually. How ITV’s culture is enabling progress to be accelerated through Group-wide Chief Executive attendance at ITV’s Cultural Advisory Council, comprising a diversity and inclusion initiatives. group of independent external advisers from a range of different industries and specialisms who advise, challenge and counsel ITV on its diversity, Equity SAFETY, WELLBEING AND MENTAL HEALTHand inclusion activities. How the Board monitors cultureCultural insight gained Review by Audit and Risk Committee of the improvements to the Group’s risk Insight into the safety behaviours across all business areas (international and Outcome management processes and systems that drive health and safety behaviours UK), including the culture of ownership of risk.The Nominations Committee will continue to monitor progress being made to meet diversity targets to ensure recruitment and succession initiatives support in the areas of operational security, business continuity and duty of care. This ITV’s Diversity, Equity and Inclusion strategy. See pages 37 to 39 for outcomes related to Diversity, Equity and Inclusion. includes the systems in place for our stakeholders to identify and raise health and safety issues, including duty of care and Speaking Up concerns. Outcome Through regular Board updates from the Chief Executive and from the Audit and Risk Committee, the Board will continue to ensure the right processes and SPEAKING UP procedures are in place for the safety of our colleagues, suppliers, programme participants and viewers, and that ITV continues to uphold high standards of duty of care. How the Board monitors culture Cultural insight gained How the Board monitors cultureCultural insight gainedThe Board receives data on Speaking Up reports received via the independent A perspective on the nature of colleague concerns and trends in the Safecall facility and other relevant channels available across ITV, at every behaviours of colleagues generally. Audit and Risk Committee review of duty of care updates from the Duty of How the mental wellbeing processes and support for colleagues and Board meeting. In addition, the Audit and Risk Committee reviews and Insight into how concerns are handled by ITV and indications of how the Care Operating Board (also reported to the Board), on the processes and stakeholders continue to enhance ITV’s culture where social inclusion is monitors the effectiveness of the Speaking Up policy, processes and alternative routes for raising all risk concerns are being utilised. standards in place for colleague and other relevant stakeholder’s wellbeing. embraced and mental health issues are understood, accepted and framework annually and receives Speaking Up reports at least twice a year Feedback from the Ambassador and Network groups, and Mental Health safeguarded.providing analysis of complaints received, those substantiated, process for Advisory Group (external experts), included guidance and support on ITV’s investigating, themes and actions taken. Feedback is given to the Board. approach to mental health and wellbeing with colleagues, production teams, Review conducted by the internal audit function in 2023 of the effectiveness participants in our programmes and viewers.of the Speaking Up process. Outcome See page 113 for the Speaking Up framework’s implementation in 2023. The Board, through the Chief Executive and Duty of Care Operating Board continues to regularly monitor colleague wellbeing (including mental health) and the efficacy of initiatives on culture. The Audit and Risk Committee Chair attends all Duty of Care Operating Board meetings, on behalf of the Board, providing Board oversight, challenge and support and enabling direct feedback to the Board. In 2023 there was an internal audit on Safeguarding and Outcome Duty of Care controls with a focus on compliance with the provisions under Ofcom’s Broadcasting Code. The review highlighted examples of good practice The Audit and Risk Committee will continue to monitor the effectiveness of the Speaking Up framework, and feed back to the Board on how this has supported in the design and implementation of the controls, but made some key recommendations around operational effectiveness which have been addressed.the openness of ITV’s culture. REMUNERATION How the Board monitors culture Cultural insight gained Review by the Remuneration Committee of the wider employee reward Insight into the role that remuneration and setting performance goals, has on framework, including gender, ethnicity, disability and LGBTQ+ pay gaps, CEO promoting the right behaviours and the extent to which incentives and pay ratios and how our approach to Directors’ remuneration aligns with our rewards are aligned with culture. approach for the overall workforce. Integration of ESG measures into incentive targets. Live Q&A and remuneration discussion for Ambassadors hosted by the Remuneration Committee Chair, which was reported back to the Committee. Outcome The Remuneration Committee will continue to report to the Board on colleague sentiment in relation to retention and reward initiatives.
100 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 101 G BOARD EVALUATION O VE R NAN An evaluation of the Board and its Commi ees is carried C 2023 INTERNAL EVALUATION OUTCOMES AND ACTIONS E out annually and externally facilitated every three years, Areas of focus identified: Our key follow up actions: with an internal review conducted this year. Succession planning for the Executive A key focus for the Nominations Committee in The General Counsel and Company Secretary is leadership team. 2024, with recommendations on next steps to be responsible for driving the actions forward. They presented to the Board. compiled an action plan listing specific actions to address the findings of the evaluation and further A reweighting of agendas to include more time for Agendas and board papers reviewed to ensure enhance the Board’s effectiveness. The Board BOARD EVALUATION CYCLE strategic discussion. there is a clear link to strategy and KPIs for all will monitor the implementation of the follow-up matters tabled. actions and review progress against the Greater engagement and interaction with Continue having members of the Executive recommendations. management, and opportunities to meet with Leadership Team attend and present at Board other layers of the organisation. More engagement meetings. Plan opportunities for more director Year 1 (2023) Year 2 (2024) Year 3 (2025) with material stakeholders and partners. engagement with the wider management Group. Consider more trips away from London for Year 1 (2023) internal review focused on Year 1 progress reviewed internally, and Independent, externally facilitated the Board. year 1 issues raised and any new issues any areas of focus identified ahead of the review of: arising. The process for internal review is external evaluation in 2025. • Performance against targets set for 2024 More time reserved for Non-executive Director Work to set up future Board sessions with material determined on a year‑on‑year basis. • An external evaluation carried out by an only sessions. stakeholders and partners. NED-only sessions advisory firm build into Board meetings. • Areas of focus identified for 2026 PROGRESS AGAINST 2022 ACTIONS Action Outcome In 2023, the Board undertook an internally facilitated evaluation using bespoke online questionnaires. A description of the process followed for To increase focus on and gain deeper insight into The Chair held one-to-one sessions with the Non-executive Directors to establish the degree of this year’s review is detailed below. the development of strategy and related topics alignment and identify any gaps in current strategy/KPIs/narrative. identified in the Board Evaluation. The Chair fed the findings back to the Management team and then the Board with the recommendations for review. This included spending more time in Board meetings discussing strategy, focusing on STAGES 1–5 specific issues for deeper discussion and how to manage reporting of progress (e.g. in Board packs). A programme of deep dives into value drivers and strategic KPIs was delivered across the year. As a result the Directors were in agreement that they had correctly identified the main strategic challenges and now had good oversight of delivery. Stage 1 • The Chair’s relationships and communications Stage 4 with Board members; chairing and managing of To consider the future demands on the business The Chair considered the composition of the Board. Two new Non-executive Directors were appointed Evaluation process planning Board meetings; and relationships with the Consider results and agree actions and how to ensure that the Board is equipped to in the year to provide content and finance expertise. Company’s shareholders support the business and the Management team. A detailed review of succession planning for the Management Board and its direct reports was JULY – SEPTEMBER 2023 FEBRUARY 2024 The General Counsel and Company Secretary • Each individual’s preparation for and attendance The Board discussed the findings and endorsed the conducted with the Chief Executive at the scheduled annual session at the November Nominations undertook a detailed review of the externally‑run at meetings; ability to commit sufficient time; proposed action plan at its meeting in February Committee meeting (which was held after the evaluation questionnaires had been completed 2022 Board evaluation in order to develop the relationships with fellow Board members; the 2024. The findings of the evaluation exercise were by Directors). approach for 2023, incorporating extent to which knowledge and experience are fully considered when making recommendations in recommendations from the 2018 Code, Parker drawn upon; and overall contribution respect of the appointment and reappointment of Review and FRC Guidance on Board Effectiveness. Stage 3 individual Directors, and included an assessment A focused questionnaire was designed to gather of their independence, time commitment and individual Directors’ perceptions of the valuation and reporting individual performance. The respective 2024 AGM E effectiveness of the Board and its operations. DECEMBER 2023 Resolutions were considered and agreed by the Board. The proposed actions arising from the Stage 2 The General Counsel and Company Secretary evaluation were thoroughly discussed and agreed Questionnaire responses and one-to-one collated the individual responses, including for implementation and monitoring. analysis of themes and proposed actions. meetings A detailed report, setting out the findings of Stage 5 OCTOBER – NOVEMBER 2023 the evaluation, was provided to the Chair for consideration with the resulting report being Monitor progress The questionnaires were issued to Directors. tabled to the Board for further consideration The General Counsel and Company Secretary, FROM FEBRUARY 2024 ONWARDS and comment in December 2023. The Board will continue to oversee the progress regular attendees of the Board and Committee meetings and some external advisers also The evaluation found that the Board and its made in relation to the agreed actions to ensure completed certain sections of the questionnaires Committees continue to operate to a high their timely completion. to allow their views to be taken into account. standard. The Directors work effectively together The Nominations Committee will also continue to and value each other’s contributions at Board and play a key role in monitoring the actions relating to Directors were asked to comment on a range of Committee meetings. issues including: Board succession, composition, recruitment and • Board composition and diversity; dynamics and The Senior Independent Director led a separate induction. expertise; time management; Board support; evaluation of the Chair with the Non‑executive stakeholders and workforce engagement; Directors to appraise the Chair’s performance. strategic oversight; risk management and internal It was concluded that Andrew Cosslett’s controls; succession planning; and priorities for performance and contribution were strong and change that he demonstrates effective leadership. • Committee and Committee Chair effectiveness; annual plans and agendas; Committee composition; and time management
100 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 101 G BOARD EVALUATION O VE R NAN An evaluation of the Board and its Commi ees is carried C 2023 INTERNAL EVALUATION OUTCOMES AND ACTIONS E out annually and externally facilitated every three years, Areas of focus identified: Our key follow up actions: with an internal review conducted this year.Succession planning for the Executive A key focus for the Nominations Committee in The General Counsel and Company Secretary is leadership team. 2024, with recommendations on next steps to be responsible for driving the actions forward. They presented to the Board. compiled an action plan listing specific actions to address the findings of the evaluation and further A reweighting of agendas to include more time for Agendas and board papers reviewed to ensure enhance the Board’s effectiveness. The Board BOARD EVALUATION CYCLEstrategic discussion. there is a clear link to strategy and KPIs for all will monitor the implementation of the follow-up matters tabled. actions and review progress against the Greater engagement and interaction with Continue having members of the Executive recommendations. management, and opportunities to meet with Leadership Team attend and present at Board other layers of the organisation. More engagement meetings. Plan opportunities for more director Year 1 (2023) Year 2 (2024) Year 3 (2025)with material stakeholders and partners.engagement with the wider management Group. Consider more trips away from London for Year 1 (2023) internal review focused on Year 1 progress reviewed internally, and Independent, externally facilitated the Board. year 1 issues raised and any new issues any areas of focus identified ahead of the review of: arising. The process for internal review is external evaluation in 2025.• Performance against targets set for 2024More time reserved for Non-executive Director Work to set up future Board sessions with material determined on a year‑on‑year basis.• An external evaluation carried out by an only sessions.stakeholders and partners. NED-only sessions advisory firm build into Board meetings. • Areas of focus identified for 2026 PROGRESS AGAINST 2022 ACTIONS Action Outcome In 2023, the Board undertook an internally facilitated evaluation using bespoke online questionnaires. A description of the process followed for To increase focus on and gain deeper insight into The Chair held one-to-one sessions with the Non-executive Directors to establish the degree of this year’s review is detailed below.the development of strategy and related topics alignment and identify any gaps in current strategy/KPIs/narrative. identified in the Board Evaluation. The Chair fed the findings back to the Management team and then the Board with the recommendations for review. This included spending more time in Board meetings discussing strategy, focusing on STAGES 1–5 specific issues for deeper discussion and how to manage reporting of progress (e.g. in Board packs). A programme of deep dives into value drivers and strategic KPIs was delivered across the year. As a result the Directors were in agreement that they had correctly identified the main strategic challenges and now had good oversight of delivery. Stage 1• The Chair’s relationships and communications Stage 4 with Board members; chairing and managing of To consider the future demands on the business The Chair considered the composition of the Board. Two new Non-executive Directors were appointed Evaluation process planningBoard meetings; and relationships with the Consider results and agree actionsand how to ensure that the Board is equipped to in the year to provide content and finance expertise. Company’s shareholders support the business and the Management team. A detailed review of succession planning for the Management Board and its direct reports was JULY – SEPTEMBER 2023FEBRUARY 2024 The General Counsel and Company Secretary • Each individual’s preparation for and attendance The Board discussed the findings and endorsed the conducted with the Chief Executive at the scheduled annual session at the November Nominations undertook a detailed review of the externally‑run at meetings; ability to commit sufficient time; proposed action plan at its meeting in February Committee meeting (which was held after the evaluation questionnaires had been completed 2022 Board evaluation in order to develop the relationships with fellow Board members; the 2024. The findings of the evaluation exercise were by Directors). approach for 2023, incorporating extent to which knowledge and experience are fully considered when making recommendations in recommendations from the 2018 Code, Parker drawn upon; and overall contribution respect of the appointment and reappointment of Review and FRC Guidance on Board Effectiveness. Stage 3individual Directors, and included an assessment A focused questionnaire was designed to gather of their independence, time commitment and individual Directors’ perceptions of the valuation and reportingindividual performance. The respective 2024 AGM E effectiveness of the Board and its operations.DECEMBER 2023Resolutions were considered and agreed by the Board. The proposed actions arising from the Stage 2The General Counsel and Company Secretary evaluation were thoroughly discussed and agreed Questionnaire responses and one-to-one collated the individual responses, including for implementation and monitoring. analysis of themes and proposed actions. meetingsA detailed report, setting out the findings of Stage 5 OCTOBER – NOVEMBER 2023the evaluation, was provided to the Chair for consideration with the resulting report being Monitor progress The questionnaires were issued to Directors. tabled to the Board for further consideration The General Counsel and Company Secretary, FROM FEBRUARY 2024 ONWARDS and comment in December 2023. The Board will continue to oversee the progress regular attendees of the Board and Committee meetings and some external advisers also The evaluation found that the Board and its made in relation to the agreed actions to ensure completed certain sections of the questionnaires Committees continue to operate to a high their timely completion. to allow their views to be taken into account.standard. The Directors work effectively together The Nominations Committee will also continue to and value each other’s contributions at Board and play a key role in monitoring the actions relating to Directors were asked to comment on a range of Committee meetings. issues including:Board succession, composition, recruitment and • Board composition and diversity; dynamics and The Senior Independent Director led a separate induction. expertise; time management; Board support; evaluation of the Chair with the Non‑executive stakeholders and workforce engagement; Directors to appraise the Chair’s performance. strategic oversight; risk management and internal It was concluded that Andrew Cosslett’s controls; succession planning; and priorities for performance and contribution were strong and change that he demonstrates effective leadership. • Committee and Committee Chair effectiveness; annual plans and agendas; Committee composition; and time management
102 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 103 G DIRECTORS’ ONGOING DEVELOPMENT AND TIME COMMITMENTS NOMINATIONS COMMITTEE REPORT O VE R NAN In addition, their inductions covered deep Ongoing training and development Tailored induction for new C The ongoing development of Board members Directors dives relevant to their new roles at ITV, E is crucial to ensure that they remain their background and experience. In this report The General Counsel and Company well‑informed of changes to the business Secretary assists the Chair in designing and Both Directors also requested and received environment in which ITV operates (including facilitating an induction programme for new The purpose of this report is to highlight the role on legal, regulatory, compliance and additional follow‑up sessions on areas that the Nominations Committee plays in ensuring Directors and their ongoing training. where they wanted to further their governance matters), and effective in that the Board has the appropriate balance of providing challenge on a wide range of topics. knowledge, or felt they could support skills, experience, knowledge and background to Each newly appointed Director receives a management with their experience. The Chair, with the support of the General comprehensive induction programme provide the breadth, depth, diversity of thinking Counsel and Company Secretary, keeps the designed to give them a thorough overview and perspective needed to effectively deliver training and development needs and understanding of the business covering Time commitments long‑term sustainable success. of Directors under review. the Company’s core purpose and values, The Directors have demonstrated a strong strategy, key business areas and operations, commitment to their roles on our Board and ANDREW COSSLETT During the year, all Directors were provided Committees with full attendance at Board CHAIR and corporate governance structure. This is with briefings, presentations, deep dives, tailored to take into account a Director’s and Committee meetings in 2023, see page teach‑ins and guest speakers on a range of previous experience and their 82. The Directors have all given careful subjects, including a deep dive on the responsibilities. Directors are also briefed consideration to their external time proposed governance and audit reform on their roles and responsibilities as commitments to ensure that they are able proposals. The Directors’ development and directors of a listed company. For to devote an appropriate amount of time Who is on the Committee training programme covered topics identified Non‑executive Directors, specific to their roles at ITV. For each Director, the in the 2022 Board evaluation, as areas on Committee responsibilities relevant to Board considers that the external time The Committee is composed The current members are: Full details of attendance at Committee meetings can which Directors felt they could benefit from their Committee memberships are covered, commitments that they are required to entirely of Non‑executive • Andrew Cosslett (Chair) • Graham Cooke be found on the table on page 82 additional training or support. The to enable them to function effectively as devote do not compromise their Directors (NEDs). • Salman Amin • Margaret Ewing Detailed biographies can be found on pages 77 and 78 programme included: quickly as possible. commitment to their roles (on the ITV • Edward Bonham Carter • Sharmila Nebhrajani • Attending deep dive sessions on the value Board, Committees and otherwise). The drivers for both the Studios and M&E During 2023, there were two new Nominations Committee reviews, on an divisions and the KPIs underpinning them appointments to the Board, Marjorie Kaplan ongoing basis, Directors’ time commitments and Dawn Allen. For both Directors the against the recommended guidance from Our role • Attending a session on the PSB licence induction programme included the investor bodies and ITV’s top shareholders, renewal presented by Matthew Horsman to anticipate any perception of ‘over Following each meeting, the The main role of the Committee is to: from Mediatique following elements: Committee communicates its • Regularly review Board composition and the balance of skills, knowledge, experience and diversity boarding’ at the forthcoming AGM. The main discussion points and • Attending a session on future media • One‑to‑one meetings with both Committee was able to confirm that it was findings to the Board. • Determine when appointments and retirements are appropriate, and lead on any Director searches landscape presented by BCG Executive and each of the Non‑executive fully satisfied with the amount of time each • Give full consideration to succession planning and oversee the development of a diverse pipeline for succession, Directors The Committee’s terms of at Board and senior management levels • Completing the refreshed mandatory Director devoted to the business. reference can be accessed on training for colleagues (on ITV’s Code of • Briefing from the Chief Executive on the our website. • Set measurable objectives on Board diversity and monitor progress on these objectives, as well as review Group’s strategy, and from the Chief During 2023, the Board considered changes Company‑wide targets Ethics and Conduct, Cyber Security, Data www.itvplc.com/investors/ Protection and Privacy, Climate Action and Executive and Group CFO and COO on in the time commitments of the Directors. governance Diversity, Equity and Inclusion) operational matters There were no role changes or new • Briefing from the Group CFO and COO on appointments that needed the Board’s Directors are encouraged to ask for any financial matters additional consideration. support they need and are reminded that • Briefings from the General Counsel and Meetings in 2023 there is always an open line to management Company Secretary and the Director of on any topic. Non‑executive Directors also Investor Relations on legal and In addition to Committee January April November have access to relevant professional members, the Chief • Identification of need for a NED • Changes to the composition of the • People strategy review governance matters and shareholder Executive, Chief People with content and media expertise Committee and appointment of a (including review of executive technical briefings from the audit firms, relationships, which were followed up by Officer and General Counsel including the Deloitte Academy Director • Review of Board Diversity Policy new workforce engagement succession plans) sessions with the Group’s brokers and and Company Secretary director • Company diversity updates. In addition, each Director may external advisers regularly attended meetings • Director time commitments and obtain independent professional advice at of the Committee. ‘over boarding’ considerations • Identification of a need for a progress update • Briefings from senior executives and • Re‑election of Directors at the NED with finance experience The Committee also held a number the Company’s expense where they judge it managers across our key business areas necessary to discharge their responsibilities. AGM July of ad hoc meetings in relation to the and operations, including Studios, Media • Review of draft • Indicative timeline and process for Non‑executive Director searches & Entertainment, Commercial, Policy and Nominations Committee Report internal board evaluation including discussions on candidate Regulatory Affairs, Investor Relations, in Annual Report • Annual review of terms of specifications, longlists and Diversity and Inclusion, Social Purpose, • Proposed 2023 reference approval of shortlists, and Reward and Remuneration, Committee schedule discussions on the candidates • Annual review of the register following the interview. Communications and Technology of interests • Access to a library of reference materials, • Company diversity including key information on our progress update governance framework, recent financial data and the policies supporting our business practices, including our share dealing policies, conflicts of interest Annual review procedure and gifts and hospitality policy An annual review of the • In 2023, an internally facilitated Board evaluation was undertaken, which included a review of the Committee. The performance of the results are summarised on page 101. Committee is conducted • Overall, the evaluation concluded that the Committee is working effectively and responding appropriately to its each year. terms of reference. • As part of the Committee’s succession planning agenda, the key priorities identified for 2024 were to embed the two new Non‑executive directors and to continue its focus on Executive and Non‑executive succession planning, as well as senior management talent retention and succession.
102 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 103 G DIRECTORS’ ONGOING DEVELOPMENT AND TIME COMMITMENTSNOMINATIONS COMMITTEE REPORT O VE R NAN In addition, their inductions covered deep Ongoing training and developmentTailored induction for new C The ongoing development of Board members Directorsdives relevant to their new roles at ITV, E is crucial to ensure that they remain their background and experience.In this report The General Counsel and Company well‑informed of changes to the business Secretary assists the Chair in designing and Both Directors also requested and received environment in which ITV operates (including facilitating an induction programme for new The purpose of this report is to highlight the role on legal, regulatory, compliance and additional follow‑up sessions on areas that the Nominations Committee plays in ensuring Directors and their ongoing training. where they wanted to further their governance matters), and effective in that the Board has the appropriate balance of providing challenge on a wide range of topics. knowledge, or felt they could support skills, experience, knowledge and background to Each newly appointed Director receives a management with their experience. The Chair, with the support of the General comprehensive induction programme provide the breadth, depth, diversity of thinking Counsel and Company Secretary, keeps the designed to give them a thorough overview and perspective needed to effectively deliver training and development needs and understanding of the business covering Time commitments long‑term sustainable success. of Directors under review.the Company’s core purpose and values, The Directors have demonstrated a strong strategy, key business areas and operations, commitment to their roles on our Board and ANDREW COSSLETT During the year, all Directors were provided Committees with full attendance at Board CHAIR and corporate governance structure. This is with briefings, presentations, deep dives, tailored to take into account a Director’s and Committee meetings in 2023, see page teach‑ins and guest speakers on a range of previous experience and their 82. The Directors have all given careful subjects, including a deep dive on the responsibilities. Directors are also briefed consideration to their external time proposed governance and audit reform on their roles and responsibilities as commitments to ensure that they are able proposals. The Directors’ development and directors of a listed company. For to devote an appropriate amount of time Who is on the Committee training programme covered topics identified Non‑executive Directors, specific to their roles at ITV. For each Director, the in the 2022 Board evaluation, as areas on Committee responsibilities relevant to Board considers that the external time The Committee is composed The current members are: Full details of attendance at Committee meetings can which Directors felt they could benefit from their Committee memberships are covered, commitments that they are required to entirely of Non‑executive • Andrew Cosslett (Chair)• Graham Cooke be found on the table on page 82 additional training or support. The to enable them to function effectively as devote do not compromise their Directors (NEDs). • Salman Amin • Margaret Ewing Detailed biographies can be found on pages 77 and 78 programme included: quickly as possible. commitment to their roles (on the ITV • Edward Bonham Carter • Sharmila Nebhrajani • Attending deep dive sessions on the value Board, Committees and otherwise). The drivers for both the Studios and M&E During 2023, there were two new Nominations Committee reviews, on an divisions and the KPIs underpinning themappointments to the Board, Marjorie Kaplan ongoing basis, Directors’ time commitments and Dawn Allen. For both Directors the against the recommended guidance from Our role • Attending a session on the PSB licence induction programme included the investor bodies and ITV’s top shareholders, renewal presented by Matthew Horsman to anticipate any perception of ‘over Following each meeting, the The main role of the Committee is to: from Mediatiquefollowing elements: Committee communicates its • Regularly review Board composition and the balance of skills, knowledge, experience and diversity boarding’ at the forthcoming AGM. The main discussion points and • Attending a session on future media • One‑to‑one meetings with both Committee was able to confirm that it was findings to the Board.• Determine when appointments and retirements are appropriate, and lead on any Director searches landscape presented by BCG Executive and each of the Non‑executive fully satisfied with the amount of time each • Give full consideration to succession planning and oversee the development of a diverse pipeline for succession, Directors The Committee’s terms of at Board and senior management levels • Completing the refreshed mandatory Director devoted to the business. reference can be accessed on training for colleagues (on ITV’s Code of • Briefing from the Chief Executive on the our website. • Set measurable objectives on Board diversity and monitor progress on these objectives, as well as review Group’s strategy, and from the Chief During 2023, the Board considered changes Company‑wide targets Ethics and Conduct, Cyber Security, Data www.itvplc.com/investors/ Protection and Privacy, Climate Action and Executive and Group CFO and COO on in the time commitments of the Directors. governance Diversity, Equity and Inclusion)operational mattersThere were no role changes or new • Briefing from the Group CFO and COO on appointments that needed the Board’s Directors are encouraged to ask for any financial mattersadditional consideration. support they need and are reminded that • Briefings from the General Counsel and Meetings in 2023 there is always an open line to management Company Secretary and the Director of on any topic. Non‑executive Directors also Investor Relations on legal and In addition to Committee January April November have access to relevant professional members, the Chief • Identification of need for a NED • Changes to the composition of the • People strategy review governance matters and shareholder Executive, Chief People with content and media expertise Committee and appointment of a (including review of executive technical briefings from the audit firms, relationships, which were followed up by Officer and General Counsel including the Deloitte Academy Director • Review of Board Diversity Policy new workforce engagement succession plans) sessions with the Group’s brokers and and Company Secretary director • Company diversity updates. In addition, each Director may external advisersregularly attended meetings • Director time commitments and obtain independent professional advice at of the Committee. ‘over boarding’ considerations • Identification of a need for a progress update • Briefings from senior executives and • Re‑election of Directors at the NED with finance experience The Committee also held a number the Company’s expense where they judge it managers across our key business areas necessary to discharge their responsibilities. AGM July of ad hoc meetings in relation to the and operations, including Studios, Media • Review of draft • Indicative timeline and process for Non‑executive Director searches & Entertainment, Commercial, Policy and Nominations Committee Report internal board evaluation including discussions on candidate Regulatory Affairs, Investor Relations, in Annual Report • Annual review of terms of specifications, longlists and Diversity and Inclusion, Social Purpose, • Proposed 2023 reference approval of shortlists, and Reward and Remuneration, Committee schedule discussions on the candidates • Annual review of the register following the interview. Communications and Technology of interests • Access to a library of reference materials, • Company diversity including key information on our progress update governance framework, recent financial data and the policies supporting our business practices, including our share dealing policies, conflicts of interest Annual review procedure and gifts and hospitality policyAn annual review of the • In 2023, an internally facilitated Board evaluation was undertaken, which included a review of the Committee. The performance of the results are summarised on page 101. Committee is conducted • Overall, the evaluation concluded that the Committee is working effectively and responding appropriately to its each year. terms of reference. • As part of the Committee’s succession planning agenda, the key priorities identified for 2024 were to embed the two new Non‑executive directors and to continue its focus on Executive and Non‑executive succession planning, as well as senior management talent retention and succession.
104 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 105 NOMINATIONS COMMITTEE REPORT CONTINUED G O VE R NAN Board searches Set out below are the objectives of our Maintain at least 30% female Directors on Maintain at least 10% Directors who are Ensure the Non-executive Director search C BOARD DIVERSITY The Committee approved the appointment Board Diversity Policy and our assessment the Board over the short to medium term People of Colour on the Board over the pool is sufficiently wide and covers E of SRI/Mission Bay for the search for a of performance against them. These As at 31 December 2023, the Board had short to medium term candidates who are People of Colour and 45.45% Non‑executive Director with specialised objectives ensure that both appointments 45.45% female representation, including one As at 31 December 2023, the Board had candidates with a wide range of expertise, creative industry skills experience and Lygon and succession planning support the Executive Director and two Committee 18.18% representation of People of Colour skills and backgrounds, and that shortlists female Board representation Group for the search for a Non‑executive development of a diverse pipeline. Chairs. We have therefore exceeded the with two Directors represented on the Board. include at least 50% female candidates In line with Parker Review, the Listing Director with financial expertise. Other than target of 40% of women on the Board set by We therefore also comply with the When conducting a Non-executive Director the provision of search services, neither SRI/ Ensure ITV has a development pipeline of ITV and the FCA Listing Rules, as well as the recommendation of the Parker Review and search, the Committee works closely with Rules and Hampton‑Alexander Review Mission Bay or Lygon Group have any other high calibre senior executive candidates Hampton-Alexander target of 33%. Whilst the FCA Listing Rule requirement to have at the executive search agency to compile a recommendations connection with the Company or any and encourage senior executives to obtain the Board recognises that an effective Board least one director of colour on the Board. long and shortlist of candidates made up of individual director. SRI/Mission Bay had external board experience with broad strategic perspective requires at least 50% female candidates as well as 18.18% previously supported the recruitment of The ongoing development of senior leaders, diversity, ultimately the Board appoints Use search firms who have signed up to the candidates from various backgrounds and Non‑executive Directors to the Board. to ensure we retain the best talent to candidates based on merit and assesses Voluntary Code of Conduct on gender industries, including People of Colour. People of Colour Board representation broaden their skill sets and experience to potential Directors against measurable, diversity Candidates were identified and interviewed The specifications for both vacancies set prepare them for future senior roles, is objective criteria. The Board supports the provisions of the and their skills and qualities were assessed out the agreed key skills, experience and important to us. ITV runs a high potential Voluntary Code of Conduct for Executive against measurable, objective criteria. Board composition and character profile being sought to fit with the leadership programme, building a pipeline of Our principles for Board diversity also apply Search Firms which addresses gender succession planning current balance, membership and dynamics diverse talent for senior level roles. The Rise to our Management Board and senior diversity on corporate boards and best ANDREW COSSLETT of the Board and were approved by the Programme launched in 2020 continues to management below this level. We are practice for related search processes. Both CHAIR Composition Committee. As in prior years, the Committee promote People of Colour talent progression therefore pleased that the FTSE Women 7 March 2024 During the year, the Committee undertook executive search agencies used in 2023 for focused on diversity as part of the selection at the manager level by providing People of Leaders Review ranked ITV third out of the our Non-executive Directors are signatories an analytical review of Board composition, criteria, selecting the highest calibre Colour colleagues greater visibility with FTSE 250 and top of the Media sector for to the Code. assessing the range and balance of skills, candidates for appointment to the Board, senior leaders through networking and representation of women in leadership, with experience, diversity, knowledge and based on merit and objective criteria. sponsorship, alongside career coaching. 52.4% women in the Combined Executive independence to identify any gaps and inform The programme also works with managers Committee and Direct Reports. the Non‑executive Director searches. The In each case a shortlist of candidates was and Senior Leadership Team advocates to review concluded that the representation of interviewed by all the members of the build race confidence and accelerate an Board diversity was strong and the Directors Nominations Committee (led by the inclusive culture change at ITV. as a whole had the right skills, knowledge and Chairman), the Chief Executive and Group experience to enable ITV to execute its CFO and COO. Following this, the Committee Bespoke development initiatives are in Listing Rule 9.8.6R (10) strategy. However, the departure of Sir Peter recommended the appointments of Marjorie place for senior executives who have been In accordance with Listing Rule 9.8.6R (10), our gender and ethnicity data in the format set out in LR9 Annex 2.1 as at 31 December 2023 is set Bazalgette in 2022 meant there was a Kaplan and Dawn Allen, which the Board identified as potential successors, based out below. requirement for specialised creative industry subsequently approved. on particular development needs. skills experience. In anticipation of the These include: The Board and Management Board members are asked to complete a diversity monitoring form to confirm which of the categories set out in departure of Anna Manz in 2023, a further gap The Committee is satisfied that these the below they identify with. As Carolyn McCall and Chris Kennedy sit on both the PLC and Management Boards they have been counted in was identified in finance skills and expertise. appointments further strengthen the mix • External executive coaching, with clear both totals. Two searches were instigated as discussed of expertise on the Board. Marjorie Kaplan coaching objectives (including 360 further below. degrees feedback where relevant) Number of senior has extensive brand, content and audience positions on the Number of the Percentage of strategy experience with a track record • Psychometric testing, such as the Hogan Number of Board Percentage of the Board (CEO, CFO, executive executive Non‑executive Director succession Gender members Board Chair and SID) management 1 management as a change agent. Dawn Allen has extensive Leadership series that identifies Men 6 54.45 3 8 72.73 planning financial, commercial and international leadership strengths, derailers and values The Committee continues to keep experience having held a number of • Mentoring by a Non‑executive Director Women 5 45.45 1 3 27.27 succession under review for each of the senior financial roles in large scale • Business School executive non‑executive roles to take account of global businesses. education programmes Number of tenure and to ensure the size, structure, senior positions • Non‑executive Director and Trustee on the Board Number of Percentage of composition and diversity of the Board and Both the new Non‑executive Directors appointments where there is a suitable Number of Percentage of (CEO, CFO, the executive executive its Committees are appropriate, identifying undertook a comprehensive induction Ethnicity Board members the Board Chair and SID) management management internal candidates or where an external programme. See page 102 for further match and development support for those Asian 2 18.18 – – – search may be needed, both for emergency information. interested in these opportunities Black/African/Caribbean – – – 1 9 and longer‑term succession. Mixed/Multiple Ethnic Groups – – – – – Board diversity policy Other minority ethnic group – – – – – Executive Director and Management Board Our objective to drive the benefits of a White 9 81.82 4 10 91 succession planning diverse senior management team and wider During the year, the Chief Executive and workforce is underpinned by our Board Chief People Officer reported on the Diversity Policy. A copy of the Board Diversity policy can be found on our website succession planning measures in place for www.itvplc.com/investors/governance/directors the Management Board (including the Our belief is that diversity at all levels is Executive Directors), as well as the direct incredibly important as it allows the reports to Management Board members. organisation to harness the benefit of This included Management Board and differences in skills, experience, culture, Executive Leadership Team bench strength personality, background and work‑style. analysis for each role identifying short and We are proud of our commitment to driving medium‑term successors and the diversity further diversity on a Group‑wide basis. of the pipeline. The Committee was satisfied Please refer to pages 37 to 39 for further that the Company has effective executive information on our Group‑wide diversity succession planning processes in place, plan and targets. including appropriate development plans for key individuals, and was able to understand the areas where external candidates may need to be considered. The Committee also had a session on improving the strength, depth and diversity of our talent.
104 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 105 NOMINATIONS COMMITTEE REPORT CONTINUED G O VE R NAN Board searchesSet out below are the objectives of our Maintain at least 30% female Directors on Maintain at least 10% Directors who are Ensure the Non-executive Director search C BOARD DIVERSITYThe Committee approved the appointment Board Diversity Policy and our assessment the Board over the short to medium termPeople of Colour on the Board over the pool is sufficiently wide and covers E of SRI/Mission Bay for the search for a of performance against them. These As at 31 December 2023, the Board had short to medium term candidates who are People of Colour and 45.45% Non‑executive Director with specialised objectives ensure that both appointments 45.45% female representation, including one As at 31 December 2023, the Board had candidates with a wide range of expertise, creative industry skills experience and Lygon and succession planning support the Executive Director and two Committee 18.18% representation of People of Colour skills and backgrounds, and that shortlists female Board representationGroup for the search for a Non‑executive development of a diverse pipeline. Chairs. We have therefore exceeded the with two Directors represented on the Board. include at least 50% female candidates In line with Parker Review, the Listing Director with financial expertise. Other than target of 40% of women on the Board set by We therefore also comply with the When conducting a Non-executive Director the provision of search services, neither SRI/Ensure ITV has a development pipeline of ITV and the FCA Listing Rules, as well as the recommendation of the Parker Review and search, the Committee works closely with Rules and Hampton‑Alexander Review Mission Bay or Lygon Group have any other high calibre senior executive candidates Hampton-Alexander target of 33%. Whilst the FCA Listing Rule requirement to have at the executive search agency to compile a recommendationsconnection with the Company or any and encourage senior executives to obtain the Board recognises that an effective Board least one director of colour on the Board. long and shortlist of candidates made up of individual director. SRI/Mission Bay had external board experiencewith broad strategic perspective requires at least 50% female candidates as well as 18.18% previously supported the recruitment of The ongoing development of senior leaders, diversity, ultimately the Board appoints Use search firms who have signed up to the candidates from various backgrounds and Non‑executive Directors to the Board. to ensure we retain the best talent to candidates based on merit and assesses Voluntary Code of Conduct on gender industries, including People of Colour. People of Colour Board representationbroaden their skill sets and experience to potential Directors against measurable, diversity Candidates were identified and interviewed The specifications for both vacancies set prepare them for future senior roles, is objective criteria. The Board supports the provisions of the and their skills and qualities were assessed out the agreed key skills, experience and important to us. ITV runs a high potential Voluntary Code of Conduct for Executive against measurable, objective criteria. Board composition and character profile being sought to fit with the leadership programme, building a pipeline of Our principles for Board diversity also apply Search Firms which addresses gender succession planningcurrent balance, membership and dynamics diverse talent for senior level roles. The Rise to our Management Board and senior diversity on corporate boards and best ANDREW COSSLETT of the Board and were approved by the Programme launched in 2020 continues to management below this level. We are practice for related search processes. Both CHAIR CompositionCommittee. As in prior years, the Committee promote People of Colour talent progression therefore pleased that the FTSE Women 7 March 2024 During the year, the Committee undertook executive search agencies used in 2023 for focused on diversity as part of the selection at the manager level by providing People of Leaders Review ranked ITV third out of the our Non-executive Directors are signatories an analytical review of Board composition, criteria, selecting the highest calibre Colour colleagues greater visibility with FTSE 250 and top of the Media sector for to the Code. assessing the range and balance of skills, candidates for appointment to the Board, senior leaders through networking and representation of women in leadership, with experience, diversity, knowledge and based on merit and objective criteria. sponsorship, alongside career coaching. 52.4% women in the Combined Executive independence to identify any gaps and inform The programme also works with managers Committee and Direct Reports. the Non‑executive Director searches. The In each case a shortlist of candidates was and Senior Leadership Team advocates to review concluded that the representation of interviewed by all the members of the build race confidence and accelerate an Board diversity was strong and the Directors Nominations Committee (led by the inclusive culture change at ITV. as a whole had the right skills, knowledge and Chairman), the Chief Executive and Group experience to enable ITV to execute its CFO and COO. Following this, the Committee Bespoke development initiatives are in Listing Rule 9.8.6R (10) strategy. However, the departure of Sir Peter recommended the appointments of Marjorie place for senior executives who have been In accordance with Listing Rule 9.8.6R (10), our gender and ethnicity data in the format set out in LR9 Annex 2.1 as at 31 December 2023 is set Bazalgette in 2022 meant there was a Kaplan and Dawn Allen, which the Board identified as potential successors, based out below. requirement for specialised creative industry subsequently approved. on particular development needs. skills experience. In anticipation of the These include:The Board and Management Board members are asked to complete a diversity monitoring form to confirm which of the categories set out in departure of Anna Manz in 2023, a further gap The Committee is satisfied that these the below they identify with. As Carolyn McCall and Chris Kennedy sit on both the PLC and Management Boards they have been counted in was identified in finance skills and expertise. appointments further strengthen the mix • External executive coaching, with clear both totals. Two searches were instigated as discussed of expertise on the Board. Marjorie Kaplan coaching objectives (including 360 further below. degrees feedback where relevant) Number of senior has extensive brand, content and audience positions on the Number of the Percentage of strategy experience with a track record • Psychometric testing, such as the Hogan Number of Board Percentage of the Board (CEO, CFO, executive executive Non‑executive Director succession Gender members Board Chair and SID) management 1 management as a change agent. Dawn Allen has extensive Leadership series that identifies Men 6 54.45 3 8 72.73 planningfinancial, commercial and international leadership strengths, derailers and values The Committee continues to keep experience having held a number of • Mentoring by a Non‑executive DirectorWomen 5 45.45 1 3 27.27 succession under review for each of the senior financial roles in large scale • Business School executive non‑executive roles to take account of global businesses. education programmes Number of tenure and to ensure the size, structure, senior positions • Non‑executive Director and Trustee on the Board Number of Percentage of composition and diversity of the Board and Both the new Non‑executive Directors appointments where there is a suitable Number of Percentage of (CEO, CFO, the executive executive its Committees are appropriate, identifying undertook a comprehensive induction Ethnicity Board members the Board Chair and SID) management management internal candidates or where an external programme. See page 102 for further match and development support for those Asian 2 18.18 – – – search may be needed, both for emergency information.interested in these opportunitiesBlack/African/Caribbean – – – 1 9 and longer‑term succession. Mixed/Multiple Ethnic Groups – – – – – Board diversity policy Other minority ethnic group – – – – – Executive Director and Management Board Our objective to drive the benefits of a White 9 81.82 4 10 91 succession planningdiverse senior management team and wider During the year, the Chief Executive and workforce is underpinned by our Board Chief People Officer reported on the Diversity Policy. A copy of the Board Diversity policy can be found on our website succession planning measures in place for www.itvplc.com/investors/governance/directors the Management Board (including the Our belief is that diversity at all levels is Executive Directors), as well as the direct incredibly important as it allows the reports to Management Board members. organisation to harness the benefit of This included Management Board and differences in skills, experience, culture, Executive Leadership Team bench strength personality, background and work‑style. analysis for each role identifying short and We are proud of our commitment to driving medium‑term successors and the diversity further diversity on a Group‑wide basis. of the pipeline. The Committee was satisfied Please refer to pages 37 to 39 for further that the Company has effective executive information on our Group‑wide diversity succession planning processes in place, plan and targets. including appropriate development plans for key individuals, and was able to understand the areas where external candidates may need to be considered. The Committee also had a session on improving the strength, depth and diversity of our talent.
106 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 107 G AUDIT AND RISK COMMITTEE REPORT O VE R NAN management took the decision to continue C to implement ‘no regrets’ improvements. E The Group continues to focus on 2023 Key Matters strengthening its internal controls environment and has robust plans in place Ma ers considered at the meetings that will put the Company in a strong position to comply with the controls’ effectiveness are set out on the pages that follow. statement requirement, introduced in the FRC’s revised Corporate Governance Code issued in January 2024 and applicable from 1st January 2026. MARGARET EWING I was delighted when ITV gained a gold CHAIR, AUDIT AND RISK COMMITTEE award for best FTSE 250 Annual Report and Accounts at the Corporate & Financial Awards, and was Highly Commended by the Corporate Reporting Awards. At ITV, Meetings in 2023 Our role we strive to ensure we maintain clear and Dear Shareholder stabilisation of the transformation. This coherent reporting that provides a clear link The Committee held five scheduled The Committee’s terms of reference, WHO IS ON THE COMMITTEE enabled me to gain a good understanding of meetings during the year, and a number reviewed annually and last updated in On behalf of the Board, I am pleased to from purpose to strategy to operations, present the 2023 Audit and Risk Committee the ongoing challenges and the implications and the Committee was delighted that of ad hoc meetings. July 2023, can be accessed on our Composition for resourcing, morale and welfare of the colleagues’ efforts and focus have been website. The current members of the Report which sets out the key areas of focus impacted teams, which I fed back to relevant In addition to Committee members, the during 2023. recognised in this way. Committee are: management, the Committee and the Board. Chair of the Board, Group CFO and COO, The Committee’s principal • Margaret Ewing (Chair) During 2023, despite the challenging I personally want to thank all ITV personnel Group Director of Finance, Group responsibilities are to oversee and economic environment, the Group Management has continued to implement involved in the Group’s corporate and Finance Controller, General Counsel and provide assurance to the Board on • Dawn Allen a detailed programme of remediation and financial integrity, controls, recording and Company Secretary, Group Director of the integrity and quality of financial • Edward Bonham Carter accelerated its proposition as a vertically enhancement to address internal control Risk Management, Head of Internal reporting, effectiveness of audit integrated producer, broadcaster and reporting for their immense effort, fortitude • Graham Cooke streamer, further developing ITVX following issues highlighted by the internal and and loyalty during 2023 – a year that has Audit (EY) and External Audit lead arrangements and robustness and its launch, growing the global studios external auditors in 2022 and further delivered very significant change and partner (PwC) regularly attend meetings. effective operation of internal controls, Full details of aendance at Commiee business and digitally transforming the identified as a result of the ITV Together improvement within ITV in a very short There were a number of sessions during compliance and risk management meetings can be found on the table on Broadcast business. ITV colleagues have, implementation. The Committee received time frame. the year when the Committee met the processes. The Committee meeting page 82. reports from management, and the external External Audit lead partner and, agendas are tailored to ensure emerging despite an incredible workload, risen to the and internal auditors, at each of its meetings separately, the Head of Internal Audit topics are included and to allow for ad Detailed biographies can be found on challenge and delivered positively and I hope that you find this report informative on the progress in the execution of the and can continue to take assurance from the without executives present. hoc discussion and reviews (including pages 77 and 78. effectively. In this environment, the Committee has continued to focus on risk remediation programme. The Committee work undertaken by the Committee this year. ad hoc meetings when required). The Committee is composed entirely of management, internal controls and the recognises that good progress has been A summary of the Committee’s activities independent Non-executive Directors. made in this area and is confident the Group MARGARET EWING from the date of our 2022 report and In 2023, Anna Manz and Mary Harris retired ongoing restructuring, financial and has an effective control environment; until the date of this report is detailed on from the Committee (and Board), with accounting implications of the strategy CHAIR, AUDIT AND RISK COMMITTEE Dawn Allen joining in October 2023. implementation. however, the Committee also acknowledges 7 March 2024 the following pages. that the Group is on a journey of maturity and The Committee members have, between improved formalisation, automation and them, a wide range of relevant sector and Throughout 2023 I have maintained regular monitoring of its control processes and this ANNUAL REVIEW financial experience, enabling the dialogue with all members of the Committee, will continue to be an area of key focus for Committee to fulfil its terms of reference. the Group CFO & COO, and other members In 2023, an internally facilitated evaluation of the Committee’s performance was This includes providing independent and of management, including meeting with the Committee during 2024. undertaken. Participants in the evaluation, in addition to Committee members, robust challenge to management and our relevant ‘agenda topic owners’ prior to each included all regular Committee meeting attendees. internal and external auditors, to ensure Committee meeting, ensuring the The Committee has spent considerable there are effective and high-quality controls Committee would be provided with the time reviewing and scrutinising the Group’s in place and appropriate judgements are financial results, ensuring it had clear The evaluation concluded that the Committee continues to work effectively, is highly taken. For the purposes of the Code, the necessary information to enable it to guide, oversight of the evolving impact of the engaged and is responding appropriately to its terms of reference. Board considers that Margaret Ewing and challenge and advise and, when required, Group’s strategy on the business and its Dawn Allen, and Anna Manz until her make informed decisions. I also met with Although the evaluation did not identify any concerns, the Committee has agreed retirement from the Board, have recent ITV’s legal advisers in respect of ongoing financial affairs plus emerging risks. This that the areas it will focus on in 2024 will include: and relevant financial experience. litigation and other legal matters and met included adjusted performance measures privately throughout the year with the lead and exceptional items, progress of certain 1. The ongoing programmes of enhancement of the financial, IT, reporting, partner of our external auditor, PwC, and lead legal and regulatory matters and disclosure compliance and operational control frameworks partner of EY, ITV’s provider of outsourced and provisioning implications, programme 2. Stabilisation of Wave 1 of ITV Together (the finance, HR and production accounting internal audit. rights impairment and the implications of transformation programme) and approval of the business case and timing for the proposed reform of the system of commencement of Wave 2 A significant event in 2023 was the go live audio-visual tax credits. Details of the 3. Fraud and risk management improvements, including data governance and in April of wave 1 of the ITV Together Oracle significant financial reporting issues we privacy and speaking up processes Fusion finance and HR systems and considered can be found in this report. 4. Readiness to comply with all existing and emerging regulations and legislation functional transformation. A detailed post Information regarding the Board’s regarding sustainability, climate and other ESG related matters go live stabilisation plan with clear focus stakeholder engagement is set out on pages on change management, governance and 84 to 91, which also indicates where the In addition, the Chief Executive and other members of the Management Board will priority actions is in place and has been Committee took account of the views of the be invited to attend relevant parts of Committee meetings on a more regular basis to communicated to impacted teams across Company’s key stakeholders and considered provide additional strategic and operational insight to the Committee’s reviews and the Group. When the Board visited their interests in its discussions and decision-making. colleagues in Manchester, I held meetings decision-making. Whilst we note that the with the teams in the Group’s Global Finance Government’s previously proposed Operations (GFO) most impacted by the corporate governance reforms are not being development, launch and ongoing introduced, the Committee is pleased that
106 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 107 G AUDIT AND RISK COMMITTEE REPORT O VE R NAN management took the decision to continue C to implement ‘no regrets’ improvements. E The Group continues to focus on 2023 Key Matters strengthening its internal controls environment and has robust plans in place Ma ers considered at the meetings that will put the Company in a strong position to comply with the controls’ effectiveness are set out on the pages that follow. statement requirement, introduced in the FRC’s revised Corporate Governance Code issued in January 2024 and applicable from 1st January 2026. MARGARET EWING I was delighted when ITV gained a gold CHAIR, AUDIT AND RISK COMMITTEEaward for best FTSE 250 Annual Report and Accounts at the Corporate & Financial Awards, and was Highly Commended by the Corporate Reporting Awards. At ITV, Meetings in 2023 Our role we strive to ensure we maintain clear and Dear Shareholderstabilisation of the transformation. This coherent reporting that provides a clear link The Committee held five scheduled The Committee’s terms of reference, WHO IS ON THE COMMITTEEenabled me to gain a good understanding of meetings during the year, and a number reviewed annually and last updated in On behalf of the Board, I am pleased to from purpose to strategy to operations, present the 2023 Audit and Risk Committee the ongoing challenges and the implications and the Committee was delighted that of ad hoc meetings. July 2023, can be accessed on our Compositionfor resourcing, morale and welfare of the colleagues’ efforts and focus have been website. The current members of the Report which sets out the key areas of focus impacted teams, which I fed back to relevant In addition to Committee members, the during 2023. recognised in this way. Committee are:management, the Committee and the Board. Chair of the Board, Group CFO and COO, The Committee’s principal • Margaret Ewing (Chair)During 2023, despite the challenging I personally want to thank all ITV personnel Group Director of Finance, Group responsibilities are to oversee and economic environment, the Group Management has continued to implement involved in the Group’s corporate and Finance Controller, General Counsel and provide assurance to the Board on • Dawn Allena detailed programme of remediation and financial integrity, controls, recording and Company Secretary, Group Director of the integrity and quality of financial • Edward Bonham Carteraccelerated its proposition as a vertically enhancement to address internal control Risk Management, Head of Internal reporting, effectiveness of audit integrated producer, broadcaster and reporting for their immense effort, fortitude • Graham Cookestreamer, further developing ITVX following issues highlighted by the internal and and loyalty during 2023 – a year that has Audit (EY) and External Audit lead arrangements and robustness and its launch, growing the global studios external auditors in 2022 and further delivered very significant change and partner (PwC) regularly attend meetings. effective operation of internal controls, Full details of aendance at Commiee business and digitally transforming the identified as a result of the ITV Together improvement within ITV in a very short There were a number of sessions during compliance and risk management meetings can be found on the table on Broadcast business. ITV colleagues have, implementation. The Committee received time frame.the year when the Committee met the processes. The Committee meeting page 82.reports from management, and the external External Audit lead partner and, agendas are tailored to ensure emerging despite an incredible workload, risen to the and internal auditors, at each of its meetings separately, the Head of Internal Audit topics are included and to allow for ad Detailed biographies can be found on challenge and delivered positively and I hope that you find this report informative on the progress in the execution of the and can continue to take assurance from the without executives present. hoc discussion and reviews (including pages 77 and 78.effectively. In this environment, the Committee has continued to focus on risk remediation programme. The Committee work undertaken by the Committee this year. ad hoc meetings when required). The Committee is composed entirely of management, internal controls and the recognises that good progress has been A summary of the Committee’s activities independent Non-executive Directors. made in this area and is confident the Group MARGARET EWING from the date of our 2022 report and In 2023, Anna Manz and Mary Harris retired ongoing restructuring, financial and has an effective control environment; until the date of this report is detailed on from the Committee (and Board), with accounting implications of the strategy CHAIR, AUDIT AND RISK COMMITTEE Dawn Allen joining in October 2023. implementation.however, the Committee also acknowledges 7 March 2024 the following pages. that the Group is on a journey of maturity and The Committee members have, between improved formalisation, automation and them, a wide range of relevant sector and Throughout 2023 I have maintained regular monitoring of its control processes and this ANNUAL REVIEW financial experience, enabling the dialogue with all members of the Committee, will continue to be an area of key focus for Committee to fulfil its terms of reference. the Group CFO & COO, and other members In 2023, an internally facilitated evaluation of the Committee’s performance was This includes providing independent and of management, including meeting with the Committee during 2024. undertaken. Participants in the evaluation, in addition to Committee members, robust challenge to management and our relevant ‘agenda topic owners’ prior to each included all regular Committee meeting attendees. internal and external auditors, to ensure Committee meeting, ensuring the The Committee has spent considerable there are effective and high-quality controls Committee would be provided with the time reviewing and scrutinising the Group’s in place and appropriate judgements are financial results, ensuring it had clear The evaluation concluded that the Committee continues to work effectively, is highly taken. For the purposes of the Code, the necessary information to enable it to guide, oversight of the evolving impact of the engaged and is responding appropriately to its terms of reference. Board considers that Margaret Ewing and challenge and advise and, when required, Group’s strategy on the business and its Dawn Allen, and Anna Manz until her make informed decisions. I also met with Although the evaluation did not identify any concerns, the Committee has agreed retirement from the Board, have recent ITV’s legal advisers in respect of ongoing financial affairs plus emerging risks. This that the areas it will focus on in 2024 will include: and relevant financial experience.litigation and other legal matters and met included adjusted performance measures privately throughout the year with the lead and exceptional items, progress of certain 1. The ongoing programmes of enhancement of the financial, IT, reporting, partner of our external auditor, PwC, and lead legal and regulatory matters and disclosure compliance and operational control frameworks partner of EY, ITV’s provider of outsourced and provisioning implications, programme 2. Stabilisation of Wave 1 of ITV Together (the finance, HR and production accounting internal audit.rights impairment and the implications of transformation programme) and approval of the business case and timing for the proposed reform of the system of commencement of Wave 2 A significant event in 2023 was the go live audio-visual tax credits. Details of the 3. Fraud and risk management improvements, including data governance and in April of wave 1 of the ITV Together Oracle significant financial reporting issues we privacy and speaking up processes Fusion finance and HR systems and considered can be found in this report. 4. Readiness to comply with all existing and emerging regulations and legislation functional transformation. A detailed post Information regarding the Board’s regarding sustainability, climate and other ESG related matters go live stabilisation plan with clear focus stakeholder engagement is set out on pages on change management, governance and 84 to 91, which also indicates where the In addition, the Chief Executive and other members of the Management Board will priority actions is in place and has been Committee took account of the views of the be invited to attend relevant parts of Committee meetings on a more regular basis to communicated to impacted teams across Company’s key stakeholders and considered provide additional strategic and operational insight to the Committee’s reviews and the Group. When the Board visited their interests in its discussions and decision-making. colleagues in Manchester, I held meetings decision-making. Whilst we note that the with the teams in the Group’s Global Finance Government’s previously proposed Operations (GFO) most impacted by the corporate governance reforms are not being development, launch and ongoing introduced, the Committee is pleased that
108 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 109 AUDIT AND RISK COMMITTEE REPORT CONTINUED G O VE R NAN C FINANCIAL REPORTING SIGNIFICANT AUDIT RISKS AND ACCOUNTING JUDGEMENTS E Our role Reviewed In planning its agenda and reviewing the audit plans of the internal and external auditors, the Committee has considered significant operational and financial issues and risks which may have had an impact on the Company’s financial statements, internal controls and/or the delivery and execution of the Company’s • Monitor the integrity of published financial information and • Quarterly, interim and full year results statements, prior to recommendation to Board for strategy (including changes in the nature and significance of some of the Group’s Principal Risks). review and challenge significant financial reporting issues, approval, together with supporting reports from the Group Director of Finance highlighting estimates and judgements all key judgements and estimates The Committee focused on assessing whether management had made appropriate judgements and estimates in preparing the Company’s financial • Review the appropriateness of accounting policies • External auditor reports, including progress updates, regarding interim review and full statements, particularly with regard to the significant issues listed below. These issues were subject to robust challenge and debate between management, and practices year audit the external auditor and the Committee. The Committee also reviewed detailed external auditor reports outlining work performed and any issues identified in respect of key judgements and estimates – see the Independent Auditor’s Report on pages 149 to 155. The Committee concluded there was no significant • Provide advice to the Board on whether the Annual Report • Final draft 2023 Annual Report and Accounts, prior to recommendation to Board disagreement or unresolved issue that required referral to the Board. and Accounts are fair, balanced and understandable and the for approval, including review of the Group Financial Statements, Principal and appropriateness of the risk disclosures, going concern Emerging Risks disclosure and assessment that the Annual Report and Accounts is fair, Risk of fraud (particularly in revenue recognition) statement, the longer-term viability statement and the balanced and understandable statement regarding effectiveness of the internal controls • Assessment of appropriateness of going concern and viability statements, including Issue Action taken by the Committee Outcome/future actions management reports on all key judgements, scenario assumptions, supporting analysis/ The nature of ITV’s business, Review of the work undertaken to update the GFO Finance In anticipation of the UK’s new corporate offence of evidence, reporting and disclosures including advertising and Fraud Prevention Framework following the implementation ‘failure to prevent fraud’, the Committee discussed ITV’s plan • Litigation updates, including status reports and potential impact on financial results in production, means that there of the Oracle Fusion platform and the subsequent impact to respond to the new legislation during 2024 including: respect of Box Clever, the Voice of Holland and CMA matters are potential risks of revenue on the controls in place to prevent and detect fraud across • Updating the Fraud Risk Management policy and the fraud • Key accounting judgements recognition and other fraud, all aspects of the Group, including the international risk assessment including collusion with studios businesses. • Reports on potential acquisitions and earnout liabilities and performance against advertisers, facilitation • Monitoring of high-risk financial controls acquisition business case criteria payments, fraudulent The Committee also considered the Group’s changing risk • Delivery of targeted training • Pension matters, including the IAS 19 accounting surplus and underlying assumptions payments to suppliers or landscape and the implications for non-financial fraud risk. • Reviewing ITV’s due diligence processes and • Assessment of appropriateness of identification and classification of exceptional items employees and manipulation In addition, the Committee reviewed the results of PwC’s contractual provisions • Regular tax updates and recommendation of updated tax strategy to Board for approval, of profits or hiding fraud by data auditing techniques for advertising revenue, journals use of accounting journals. and payroll as well as their conclusions relating to fraud risk The Committee agreed with management’s assessment that having ensured the relationship with tax authorities, particularly HMRC, is collaborative, the overall control framework remained effective and the open and transparent in revenue recognition. Group’s revenue recognition processes included a robust • Treasury policies, updates and funding strategy control framework to effectively mitigate the risk of material • Share plan anticipated performance outcomes for FY23 financial fraud. • Developments in financial and corporate reporting • Implications for financial reporting of stabilisation phase of ITV Together programme Exceptional items including Alternative Performance Measures • Finance team structure and resourcing Issue Action taken by the Committee Outcome/future actions • Process to allow subsidiary entities to be considered for audit exemption using a parental guarantee During 2023, management The Committee continued to closely scrutinise the The Committee concluded that the policy in respect of proposed a number of application of the Group’s policy on exceptional items, exceptional items and management’s approach to • Progress in preparation, audit and filing of all FY22 subsidiary statutory accounts by matters to be classified as spending considerable time reviewing the existing policy exceptional items were appropriate. regulatory filing dates exceptional items. (See and challenging management’s proposed classification. note 2.2 to the financial The Committee scrutinised in particular those exceptional The Committee also recognised that management had statements and page 172 items that recur over a number of years, such as exercised discipline on the categorisation of costs as for an explanation of the restructuring, transformation and property costs, or exceptional items, the policy had been applied consistently exceptional items policy). frequently occurred, e.g. legal costs, and considered the and the amounts were clearly disclosed in the Annual Report views of the external auditor. and Accounts. The Committee will continue to review the exceptional items policy and definitions regularly, consider evolving regulatory scrutiny and the impact of exceptional items on reported earnings. Review of legal cases Issue Action taken by the Committee Outcome/future actions ITV is subject to ongoing legal Throughout 2023, the Committee reviewed management’s Following considerable discussion and input from the disputes where the outcome updates on its various outstanding legal cases and any external auditor and legal adviser, the Committee agreed is not certain, including the potential liability that might arise from them. In addition, that the provision and disclosure made in respect of quantum of liability (actual or twice during the year, the Committee Chair met with the Box Clever was appropriate, given the status of discussions possible) in respect of the Company’s various external legal advisers to understand with the Pensions Regulator. See note 3.7 to the financial Box Clever pension scheme their perspectives on the status of the various legal cases. statements. deficit and the two separate In respect of Box Clever, the Committee considered the The Committee also agreed that the contingent liability UK Competitions and response from and management’s interactions with the disclosure proposed by management in relation to the CMA Markets Authority (CMA) Pensions Regulator, views of external actuarial and legal investigations was appropriate. investigations that advisers and the level of provision for the case and commenced in 2022 disclosure, given the high level of uncertainty of the final The Committee also considered other ongoing legal matters and 2023. outcome and the legal process, which could continue for and agreed with management’s proposed position and a number of years. related disclosures. With regards to the two separate CMA investigations, The Committee considered the contingent liability disclosure proposed by management and agreed with management’s conclusion that it is not possible to reliably quantify any liability that might result from the investigations due to the early stage of each of them. The Committee discussed the provisions held and related disclosures in respect of all other material legal cases.
108 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 109 AUDIT AND RISK COMMITTEE REPORT CONTINUED G O VE R NAN C FINANCIAL REPORTING SIGNIFICANT AUDIT RISKS AND ACCOUNTING JUDGEMENTS E Our roleReviewed In planning its agenda and reviewing the audit plans of the internal and external auditors, the Committee has considered significant operational and financial issues and risks which may have had an impact on the Company’s financial statements, internal controls and/or the delivery and execution of the Company’s • Monitor the integrity of published financial information and • Quarterly, interim and full year results statements, prior to recommendation to Board for strategy (including changes in the nature and significance of some of the Group’s Principal Risks). review and challenge significant financial reporting issues, approval, together with supporting reports from the Group Director of Finance highlighting estimates and judgementsall key judgements and estimatesThe Committee focused on assessing whether management had made appropriate judgements and estimates in preparing the Company’s financial • Review the appropriateness of accounting policies • External auditor reports, including progress updates, regarding interim review and full statements, particularly with regard to the significant issues listed below. These issues were subject to robust challenge and debate between management, and practicesyear auditthe external auditor and the Committee. The Committee also reviewed detailed external auditor reports outlining work performed and any issues identified in respect of key judgements and estimates – see the Independent Auditor’s Report on pages 149 to 155. The Committee concluded there was no significant • Provide advice to the Board on whether the Annual Report • Final draft 2023 Annual Report and Accounts, prior to recommendation to Board disagreement or unresolved issue that required referral to the Board. and Accounts are fair, balanced and understandable and the for approval, including review of the Group Financial Statements, Principal and appropriateness of the risk disclosures, going concern Emerging Risks disclosure and assessment that the Annual Report and Accounts is fair, Risk of fraud (particularly in revenue recognition) statement, the longer-term viability statement and the balanced and understandable statement regarding effectiveness of the internal controls• Assessment of appropriateness of going concern and viability statements, including IssueAction taken by the CommitteeOutcome/future actions management reports on all key judgements, scenario assumptions, supporting analysis/The nature of ITV’s business, Review of the work undertaken to update the GFO Finance In anticipation of the UK’s new corporate offence of evidence, reporting and disclosuresincluding advertising and Fraud Prevention Framework following the implementation ‘failure to prevent fraud’, the Committee discussed ITV’s plan • Litigation updates, including status reports and potential impact on financial results in production, means that there of the Oracle Fusion platform and the subsequent impact to respond to the new legislation during 2024 including: respect of Box Clever, the Voice of Holland and CMA mattersare potential risks of revenue on the controls in place to prevent and detect fraud across • Updating the Fraud Risk Management policy and the fraud • Key accounting judgements recognition and other fraud, all aspects of the Group, including the international risk assessment including collusion with studios businesses. • Reports on potential acquisitions and earnout liabilities and performance against advertisers, facilitation • Monitoring of high-risk financial controls acquisition business case criteriapayments, fraudulent The Committee also considered the Group’s changing risk • Delivery of targeted training • Pension matters, including the IAS 19 accounting surplus and underlying assumptions payments to suppliers or landscape and the implications for non-financial fraud risk. • Reviewing ITV’s due diligence processes and • Assessment of appropriateness of identification and classification of exceptional items employees and manipulation In addition, the Committee reviewed the results of PwC’s contractual provisions • Regular tax updates and recommendation of updated tax strategy to Board for approval, of profits or hiding fraud by data auditing techniques for advertising revenue, journals use of accounting journals. and payroll as well as their conclusions relating to fraud risk The Committee agreed with management’s assessment that having ensured the relationship with tax authorities, particularly HMRC, is collaborative, the overall control framework remained effective and the open and transparent in revenue recognition. Group’s revenue recognition processes included a robust • Treasury policies, updates and funding strategy control framework to effectively mitigate the risk of material • Share plan anticipated performance outcomes for FY23 financial fraud. • Developments in financial and corporate reporting • Implications for financial reporting of stabilisation phase of ITV Together programmeExceptional items including Alternative Performance Measures • Finance team structure and resourcing Issue Action taken by the Committee Outcome/future actions • Process to allow subsidiary entities to be considered for audit exemption using a parental guarantee During 2023, management The Committee continued to closely scrutinise the The Committee concluded that the policy in respect of proposed a number of application of the Group’s policy on exceptional items, exceptional items and management’s approach to • Progress in preparation, audit and filing of all FY22 subsidiary statutory accounts by matters to be classified as spending considerable time reviewing the existing policy exceptional items were appropriate. regulatory filing datesexceptional items. (See and challenging management’s proposed classification. note 2.2 to the financial The Committee scrutinised in particular those exceptional The Committee also recognised that management had statements and page 172 items that recur over a number of years, such as exercised discipline on the categorisation of costs as for an explanation of the restructuring, transformation and property costs, or exceptional items, the policy had been applied consistently exceptional items policy). frequently occurred, e.g. legal costs, and considered the and the amounts were clearly disclosed in the Annual Report views of the external auditor. and Accounts. The Committee will continue to review the exceptional items policy and definitions regularly, consider evolving regulatory scrutiny and the impact of exceptional items on reported earnings. Review of legal cases Issue Action taken by the Committee Outcome/future actions ITV is subject to ongoing legal Throughout 2023, the Committee reviewed management’s Following considerable discussion and input from the disputes where the outcome updates on its various outstanding legal cases and any external auditor and legal adviser, the Committee agreed is not certain, including the potential liability that might arise from them. In addition, that the provision and disclosure made in respect of quantum of liability (actual or twice during the year, the Committee Chair met with the Box Clever was appropriate, given the status of discussions possible) in respect of the Company’s various external legal advisers to understand with the Pensions Regulator. See note 3.7 to the financial Box Clever pension scheme their perspectives on the status of the various legal cases. statements. deficit and the two separate In respect of Box Clever, the Committee considered the The Committee also agreed that the contingent liability UK Competitions and response from and management’s interactions with the disclosure proposed by management in relation to the CMA Markets Authority (CMA) Pensions Regulator, views of external actuarial and legal investigations was appropriate. investigations that advisers and the level of provision for the case and commenced in 2022 disclosure, given the high level of uncertainty of the final The Committee also considered other ongoing legal matters and 2023. outcome and the legal process, which could continue for and agreed with management’s proposed position and a number of years. related disclosures. With regards to the two separate CMA investigations, The Committee considered the contingent liability disclosure proposed by management and agreed with management’s conclusion that it is not possible to reliably quantify any liability that might result from the investigations due to the early stage of each of them. The Committee discussed the provisions held and related disclosures in respect of all other material legal cases.
110 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 111 AUDIT AND RISK COMMITTEE REPORT CONTINUED G O VE R NAN C OTHER SIGNIFICANT ISSUES IMPACTING FY23 AND/OR FUTURE YEARS OTHER SIGNIFICANT ISSUES IMPACTING FY23 AND/OR FUTURE YEARS E Acquisitions and related liabilities Organisation for Economic Co-operation and Development (OECD) Base Erosion Profit Shifting (BEPS 2.0) Agreement – Pillar 2 Issue Action taken by the Committee Outcome/future actions Issue Action taken by the Committee Outcome/future actions Acquisition liabilities are The Committee reviewed management’s process to The Committee agreed with management’s assessment The UK substantively The Committee received a briefing on the anticipated The Committee concluded that management was in a good amounts payable to former determine the expected future payments and the related of expected future payments for Plimsoll and other previous enacted Finance (No2) Act financial and compliance impact of Pillar 2, informed position to perform accurate and detailed Pillar 2 calculations owners of businesses year end liability, including the classification of those costs acquisitions. 2023 in June 2023 by advice from professional advisers engaged to assist in 2024 and was comfortable that the financial impact to the acquired for remaining linked to employment as exceptional. The Committee was pleased to note that the integration introducing a global minimum management in navigating the detailed and Group would not be material. minority shareholdings. In 2022 the Group acquired a majority stake in Plimsoll of Plimsoll with ITV had been successful, including adoption effective tax rate of 15% for complex legislation. The Committee will continue to monitor the Group’s approach The payments are linked to Productions. During 2023, the Committee considered of ITV’s policies, a good controls environment and ongoing large groups and for financial to and implementation of Pillar 2. the financial and/or management’s post-acquisition review and, in light of the transition to ITV corporate network and systems. years beginning on or after operating performance of review, the appropriateness of the anticipated future 31 December 2023. the business over future payments. In addition, the Committee reviewed the periods and are usually conclusions of EY’s internal audit of Plimsoll’s production Audio-Visual Expenditure Credits (AVEC) linked to continued financial controls and compliance with ITV’s Group policies. employment. Issue Action taken by the Committee Outcome/future actions HM Treasury and HMRC have The Committee received a briefing from management The Committee considered and supported management’s Pensions risk management established a new on the impact of the new UK tax credit regime and a recommendation noting that this would have no impact on Issue Action taken by the Committee Outcome/future actions audio-visual tax regime recommendation to adopt the new AVEC regime at the the Group’s future reported and adjusted profit after tax. (AVEC) to replace the current earliest opportunity. Managing the impact of The Committee received an update on the management of The Committee noted the update and was confident that High-End Television (HETV) economic turbulence in the the Group’s pension risks, with a focus on investment the actions taken meant that the risks identified continued Tax Credit regime in the UK year on the investment governance and strategy. Strong risk management and to be managed and maintained as previously agreed with which results in a reduced strategy of the ITV Pension maintaining the risk exposure in balance were fundamental the Committee. effective tax rate and a Scheme and the valuation of objectives. potential Pillar 2 top-up pension assets and liabilities. tax liability. Treasury and financial risk management Going concern and viability assessments Issue Action taken by the Committee Outcome/future actions Issue Action taken by the Committee Outcome/future actions During 2023 the Committee The Committee reviewed the Group’s debt maturity profile The Committee considered, supported and approved In light of the continuing The Committee reviewed and challenged management’s Following this thorough review and strong challenge of considered updates from and the options to address the short-term refinancing needs management’s proposed policy changes and the actions uncertain economic process and assessment of going concern, longer-term management’s assumptions, the Committee considered the management on the impact of the business, with a term loan from relationship banks taken to mitigate other financial risk. environment, the Committee prospects and viability by considering forecast cash flows, assessment to be appropriate and recommended the draft of financial risks affecting being proposed. Subsequently, an assessment was The Committee also recommended to the Board the applied considerable base case and downside scenario analysis, the results viability statement and related disclosures for approval by the business. considered on management of the longer-term financing approval of the financing proposals of management to scrutiny to management’s of further stress testing of those scenarios, and other the Board. The Committee also concluded that it remained requirements, which included a proposal to implement an ensure the Group retains appropriate liquidity to support assumptions, stress testing principal risks, including continuing uncertainty in the appropriate to adopt the going concern basis of accounting in Euro Medium Term Note programme (during H1 2024). delivery of the Group’s strategy, particularly in the current and scenario analyses macro environment. preparing the consolidated financial statements and the The annual review of treasury policies focused on mitigation uncertain and volatile economic and political environment. supporting the going concern In reaching its view, the Committee also considered: (i) relevant Annual Report and Accounts disclosure was of foreign exchange risk. and viability statements as analyst and other expert commentary to understand the appropriate. See pages 162 and 163. well as seeking impartial wider market views on the Group’s future financial Given the uncertain economic outlook, and its impact on the external views on performance and viability; (ii) Board approved financial demands for content production and advertising, the IR35 ITV’s viability. forecasts; (iii) the Group’s financing facilities including Committee will continue to closely monitor the Group’s Issue Action taken by the Committee Outcome/future actions covenant tests and future funding plans; and (iv) the external financial status and prospects. auditor’s findings and conclusions on this matter. From April 2021 the The Committee considered updates from management The Committee considered and supported management’s responsibility for on developments in the application of IR35 and status of proposed increased provision and proposed accounting The Committee also considered the adequacy and accuracy undertaking IR35 ongoing discussions with HMRC regarding the tax status and treatment, taking into account the external auditor’s views. of the disclosures in the 2023 Annual Report and Accounts in employment status treatment of ‘front of camera’ presenters who were not respect of the Group’s ability to continue as a going concern assessments, and where employees. The Committee noted that the outcome of ITV’s negotiations and its future viability. necessary withholding PAYE with HMRC and the implications for the relevant ‘front of and paying NICs, passed to During the latter part of 2023, the Committee considered camera’ individuals. Impairment assessment the employer, rather than management’s proposed changes to the provision recorded remaining with individuals at 30 June 2023, updated to reflect ongoing discussions and Issue Action taken by the Committee Outcome/future actions and their personal service agreements reached with HMRC, including the removal of companies. ITV has been in certain prior years no longer in scope. Management The continued uncertainty in The Committee considered and challenged: Having received the views of the external auditor following continuous discussion with proposed to classify those amounts related to prior years as the economic environment, • Management’s assessment of the level of aggregation of their detailed audit of the management’s assessment of the HMRC on this matter exceptional given their materiality and nature. with increasing costs, assets for cash-generating units (CGUs) and agreed that no carrying value of CGUs, including goodwill, the Committee throughout 2023. inflation and interest rates, changes were required agreed that no impairment of CGUs is required. and its impact on the trading The Committee agreed with management’s conclusion that outlook for the Group may • The basis for calculating the discount rate for each CGU, give rise to indicators of having sought the external auditor’s views on the sports rights should be assessed for impairment as part of impairment of value of methodology applied and outcome, and consequently the whole portfolio of programme rights. certain Group assets. agreed that the discount rates were considered appropriate in the current economic environment • Management’s assessment of impairment, incorporating the cash flows used to assess going concern and viability assessment, and noted that no impairment was required in either the base case or other scenarios. In 2023, management engaged external advisers to assist in reassessing and improving the Group’s approach to content/ programme rights valuation. Following this review, the decision was taken to revert to a whole portfolio assessment.
110 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 111 AUDIT AND RISK COMMITTEE REPORT CONTINUED G O VE R NAN C OTHER SIGNIFICANT ISSUES IMPACTING FY23 AND/OR FUTURE YEARS OTHER SIGNIFICANT ISSUES IMPACTING FY23 AND/OR FUTURE YEARS E Acquisitions and related liabilities Organisation for Economic Co-operation and Development (OECD) Base Erosion Profit Shifting (BEPS 2.0) Agreement – Pillar 2 IssueAction taken by the CommitteeOutcome/future actionsIssueAction taken by the Committee Outcome/future actions Acquisition liabilities are The Committee reviewed management’s process to The Committee agreed with management’s assessment The UK substantively The Committee received a briefing on the anticipated The Committee concluded that management was in a good amounts payable to former determine the expected future payments and the related of expected future payments for Plimsoll and other previous enacted Finance (No2) Act financial and compliance impact of Pillar 2, informed position to perform accurate and detailed Pillar 2 calculations owners of businesses year end liability, including the classification of those costs acquisitions.2023 in June 2023 by advice from professional advisers engaged to assist in 2024 and was comfortable that the financial impact to the acquired for remaining linked to employment as exceptional. The Committee was pleased to note that the integration introducing a global minimum management in navigating the detailed and Group would not be material. minority shareholdings. In 2022 the Group acquired a majority stake in Plimsoll of Plimsoll with ITV had been successful, including adoption effective tax rate of 15% for complex legislation.The Committee will continue to monitor the Group’s approach The payments are linked to Productions. During 2023, the Committee considered of ITV’s policies, a good controls environment and ongoing large groups and for financial to and implementation of Pillar 2. the financial and/or management’s post-acquisition review and, in light of the transition to ITV corporate network and systems. years beginning on or after operating performance of review, the appropriateness of the anticipated future 31 December 2023. the business over future payments. In addition, the Committee reviewed the periods and are usually conclusions of EY’s internal audit of Plimsoll’s production Audio-Visual Expenditure Credits (AVEC) linked to continued financial controls and compliance with ITV’s Group policies. employment. Issue Action taken by the Committee Outcome/future actions HM Treasury and HMRC have The Committee received a briefing from management The Committee considered and supported management’s Pensions risk managementestablished a new on the impact of the new UK tax credit regime and a recommendation noting that this would have no impact on IssueAction taken by the CommitteeOutcome/future actionsaudio-visual tax regime recommendation to adopt the new AVEC regime at the the Group’s future reported and adjusted profit after tax. (AVEC) to replace the current earliest opportunity. Managing the impact of The Committee received an update on the management of The Committee noted the update and was confident that High-End Television (HETV) economic turbulence in the the Group’s pension risks, with a focus on investment the actions taken meant that the risks identified continued Tax Credit regime in the UK year on the investment governance and strategy. Strong risk management and to be managed and maintained as previously agreed with which results in a reduced strategy of the ITV Pension maintaining the risk exposure in balance were fundamental the Committee. effective tax rate and a Scheme and the valuation of objectives.potential Pillar 2 top-up pension assets and liabilities.tax liability. Treasury and financial risk managementGoing concern and viability assessments IssueAction taken by the CommitteeOutcome/future actionsIssueAction taken by the Committee Outcome/future actions During 2023 the Committee The Committee reviewed the Group’s debt maturity profile The Committee considered, supported and approved In light of the continuing The Committee reviewed and challenged management’s Following this thorough review and strong challenge of considered updates from and the options to address the short-term refinancing needs management’s proposed policy changes and the actions uncertain economic process and assessment of going concern, longer-term management’s assumptions, the Committee considered the management on the impact of the business, with a term loan from relationship banks taken to mitigate other financial risk.environment, the Committee prospects and viability by considering forecast cash flows, assessment to be appropriate and recommended the draft of financial risks affecting being proposed. Subsequently, an assessment was The Committee also recommended to the Board the applied considerable base case and downside scenario analysis, the results viability statement and related disclosures for approval by the business.considered on management of the longer-term financing approval of the financing proposals of management to scrutiny to management’s of further stress testing of those scenarios, and other the Board. The Committee also concluded that it remained requirements, which included a proposal to implement an ensure the Group retains appropriate liquidity to support assumptions, stress testing principal risks, including continuing uncertainty in the appropriate to adopt the going concern basis of accounting in Euro Medium Term Note programme (during H1 2024).delivery of the Group’s strategy, particularly in the current and scenario analyses macro environment. preparing the consolidated financial statements and the The annual review of treasury policies focused on mitigation uncertain and volatile economic and political environment.supporting the going concern In reaching its view, the Committee also considered: (i) relevant Annual Report and Accounts disclosure was of foreign exchange risk.and viability statements as analyst and other expert commentary to understand the appropriate. See pages 162 and 163. well as seeking impartial wider market views on the Group’s future financial Given the uncertain economic outlook, and its impact on the external views on performance and viability; (ii) Board approved financial demands for content production and advertising, the IR35 ITV’s viability. forecasts; (iii) the Group’s financing facilities including Committee will continue to closely monitor the Group’s IssueAction taken by the CommitteeOutcome/future actions covenant tests and future funding plans; and (iv) the external financial status and prospects. auditor’s findings and conclusions on this matter. From April 2021 the The Committee considered updates from management The Committee considered and supported management’s responsibility for on developments in the application of IR35 and status of proposed increased provision and proposed accounting The Committee also considered the adequacy and accuracy undertaking IR35 ongoing discussions with HMRC regarding the tax status and treatment, taking into account the external auditor’s views.of the disclosures in the 2023 Annual Report and Accounts in employment status treatment of ‘front of camera’ presenters who were not respect of the Group’s ability to continue as a going concern assessments, and where employees. The Committee noted that the outcome of ITV’s negotiations and its future viability. necessary withholding PAYE with HMRC and the implications for the relevant ‘front of and paying NICs, passed to During the latter part of 2023, the Committee considered camera’ individuals.Impairment assessment the employer, rather than management’s proposed changes to the provision recorded remaining with individuals at 30 June 2023, updated to reflect ongoing discussions and IssueAction taken by the Committee Outcome/future actions and their personal service agreements reached with HMRC, including the removal of companies. ITV has been in certain prior years no longer in scope. Management The continued uncertainty in The Committee considered and challenged:Having received the views of the external auditor following continuous discussion with proposed to classify those amounts related to prior years as the economic environment, • Management’s assessment of the level of aggregation of their detailed audit of the management’s assessment of the HMRC on this matter exceptional given their materiality and nature. with increasing costs, assets for cash-generating units (CGUs) and agreed that no carrying value of CGUs, including goodwill, the Committee throughout 2023. inflation and interest rates, changes were required agreed that no impairment of CGUs is required. and its impact on the trading The Committee agreed with management’s conclusion that outlook for the Group may • The basis for calculating the discount rate for each CGU, give rise to indicators of having sought the external auditor’s views on the sports rights should be assessed for impairment as part of impairment of value of methodology applied and outcome, and consequently the whole portfolio of programme rights. certain Group assets. agreed that the discount rates were considered appropriate in the current economic environment • Management’s assessment of impairment, incorporating the cash flows used to assess going concern and viability assessment, and noted that no impairment was required in either the base case or other scenarios. In 2023, management engaged external advisers to assist in reassessing and improving the Group’s approach to content/ programme rights valuation. Following this review, the decision was taken to revert to a whole portfolio assessment.
112 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 113 AUDIT AND RISK COMMITTEE REPORT CONTINUED G O VE R NAN C RISK MANAGEMENT AND INTERNAL CONTROLS ITV Speaking Crisis E Our role Committee reviewed: • Assist the Board to establish and articulate overall risk • Biannually, management’s conclusions regarding principal and emerging risks and Together Up anagement M appetite and oversee and advise the Board on specific uncertainties and associated mitigations strategic risk exposures and mitigations • Progress in implementing the enhanced ERM framework, including enhancements to the Oracle Fusion went live on 11 April 2023, The Board continued to receive regular reports Over the past year, a series of significant • Review the risk identification and mitigation processes and risk governance structure changing the operations and interaction of on issues raised during 2023 via Safecall, the external, non-ITV specific incidents and the undertake deep dives into high-risk business areas or • Progress in improving operational risk management capability for security, duty of care, and colleagues, HR, Finance and Production independent whistleblowing facility, and other evolving global landscape have underscored processes crisis management Finance processes. complaint notification channels available within the necessity for a structured and robust crisis • Review the effectiveness of the internal control and risk • Insurance arrangements and policies, including how those support mitigation of principal The Committee noted that a change of this ITV, with the Committee reviewing an overview management response capability at ITV. management processes and other financial risks nature and size was complex, and was pleased summary for the year. This included an During 2023, the revised crisis management • Oversee appropriate compliance, speaking up and fraud that it launched with minimal disruption to the assessment of any identified trends or themes framework and plan was subject to internal • Progress in implementing the financial controls framework and effectiveness review for the in complaints, the nature of any noteworthy prevention arrangements ITV Together programme business with a high volume of users and audit review by EY, as well as tested via a series transactions being processed. allegations, the corrective measures of simulated exercises facilitated by Deloitte, • Ongoing programme of improvements to technology and IT-related controls and implemented to address substantiated governance environment However, due to system and reporting issues complaints, and the process applied to triage the results of both being reported to and identified, various processes and controls did and correctly investigate complaints. The discussed by the Committee, and progress • Mapping of the internal audit plan to key principal and operational risk areas to understand in implementing the agreed resulting changes assurance coverage not operate as anticipated, with alternative Committee also considered the actions taken monitored by the Committee. • Outcome of the risk focused audits undertaken by the internal auditors, including manual controls implemented to mitigate any by management as a result of the investigations’ implementation of agreed actions to address audit conclusions risk. Consequently, Deloitte conducted a post conclusions and recommended additional The Committee acknowledged that the good implementation review in the second half of actions where appropriate, overseeing the progress in 2023 provides a solid foundation for • Enhancements to the Speaking Up policy and report on ongoing actions taken to 2023, focusing on project governance, resourcing investigation of all significant issues reported. continued improvement in 2024, including the strengthen Speaking Up processes and further increase awareness across the organisation, and change management, the outcomes of requirement to conduct regular training and including reflection of the relevant recommendations arising from the Committee’s deep which were communicated to the Committee. The Committee received regular updates on the simulated exercises across the Group in order to dive review in July 2023 and the external review by Jane Mulcahy KC status of and improvements to ITV’s awareness ensure ITV’s resilience and readiness to • Progress in implementation of data privacy and governance enhancements, including Throughout 2023 the Committee closely campaign, alongside an internal audit completed effectively respond to crisis events. actions arising from the internal audit of the effectiveness of relevant processes monitored the programme of remediation and at the end of 2022, the results of which the effectiveness of the mitigations. In addition, highlighted the need to drive continued • Biannually, effectiveness of compliance framework and monitoring the Committee Chair held a number of meetings awareness and focused training to ensure that Cyber • The M&A approvals process and approved amendments with the programme leadership to receive communications are effective. The Committee • Fraud risk and fraud prevention, detection and controls framework and its effectiveness detailed briefings on the progress of the change noted significant progress that had been made • Transformation Programme updates, particularly in respect of ITV Together management plan, providing challenge during 2023, which was demonstrated in the Security and support. strong scores for awareness of the programme • Deep dives on the Group’s resilience to key risks, including cyber, crisis management, and the routes for raising concerns in the duty of care and Speaking Up In the last few months of 2023, the ITV Together engagement survey. The Committee recognises that ITV has a • The internal audit conclusions and recommendations regarding the effectiveness and programme moved into Stabilisation and unique range of factors that impact how maturity of the second lines of defence in respect of the Group’s financial, IT general and Adoption of the Oracle Fusion solution phase, The Committee also noted the actions that management focuses on cyber to enable the compliance controls with the embedding of new ways of working had been taken in 2023 to strengthen recording future business strategy whilst managing the following hyper care, running until June 2024. and collation of relevant data to provide a better immediate risks by reducing dependence on During this phase the Committee will monitor insight into concerns being raised through the legacy systems, building security into the delivery of enhancements to meet the target various channels available across the Group, delivery of its strategy and creating a cyber finance control automation objective; alongside including the Safecall facility. During 2023, culture that provides consistent defence over Risk management Although certain aspects of the Group’s Committee considered the suite of fully embedding the end-to-end IT controls to listening circles/focus groups were introduced, a devolved organisation. ensure Oracle Fusion is robust and sufficiently which were run by an external provider, inviting Recognising the evolving nature of the risk control environment are immature, with automated analytics that enable ongoing controlled, enabling reliance over the process colleagues and freelancers to participate in The Committee received regular updates landscape, due to the increasing pace of some existing deficiencies (particularly in monitoring of high-risk financial transactions and control automation. confidential discussions about areas of concern. throughout 2023 and is pleased with the respect of IT general controls, where and access controls across Group systems. maturity and effective progress achieved. change in the industry, the continued impact The Committee welcomed the development of the macroeconomic environment and mitigations have been implemented to of a programme of mandatory training for line The Group has adopted the internationally global instability, ITV needs to be able to be address these weaknesses), the Committee In 2024, the Committee intends to continue managers on managing grievances, recognised NIST cybersecurity maturity agile in flexing aspects of its strategy is satisfied that the Group’s internal controls with focused bi-annual (and in respect of disciplinaries, concerns and complaints. framework and the Committee is supportive over financial reporting operated effectively certain areas of internal controls, quarterly) of the cyber team using this internationally implementation and manage resulting risks The recommendations arising from the KC’s recognised standard in the development smartly. The Committee’s focus for 2023 throughout the year, with no material sessions with the relevant change review of This Morning included a more targeted weaknesses identified. This was principally programme and compliance, financial, of ITV’s approach. therefore has been on evolving ITV’s approach to Speaking Up related training for based on a programme of internal audit operational and technology controls different parts of the Group and a further During 2023, the Committee received regular approach to risk management to ensure it reviews, independent Group finance sponsors and leadership teams. In particular, strengthening of the concerns and complaints updates on progress in adopting a programme remains appropriate and proportionate as assurance reviews, and monthly the Committee will focus on strategic process. The Committee will monitor of enhancement to the Group’s maturity well as enhancing the understanding of ITV’s management financial control initiatives being implemented within the management’s implementation of these framework, which included: most critical risks. This has included focus on self-assessments and the reviews Group’s technology function, with the enhancements during 2024. • Development of a new security operations progress in optimising the practices and undertaken by the external auditors as part objective of improving the overall IT control capability to detect and protect against cyber behaviours of the second line of defence and in public cloud estate introducing more collaboration and structure of their 2023 audit plan. During 2023, the maturity. Key activities in 2024 will include • Expanded coverage of controls across the across financial, IT, compliance and Committee was regularly presented with updates to the IT controls framework, Group’s international businesses – to improve operational controls, with the Committee observations following second line design completion of control design assessments how to track and measure threats, and changes providing challenge and direction as reviews conducted by the Financial for applicable systems, control gap in cyber culture appropriate. Governance and Compliance team post remediation and rollout of awareness • Continued assessment of third-party Oracle Fusion Go-Live (part of the ITV sessions across Group Technology. The suppliers/vendors to identify risks Financial internal controls Together programme), with a particular focus Committee notes the roadmap of activities For 2024, the Committee will continue to on controls automation progress and fraud for 2024, which includes controls self- regularly review the enhancements in the Throughout 2023, the Committee received controls. Moreover, where specific areas for certification and independent assurance Group’s cyber security profile, which will include regular updates on management’s ongoing improvement were identified, it was noted testing across the IT controls landscape, to additional focus on improving API security, enhancements to the Group’s controls that mitigating workaround controls and enable a cultural shift and more proactive increasing defence against AI-based email environments, including financial and IT processes were in place. These updates management of risks. attacks and bolstering defences against data controls, finance fraud risk prevention, provided the Committee with the loss with an aim to achieve target maturity cyber security, data privacy processes opportunity to increase the scope of its own by the end of the year. and capability, Speaking Up effectiveness, review and obtain additional visibility over compliance programme, and resilience to the financial control environment during the risk, including crisis management and year, particularly those areas not covered in business continuity. the Internal Audit plan. In addition, the
112 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 113 AUDIT AND RISK COMMITTEE REPORT CONTINUED G O VE R NAN C RISK MANAGEMENT AND INTERNAL CONTROLSITV Speaking Crisis E Our roleCommittee reviewed: • Assist the Board to establish and articulate overall risk • Biannually, management’s conclusions regarding principal and emerging risks and Together Upanagement M appetite and oversee and advise the Board on specific uncertainties and associated mitigations strategic risk exposures and mitigations• Progress in implementing the enhanced ERM framework, including enhancements to the Oracle Fusion went live on 11 April 2023, The Board continued to receive regular reports Over the past year, a series of significant • Review the risk identification and mitigation processes and risk governance structurechanging the operations and interaction of on issues raised during 2023 via Safecall, the external, non-ITV specific incidents and the undertake deep dives into high-risk business areas or • Progress in improving operational risk management capability for security, duty of care, and colleagues, HR, Finance and Production independent whistleblowing facility, and other evolving global landscape have underscored processescrisis management Finance processes. complaint notification channels available within the necessity for a structured and robust crisis • Review the effectiveness of the internal control and risk • Insurance arrangements and policies, including how those support mitigation of principal The Committee noted that a change of this ITV, with the Committee reviewing an overview management response capability at ITV. management processesand other financial risksnature and size was complex, and was pleased summary for the year. This included an During 2023, the revised crisis management • Oversee appropriate compliance, speaking up and fraud that it launched with minimal disruption to the assessment of any identified trends or themes framework and plan was subject to internal • Progress in implementing the financial controls framework and effectiveness review for the in complaints, the nature of any noteworthy prevention arrangementsITV Together programmebusiness with a high volume of users and audit review by EY, as well as tested via a series transactions being processed. allegations, the corrective measures of simulated exercises facilitated by Deloitte, • Ongoing programme of improvements to technology and IT-related controls and implemented to address substantiated governance environment However, due to system and reporting issues complaints, and the process applied to triage the results of both being reported to and identified, various processes and controls did and correctly investigate complaints. The discussed by the Committee, and progress • Mapping of the internal audit plan to key principal and operational risk areas to understand in implementing the agreed resulting changes assurance coverage not operate as anticipated, with alternative Committee also considered the actions taken monitored by the Committee. • Outcome of the risk focused audits undertaken by the internal auditors, including manual controls implemented to mitigate any by management as a result of the investigations’ implementation of agreed actions to address audit conclusions risk. Consequently, Deloitte conducted a post conclusions and recommended additional The Committee acknowledged that the good implementation review in the second half of actions where appropriate, overseeing the progress in 2023 provides a solid foundation for • Enhancements to the Speaking Up policy and report on ongoing actions taken to 2023, focusing on project governance, resourcing investigation of all significant issues reported. continued improvement in 2024, including the strengthen Speaking Up processes and further increase awareness across the organisation, and change management, the outcomes of requirement to conduct regular training and including reflection of the relevant recommendations arising from the Committee’s deep which were communicated to the Committee.The Committee received regular updates on the simulated exercises across the Group in order to dive review in July 2023 and the external review by Jane Mulcahy KC status of and improvements to ITV’s awareness ensure ITV’s resilience and readiness to • Progress in implementation of data privacy and governance enhancements, including Throughout 2023 the Committee closely campaign, alongside an internal audit completed effectively respond to crisis events. actions arising from the internal audit of the effectiveness of relevant processes monitored the programme of remediation and at the end of 2022, the results of which the effectiveness of the mitigations. In addition, highlighted the need to drive continued • Biannually, effectiveness of compliance framework and monitoringthe Committee Chair held a number of meetings awareness and focused training to ensure that Cyber • The M&A approvals process and approved amendmentswith the programme leadership to receive communications are effective. The Committee • Fraud risk and fraud prevention, detection and controls framework and its effectiveness detailed briefings on the progress of the change noted significant progress that had been made • Transformation Programme updates, particularly in respect of ITV Togethermanagement plan, providing challenge during 2023, which was demonstrated in the Security and support. strong scores for awareness of the programme • Deep dives on the Group’s resilience to key risks, including cyber, crisis management, and the routes for raising concerns in the duty of care and Speaking UpIn the last few months of 2023, the ITV Together engagement survey. The Committee recognises that ITV has a • The internal audit conclusions and recommendations regarding the effectiveness and programme moved into Stabilisation and unique range of factors that impact how maturity of the second lines of defence in respect of the Group’s financial, IT general and Adoption of the Oracle Fusion solution phase, The Committee also noted the actions that management focuses on cyber to enable the compliance controls with the embedding of new ways of working had been taken in 2023 to strengthen recording future business strategy whilst managing the following hyper care, running until June 2024. and collation of relevant data to provide a better immediate risks by reducing dependence on During this phase the Committee will monitor insight into concerns being raised through the legacy systems, building security into the delivery of enhancements to meet the target various channels available across the Group, delivery of its strategy and creating a cyber finance control automation objective; alongside including the Safecall facility. During 2023, culture that provides consistent defence over Risk managementAlthough certain aspects of the Group’s Committee considered the suite of fully embedding the end-to-end IT controls to listening circles/focus groups were introduced, a devolved organisation. ensure Oracle Fusion is robust and sufficiently which were run by an external provider, inviting Recognising the evolving nature of the risk control environment are immature, with automated analytics that enable ongoing controlled, enabling reliance over the process colleagues and freelancers to participate in The Committee received regular updates landscape, due to the increasing pace of some existing deficiencies (particularly in monitoring of high-risk financial transactions and control automation.confidential discussions about areas of concern. throughout 2023 and is pleased with the respect of IT general controls, where and access controls across Group systems. maturity and effective progress achieved. change in the industry, the continued impact The Committee welcomed the development of the macroeconomic environment and mitigations have been implemented to of a programme of mandatory training for line The Group has adopted the internationally global instability, ITV needs to be able to be address these weaknesses), the Committee In 2024, the Committee intends to continue managers on managing grievances, recognised NIST cybersecurity maturity agile in flexing aspects of its strategy is satisfied that the Group’s internal controls with focused bi-annual (and in respect of disciplinaries, concerns and complaints. framework and the Committee is supportive over financial reporting operated effectively certain areas of internal controls, quarterly) of the cyber team using this internationally implementation and manage resulting risks The recommendations arising from the KC’s recognised standard in the development smartly. The Committee’s focus for 2023 throughout the year, with no material sessions with the relevant change review of This Morning included a more targeted weaknesses identified. This was principally programme and compliance, financial, of ITV’s approach. therefore has been on evolving ITV’s approach to Speaking Up related training for based on a programme of internal audit operational and technology controls different parts of the Group and a further During 2023, the Committee received regular approach to risk management to ensure it reviews, independent Group finance sponsors and leadership teams. In particular, strengthening of the concerns and complaints updates on progress in adopting a programme remains appropriate and proportionate as assurance reviews, and monthly the Committee will focus on strategic process. The Committee will monitor of enhancement to the Group’s maturity well as enhancing the understanding of ITV’s management financial control initiatives being implemented within the management’s implementation of these framework, which included: most critical risks. This has included focus on self-assessments and the reviews Group’s technology function, with the enhancements during 2024. • Development of a new security operations progress in optimising the practices and undertaken by the external auditors as part objective of improving the overall IT control capability to detect and protect against cyber behaviours of the second line of defence and in public cloud estate introducing more collaboration and structure of their 2023 audit plan. During 2023, the maturity. Key activities in 2024 will include • Expanded coverage of controls across the across financial, IT, compliance and Committee was regularly presented with updates to the IT controls framework, Group’s international businesses – to improve operational controls, with the Committee observations following second line design completion of control design assessments how to track and measure threats, and changes providing challenge and direction as reviews conducted by the Financial for applicable systems, control gap in cyber culture appropriate. Governance and Compliance team post remediation and rollout of awareness • Continued assessment of third-party Oracle Fusion Go-Live (part of the ITV sessions across Group Technology. The suppliers/vendors to identify risks Financial internal controlsTogether programme), with a particular focus Committee notes the roadmap of activities For 2024, the Committee will continue to on controls automation progress and fraud for 2024, which includes controls self- regularly review the enhancements in the Throughout 2023, the Committee received controls. Moreover, where specific areas for certification and independent assurance Group’s cyber security profile, which will include regular updates on management’s ongoing improvement were identified, it was noted testing across the IT controls landscape, to additional focus on improving API security, enhancements to the Group’s controls that mitigating workaround controls and enable a cultural shift and more proactive increasing defence against AI-based email environments, including financial and IT processes were in place. These updates management of risks. attacks and bolstering defences against data controls, finance fraud risk prevention, provided the Committee with the loss with an aim to achieve target maturity cyber security, data privacy processes opportunity to increase the scope of its own by the end of the year. and capability, Speaking Up effectiveness, review and obtain additional visibility over compliance programme, and resilience to the financial control environment during the risk, including crisis management and year, particularly those areas not covered in business continuity.the Internal Audit plan. In addition, the
114 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 115 AUDIT AND RISK COMMITTEE REPORT CONTINUED G O VE R NAN The Committee concluded that overall it was Prior to the start of the year, the Committee values by management and other C CLIMATE-RELATED GOVERNANCE pleased with the quality and insight provided considered and approved the 2023 internal employees. A cultural assessment is E by the internal audits completed, particularly audit plan, which was structured to align with routinely incorporated in audit ratings. Our role Items covered the specialist audits, with material ITV’s strategic drivers and principal risks and Review of ITV’s global environmental and climate risk Reviewed: improvements in various control areas and addressed operational, financial, The Committee is satisfied that, during mitigation strategy, targets, progress and reporting in • Report from the independent provider of limited assurance over Greenhouse Gas (GHG) processes being implemented as a result of compliance and technology controls and a 2023, delivery of the approved internal compliance with the Task Force on Climate-related Financial emissions data, including Scope 1, 2 and 3 internal audit recommendations. In reaching number of key operational risks. The internal audit strategy and plan provided timely Disclosures (TCFD), Climate-related Financial Disclosures this conclusion the Committee audits performed provided assurance over and appropriate assurance on the (CFD) and other environmental reporting requirements, • ITV’s TCFD reporting, including ITV climate scenario analysis and consequential risks and and readiness for publishing a Climate Transition Plan, impact (including financial). acknowledged that the EY internal audit areas deemed to be of greater risk and effectiveness of controls in place to in accordance with the UK government’s Transition Plan • Climate risk embedded into ITV’s Principal Risks team is still familiarising itself with the relative importance to the Group in 2023. successfully manage relevant Group Taskforce recommendation, alongside preparation for • Roadmap to achieve Net Zero detailed in Climate Transition Plan, published alongside various businesses of the Group and The internal auditor also provided the principal risks. EU Corporate Sustainability Reporting Directive disclosure Annual Report and Accounts. developing appropriate relationships with Committee (and therefore the Board) with in 2026. senior management, whilst maintaining the valuable insight on the culture across the Assessing the integrity of the targets and data included in independence of management. Group and the reflection of the Group’s the reporting and obtaining appropriate assurance on its completeness, reasonableness and accuracy. EXTERNAL AUDITOR Climate-related governance The Committee also reviewed the The Committee is encouraged by the Our role Items covered The Committee plays a key role in the methodology and internal quality assurance continued progress made by management to processes over GHG emissions reporting, meet the minimum requirements for TCFD • Oversee the relationship with the external auditor • Regularly meeting with the external auditor in the absence of management governance of climate-related risks and following the implementation of a new disclosures, and in starting to deliver against • Review the quality and effectiveness of the external audit, • Review, challenge and subsequent approval of H1 review and FY23 audit strategy/plans opportunities and the Group’s compliance environmental reporting system across ITV, ITV’s ambitious environmental targets. The including approval of the annual audit plan, and the • PwC’s reports on the H1 review and FY23 audit progress, findings and conclusions with environmental and climate risk related and the results of the independent limited Committee also noted the significant procedures and controls designed to ensure auditor • Auditor opinion on FY23 financial statements regulatory reporting requirements. During independence and objectiveness 2023, management briefed the Committee assurance provided over carbon footprint improvements in the management of • Review and make recommendations to the Board on the • Recommendation to reappoint PwC at 2024 AGM on progress in further embedding climate data. ITV has appointed EcoAct as its environmental targets and climate-related tendering of the external audit contract, and the • Approval of non-audit services policy action, risks and opportunities into the sustainability partner to advise on TCFD and risks and opportunities and the continuing appointment, remuneration and terms of engagement of the • Approval of 2023 audit fee proposal running of the business (and potential CFD recommendations and best practice progress made to enhance the approach and external auditor • Consideration of the ongoing independence of the external auditor and the evidence of financial implications), including the planned and highlight areas for improvement. In to strengthen the quality of reporting that quality and effectiveness in the delivery of the audit publishing of its first Climate Transition Plan addition to reviewing ITV’s 2023 TCFD will continue into 2024. • Review outcome for FY22 external audit quality indicators (AQIs), setting of the 2023 AQI in 2024 and the steps taken to enhance ITV’s disclosure against TCFD and CFD measures and subsequent consideration and monitoring of performance against these, alignment to the TCFD and CFD criteria and recommendations, EcoAct has also A key area of focus for the Committee during including post the FY23 audit related disclosures. The Committee agreed assessed the report against the Climate 2024 will be ensuring the Company continues with management’s assessment that the Financial Disclosure recommendations, to respond appropriately to the rapidly financial impact of known risks and following changes to the Companies Act. changing and new regulations and reporting opportunities is not material. requirements, extending the limited External audit effectiveness • Audit plan and strategy: The Committee • Interaction with auditor: The numerous assurance to a wider set of indicators and and quality discussed PwC’s detailed audit plan and interactions with the auditor provided agreeing with management a timeline for strategy, including the intended scope of the Committee with an insight into the upgrading to reasonable assurance. The Committee is cognisant of the fact the audit, identification of significant and quality of the audit process and the that assessing external audit quality is a key elevated audit risks, the level of materiality audit leadership team, and with the responsibility within its remit. Set out below proposed and the principles of PwC’s opportunity to assess the auditor’s are the specific areas that the Committee centrally directed audit approach. The challenge of management’s views. In focused on in assessing audit quality, Committee welcomed the plan to enhance addition, the Committee Chair met INTERNAL AUDIT including relevant outcomes: the focus on utilising data-enabled regularly with the lead audit partner, Our role Items covered • Identification of Audit Quality Indicators auditing approaches to maximise receiving early insight to the progress of (AQIs): In 2022 seven AQIs were identified efficiencies and insight from the auditor’s the audit and any issues emerging, • Monitor and review the effectiveness and independence of • Performed an assessment of internal audit independence and effectiveness as useful in enabling the Committee to testing. Following discussion and including the auditor’s views or concerns the internal audit function • Approved the 2023 and 2024 internal audit plans challenge, the Committee agreed the regarding the capacity within the finance • Review and approve the internal audit plan and monitor its assess the effectiveness and quality of • Reviewed internal audit reports including a review of activity, key recommendations arising the external audit. In July 2023 the methodology adopted for determining teams, given the ongoing challenges implementation, approving any amendments to the plan from audits, themes across audits, status reports on action plans and regulatory and materiality and the scope of the audit. related to the introduction of the new • Review the continued appropriateness of the outsourcing of programme compliance Committee reviewed performance of these AQIs against the 2022 targets and • Auditor’s reporting (written and verbal) Oracle Fusion system and ways of working. the internal audit function, oversee the tendering of the • Annual review of risk acceptance of audit findings The Committee noted that PwC internal audit contract and approve the appointment of the concluded that the adoption of AQIs was a to the Committee: The Committee internal auditor and the remuneration and terms of • Meeting regularly with the internal auditor in the absence of management meaningful and valuable tool for all reviewed the effectiveness of the audit challenged management robustly on key engagement parties. Seven AQIs were identified and throughout the year, taking into account judgements and estimates, accounting have been used for the 2023 audit. A final (amongst other things) the delivery of the treatments and disclosures. The review of the performance of the AQIs approved audit strategy, approach to Committee also reviewed PwC’s 2023 against the 2023 targets will be adjusting the audit plan to reflect changes transparency report. Internal audit The Committee assesses the effectiveness Group CFO & COO (who also represented undertaken in May 2024. in risk assessment during the year and EY was appointed ITV’s internal auditor with of the internal audit throughout the year management’s views on the quality of the insight and robust challenge around the effect from April 2022. The Committee using a number of measures, including the internal audit provision). The discussion was key accounting judgements and in dealing continues to support ITV’s current model of a Committee’s private sessions with the guided by a series of questions circulated by with management. fully outsourced internal audit function, internal audit partner, reports from internal the Committee Chair, which included internal which allows best practice in terms of audit on the development and delivery of the auditor independence and objectivity, risk-based approach and auditing internal audit plan, communication of results resourcing, involvement in business techniques, continuous robust and of reviews performed and the completion of discussions on risk, and communications independent challenge, and the use of agreed actions arising from reviews. In between the internal auditor and the specialists in high-risk areas and across the addition, the Committee formally considered Committee. various geographies. the effectiveness and quality of the internal audit provision in a private discussion between the Committee members and
114 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 115 AUDIT AND RISK COMMITTEE REPORT CONTINUED G O VE R NAN The Committee concluded that overall it was Prior to the start of the year, the Committee values by management and other C CLIMATE-RELATED GOVERNANCE pleased with the quality and insight provided considered and approved the 2023 internal employees. A cultural assessment is E by the internal audits completed, particularly audit plan, which was structured to align with routinely incorporated in audit ratings. Our roleItems covered the specialist audits, with material ITV’s strategic drivers and principal risks and Review of ITV’s global environmental and climate risk Reviewed:improvements in various control areas and addressed operational, financial, The Committee is satisfied that, during mitigation strategy, targets, progress and reporting in • Report from the independent provider of limited assurance over Greenhouse Gas (GHG) processes being implemented as a result of compliance and technology controls and a 2023, delivery of the approved internal compliance with the Task Force on Climate-related Financial emissions data, including Scope 1, 2 and 3internal audit recommendations. In reaching number of key operational risks. The internal audit strategy and plan provided timely Disclosures (TCFD), Climate-related Financial Disclosures this conclusion the Committee audits performed provided assurance over and appropriate assurance on the (CFD) and other environmental reporting requirements, • ITV’s TCFD reporting, including ITV climate scenario analysis and consequential risks and and readiness for publishing a Climate Transition Plan, impact (including financial).acknowledged that the EY internal audit areas deemed to be of greater risk and effectiveness of controls in place to in accordance with the UK government’s Transition Plan • Climate risk embedded into ITV’s Principal Risksteam is still familiarising itself with the relative importance to the Group in 2023. successfully manage relevant Group Taskforce recommendation, alongside preparation for • Roadmap to achieve Net Zero detailed in Climate Transition Plan, published alongside various businesses of the Group and The internal auditor also provided the principal risks. EU Corporate Sustainability Reporting Directive disclosure Annual Report and Accounts. developing appropriate relationships with Committee (and therefore the Board) with in 2026. senior management, whilst maintaining the valuable insight on the culture across the Assessing the integrity of the targets and data included in independence of management. Group and the reflection of the Group’s the reporting and obtaining appropriate assurance on its completeness, reasonableness and accuracy. EXTERNAL AUDITOR Climate-related governanceThe Committee also reviewed the The Committee is encouraged by the Our role Items covered The Committee plays a key role in the methodology and internal quality assurance continued progress made by management to processes over GHG emissions reporting, meet the minimum requirements for TCFD • Oversee the relationship with the external auditor • Regularly meeting with the external auditor in the absence of management governance of climate-related risks and following the implementation of a new disclosures, and in starting to deliver against • Review the quality and effectiveness of the external audit, • Review, challenge and subsequent approval of H1 review and FY23 audit strategy/plans opportunities and the Group’s compliance environmental reporting system across ITV, ITV’s ambitious environmental targets. The including approval of the annual audit plan, and the • PwC’s reports on the H1 review and FY23 audit progress, findings and conclusions with environmental and climate risk related and the results of the independent limited Committee also noted the significant procedures and controls designed to ensure auditor • Auditor opinion on FY23 financial statements regulatory reporting requirements. During independence and objectiveness 2023, management briefed the Committee assurance provided over carbon footprint improvements in the management of • Review and make recommendations to the Board on the • Recommendation to reappoint PwC at 2024 AGM on progress in further embedding climate data. ITV has appointed EcoAct as its environmental targets and climate-related tendering of the external audit contract, and the • Approval of non-audit services policy action, risks and opportunities into the sustainability partner to advise on TCFD and risks and opportunities and the continuing appointment, remuneration and terms of engagement of the • Approval of 2023 audit fee proposal running of the business (and potential CFD recommendations and best practice progress made to enhance the approach and external auditor • Consideration of the ongoing independence of the external auditor and the evidence of financial implications), including the planned and highlight areas for improvement. In to strengthen the quality of reporting that quality and effectiveness in the delivery of the audit publishing of its first Climate Transition Plan addition to reviewing ITV’s 2023 TCFD will continue into 2024. • Review outcome for FY22 external audit quality indicators (AQIs), setting of the 2023 AQI in 2024 and the steps taken to enhance ITV’s disclosure against TCFD and CFD measures and subsequent consideration and monitoring of performance against these, alignment to the TCFD and CFD criteria and recommendations, EcoAct has also A key area of focus for the Committee during including post the FY23 audit related disclosures. The Committee agreed assessed the report against the Climate 2024 will be ensuring the Company continues with management’s assessment that the Financial Disclosure recommendations, to respond appropriately to the rapidly financial impact of known risks and following changes to the Companies Act. changing and new regulations and reporting opportunities is not material.requirements, extending the limited External audit effectiveness • Audit plan and strategy: The Committee • Interaction with auditor: The numerous assurance to a wider set of indicators and and quality discussed PwC’s detailed audit plan and interactions with the auditor provided agreeing with management a timeline for strategy, including the intended scope of the Committee with an insight into the upgrading to reasonable assurance. The Committee is cognisant of the fact the audit, identification of significant and quality of the audit process and the that assessing external audit quality is a key elevated audit risks, the level of materiality audit leadership team, and with the responsibility within its remit. Set out below proposed and the principles of PwC’s opportunity to assess the auditor’s are the specific areas that the Committee centrally directed audit approach. The challenge of management’s views. In focused on in assessing audit quality, Committee welcomed the plan to enhance addition, the Committee Chair met INTERNAL AUDIT including relevant outcomes: the focus on utilising data-enabled regularly with the lead audit partner, Our roleItems covered • Identification of Audit Quality Indicators auditing approaches to maximise receiving early insight to the progress of (AQIs): In 2022 seven AQIs were identified efficiencies and insight from the auditor’s the audit and any issues emerging, • Monitor and review the effectiveness and independence of • Performed an assessment of internal audit independence and effectivenessas useful in enabling the Committee to testing. Following discussion and including the auditor’s views or concerns the internal audit function• Approved the 2023 and 2024 internal audit plans challenge, the Committee agreed the regarding the capacity within the finance • Review and approve the internal audit plan and monitor its assess the effectiveness and quality of • Reviewed internal audit reports including a review of activity, key recommendations arising the external audit. In July 2023 the methodology adopted for determining teams, given the ongoing challenges implementation, approving any amendments to the planfrom audits, themes across audits, status reports on action plans and regulatory and materiality and the scope of the audit. related to the introduction of the new • Review the continued appropriateness of the outsourcing of programme complianceCommittee reviewed performance of these AQIs against the 2022 targets and • Auditor’s reporting (written and verbal) Oracle Fusion system and ways of working. the internal audit function, oversee the tendering of the • Annual review of risk acceptance of audit findings The Committee noted that PwC internal audit contract and approve the appointment of the concluded that the adoption of AQIs was a to the Committee: The Committee internal auditor and the remuneration and terms of • Meeting regularly with the internal auditor in the absence of managementmeaningful and valuable tool for all reviewed the effectiveness of the audit challenged management robustly on key engagement parties. Seven AQIs were identified and throughout the year, taking into account judgements and estimates, accounting have been used for the 2023 audit. A final (amongst other things) the delivery of the treatments and disclosures. The review of the performance of the AQIs approved audit strategy, approach to Committee also reviewed PwC’s 2023 against the 2023 targets will be adjusting the audit plan to reflect changes transparency report. Internal auditThe Committee assesses the effectiveness Group CFO & COO (who also represented undertaken in May 2024. in risk assessment during the year and EY was appointed ITV’s internal auditor with of the internal audit throughout the year management’s views on the quality of the insight and robust challenge around the effect from April 2022. The Committee using a number of measures, including the internal audit provision). The discussion was key accounting judgements and in dealing continues to support ITV’s current model of a Committee’s private sessions with the guided by a series of questions circulated by with management. fully outsourced internal audit function, internal audit partner, reports from internal the Committee Chair, which included internal which allows best practice in terms of audit on the development and delivery of the auditor independence and objectivity, risk-based approach and auditing internal audit plan, communication of results resourcing, involvement in business techniques, continuous robust and of reviews performed and the completion of discussions on risk, and communications independent challenge, and the use of agreed actions arising from reviews. In between the internal auditor and the specialists in high-risk areas and across the addition, the Committee formally considered Committee. various geographies. the effectiveness and quality of the internal audit provision in a private discussion between the Committee members and
116 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 117 AUDIT AND RISK COMMITTEE REPORT CONTINUED G REMUNERATION REPORT O VE R NAN • Internal evaluation session: Drawing the Audit tender and rotation Committee conclusions and C above assessments together, and key to PwC was appointed as the external auditor confirmations E the determination of a high-quality audit, for ITV effective from 1 January 2021, In this report was a formal internal assessment session Fair, balanced and understandable following a formal competitive tender attended by the Committee members and process, including seeking investor views The Board is required to provide its opinion the Group CFO & COO. This session was and agreement. The current PwC lead audit on whether it considers that the Company’s informed by circulating in advance themes partner, Jonathan Lambert, has led the audit 2023 Annual Report and Accounts, taken for discussion, including the audit plan and since the beginning of PwC’s tenure at ITV. as a whole, are fair, balanced and strategy, execution of the agreed plan and The Company will put the external audit understandable, and provide the information conclusion, team performance and contract out to public tender at least every necessary for shareholders to assess the communications, firm-wide procedures ten years and will seek the rotation of the Company’s position and performance, (including resources, support and culture), audit partner in line with regulation and business model and strategy. and insights and the reporting PwC shared professional and ethical guidance. SHARMILA NEBHRAJANI OBE with the Committee. The Group CFO & The Committee discussed the preparation CHAIR, REMUNERATION COMMITTEE COO’s input to this session was informed The Company confirms that it has complied of the Company’s 2023 Annual Report and by a prior meeting with relevant members with the provisions of the CMA‘s Statutory Accounts with the Board. To support the of the finance team, and other relevant Audit Services for Large Companies Market Board in providing its opinion, the Committee The purpose of this report is to set teams, to ensure that feedback was Investigation (Mandatory Use of Competitive considered the assigned responsibilities for out for shareholders the principles obtained from all levels and divisions Tender Processes and Audit Committee content and overall cohesion and clarity of and policy we apply to remuneration Dear Shareholder the programme to have delivered of the Group that interacted with PwC. Responsibilities) Order 2014 for the financial the Annual Report and Accounts and for our Directors and to update you Despite a challenging and rapidly evolving incremental annualised savings of at The Committee spent time discussing year under review. assessed the quality of reporting through on how we have applied these for market backdrop, this has been a year of least £50 million gross per year, giving a the degree of challenge and robustness discussion with Management and the the financial year ended progress for ITV. Economic headwinds have £30 million in year gross benefit in 2024. of approach to the audit. Independence and objectivity external auditor. Specific areas of challenge 31 December 2023. The report negatively impacted the broader sector, included the presentation of exceptional also aims to demonstrate how however we continued to make progress The pace of change for the sector continues The assessments above enabled the In addition to the above assessment of the items, the equal prominence of GAAP and to be significant. Technology advances are effectiveness and quality of the audit, the our current approach and our on strengthening the capabilities of the Committee to conclude that PwC has non-GAAP financial measures within the Remuneration Policy align with our organisation and hitting a number of key dramatically increasing the choices for continued to provide a high-quality robust Committee seeks to assess and ensure the front half of the Annual Report and Accounts consumers, the emergence of generative AI objectivity and independence of the external strategy, support the retention of milestones on our strategic journey to be audit, which it conducted with rigour and and the description of going concern and key talent and reward them for ‘More than TV’, evolving from a legacy is a potential game changer in the world of effective and constructive challenge, auditor through: viability statement assumptions. production and the competitor set is now strong performance. broadcaster to a more sustainable media including questioning key accounting issues, • Focus on the assignment and rotation of and entertainment business. made up of international streamers and and exercising professional scepticism in its key personnel The process included considering each global tech corporations rather than national review of management’s assumptions, • The adequacy of audit resource of the elements (fair, balanced and READ MORE We delivered against each of our three main television broadcasters. In light of these judgements and assertions. understandable) on an individual basis to strategic objectives. Studios grew revenue structural shifts it is essential that the The Policy on the Independence and ensure ITV’s reporting was comprehensive and profits to record levels, deploying its business continues to evolve and respond. The Committee appreciated, in particular, in a clear and consistent way, and in Remuneration Commiee (page 119) 2024 will be another pivotal year with a focus Objectivity of External Auditors (approved in global scale and strength to win business the understanding of the business and the February 2024), which includes restrictions compliance with accounting standards and Remuneration Policy application in across all major genres and geographies. In on reshaping the organisation, so that ITV can regulatory and legal requirements and be a sustainable media and entertainment quality of communications of the lead and on the provision of non-audit services and 2023 and 2024 (from page 120) streaming, ITVX had a successful launch technology audit partners, the detailed the hiring of former external auditor guidelines. The reviews carried out by year, proving technically robust and through business for the long term. risk-based planning (with clear explanations internal functions within the Company and Directors’ Remuneration Policy employees. This policy is available on the (from page 122) the quality and depth of its content attracted for any subsequent deviations) and the governance section of ITV’s website: www. independent reviewers were undertaken with large cohorts of new viewers. The linear Policy renewal structured, pragmatic approach to finding itvplc.com/investors/governance/policies a view to ensuring that all material matters Remuneration across the Company broadcast business continued to In line with the usual three-year cycle, the have been reflected in the Company’s 2023 the right solution, supported by the effective (page 129) demonstrate its extraordinary ability to Director’s Remuneration Policy will require use of PwC internal experts and specialists. Non-audit services Annual Report and Accounts, and that they generate mass, simultaneous audiences. In renewal at the 2024 AGM. correctly reflect: Annual Report on Remuneration In accordance with the Independence (from page 130) addition, innovations such as Planet V, the and Objectivity of External Auditors policy, in The Company’s position and performance as platform enabling the growth of ITV’s digital As part of the last policy renewal, 2023 the Company incurred fees for described on pages 18 to 31 Other disclosures (from page 137) advertising, reinforced ITV’s position as the shareholders approved the adoption of non-audit services of approximately clear leader in UK commercial television. Restricted Shares as our primary long-term The Company’s business model as described incentive vehicle. The rationale for this £1,500,000 (2022: £155,000) which related on pages 2 and 3 principally to reporting accountant work on a Macroeconomic pressures have depressed model included: proposed acquisition and the review of the The Company’s strategy, as described on advertising volumes across the market. pages 10 to 13 Continued cost of living pressures have • Simple structure – highly effective pay interim financial information. For information model in a competitive global media on audit fees see note 2.1 to the financial affected consumer demand and this has Following its review, the Committee advised resulted in reduced marketing spend by talent market statements. the Board that the Company’s Annual Report many advertisers, impacting ITV’s financial • Addresses inherent advertising market and Accounts for the year ended results. Total revenues for 2023 were slightly volatility – the performance of the 31 December 2023 were fair, balanced down on the prior year at £4,260m. Although business continues to be inherently linked and understandable. there was an expectation that adjusted to the buoyancy of the highly cyclical EBITA for 2023 would fall as a result of advertising market. This often makes planned strategic investment, the outcome long-term target setting challenging of £489m was towards the lower-end of • Rewards strategic investment and our forecasts reflecting a more challenging transformation – focus on execution of our external environment. We are pleased to investment strategy to deliver long-term see that the balance sheet remains robust, sustainable performance, rather than enabling our targeted strategic investment short-term gain. The structure provides programme to continue and securing the flexibility, by allowing the delivery of the dividend for the full year at 5.0p, consistent strategy to be judged over the longer term, with last year. We are now in the early stages rather than within fixed three year of a new strategic restructuring and performance periods efficiency programme across the Group to • Focuses executives on long-term reshape the cost base, enhance profitability, stewardship of the brand and support the growth drivers of Studios and Streaming. By the end of 2024 we expect
116 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 117 AUDIT AND RISK COMMITTEE REPORT CONTINUED G REMUNERATION REPORT O VE R NAN • Internal evaluation session: Drawing the Audit tender and rotation Committee conclusions and C above assessments together, and key to PwC was appointed as the external auditor confirmations E the determination of a high-quality audit, for ITV effective from 1 January 2021, In this report was a formal internal assessment session Fair, balanced and understandable following a formal competitive tender attended by the Committee members and process, including seeking investor views The Board is required to provide its opinion the Group CFO & COO. This session was and agreement. The current PwC lead audit on whether it considers that the Company’s informed by circulating in advance themes partner, Jonathan Lambert, has led the audit 2023 Annual Report and Accounts, taken for discussion, including the audit plan and since the beginning of PwC’s tenure at ITV. as a whole, are fair, balanced and strategy, execution of the agreed plan and The Company will put the external audit understandable, and provide the information conclusion, team performance and contract out to public tender at least every necessary for shareholders to assess the communications, firm-wide procedures ten years and will seek the rotation of the Company’s position and performance, (including resources, support and culture), audit partner in line with regulation and business model and strategy. and insights and the reporting PwC shared professional and ethical guidance. SHARMILA NEBHRAJANI OBE with the Committee. The Group CFO & The Committee discussed the preparation CHAIR, REMUNERATION COMMITTEE COO’s input to this session was informed The Company confirms that it has complied of the Company’s 2023 Annual Report and by a prior meeting with relevant members with the provisions of the CMA‘s Statutory Accounts with the Board. To support the of the finance team, and other relevant Audit Services for Large Companies Market Board in providing its opinion, the Committee The purpose of this report is to set teams, to ensure that feedback was Investigation (Mandatory Use of Competitive considered the assigned responsibilities for out for shareholders the principles obtained from all levels and divisions Tender Processes and Audit Committee content and overall cohesion and clarity of and policy we apply to remuneration Dear Shareholder the programme to have delivered of the Group that interacted with PwC. Responsibilities) Order 2014 for the financial the Annual Report and Accounts and for our Directors and to update you Despite a challenging and rapidly evolving incremental annualised savings of at The Committee spent time discussing year under review.assessed the quality of reporting through on how we have applied these for market backdrop, this has been a year of least £50 million gross per year, giving a the degree of challenge and robustness discussion with Management and the the financial year ended progress for ITV. Economic headwinds have £30 million in year gross benefit in 2024. of approach to the audit.Independence and objectivityexternal auditor. Specific areas of challenge 31 December 2023. The report negatively impacted the broader sector, included the presentation of exceptional also aims to demonstrate how however we continued to make progress The pace of change for the sector continues The assessments above enabled the In addition to the above assessment of the items, the equal prominence of GAAP and to be significant. Technology advances are effectiveness and quality of the audit, the our current approach and our on strengthening the capabilities of the Committee to conclude that PwC has non-GAAP financial measures within the Remuneration Policy align with our organisation and hitting a number of key dramatically increasing the choices for continued to provide a high-quality robust Committee seeks to assess and ensure the front half of the Annual Report and Accounts consumers, the emergence of generative AI objectivity and independence of the external strategy, support the retention of milestones on our strategic journey to be audit, which it conducted with rigour and and the description of going concern and key talent and reward them for ‘More than TV’, evolving from a legacy is a potential game changer in the world of effective and constructive challenge, auditor through:viability statement assumptions. production and the competitor set is now strong performance. broadcaster to a more sustainable media including questioning key accounting issues, • Focus on the assignment and rotation of and entertainment business. made up of international streamers and and exercising professional scepticism in its key personnelThe process included considering each global tech corporations rather than national review of management’s assumptions, • The adequacy of audit resourceof the elements (fair, balanced and READ MORE We delivered against each of our three main television broadcasters. In light of these judgements and assertions. understandable) on an individual basis to strategic objectives. Studios grew revenue structural shifts it is essential that the The Policy on the Independence and ensure ITV’s reporting was comprehensive and profits to record levels, deploying its business continues to evolve and respond. The Committee appreciated, in particular, in a clear and consistent way, and in Remuneration Commiee (page 119) 2024 will be another pivotal year with a focus Objectivity of External Auditors (approved in global scale and strength to win business the understanding of the business and the February 2024), which includes restrictions compliance with accounting standards and Remuneration Policy application in across all major genres and geographies. In on reshaping the organisation, so that ITV can regulatory and legal requirements and be a sustainable media and entertainment quality of communications of the lead and on the provision of non-audit services and 2023 and 2024 (from page 120) streaming, ITVX had a successful launch technology audit partners, the detailed the hiring of former external auditor guidelines. The reviews carried out by year, proving technically robust and through business for the long term. risk-based planning (with clear explanations internal functions within the Company and Directors’ Remuneration Policy employees. This policy is available on the (from page 122) the quality and depth of its content attracted for any subsequent deviations) and the governance section of ITV’s website: www.independent reviewers were undertaken with large cohorts of new viewers. The linear Policy renewal structured, pragmatic approach to finding itvplc.com/investors/governance/policiesa view to ensuring that all material matters Remuneration across the Company broadcast business continued to In line with the usual three-year cycle, the have been reflected in the Company’s 2023 the right solution, supported by the effective (page 129) demonstrate its extraordinary ability to Director’s Remuneration Policy will require use of PwC internal experts and specialists. Non-audit servicesAnnual Report and Accounts, and that they generate mass, simultaneous audiences. In renewal at the 2024 AGM. correctly reflect: Annual Report on Remuneration In accordance with the Independence (from page 130) addition, innovations such as Planet V, the and Objectivity of External Auditors policy, in The Company’s position and performance as platform enabling the growth of ITV’s digital As part of the last policy renewal, 2023 the Company incurred fees for described on pages 18 to 31 Other disclosures (from page 137) advertising, reinforced ITV’s position as the shareholders approved the adoption of non-audit services of approximately clear leader in UK commercial television. Restricted Shares as our primary long-term The Company’s business model as described incentive vehicle. The rationale for this £1,500,000 (2022: £155,000) which related on pages 2 and 3 principally to reporting accountant work on a Macroeconomic pressures have depressed model included: proposed acquisition and the review of the The Company’s strategy, as described on advertising volumes across the market. pages 10 to 13 Continued cost of living pressures have • Simple structure – highly effective pay interim financial information. For information model in a competitive global media on audit fees see note 2.1 to the financial affected consumer demand and this has Following its review, the Committee advised resulted in reduced marketing spend by talent market statements.the Board that the Company’s Annual Report many advertisers, impacting ITV’s financial • Addresses inherent advertising market and Accounts for the year ended results. Total revenues for 2023 were slightly volatility – the performance of the 31 December 2023 were fair, balanced down on the prior year at £4,260m. Although business continues to be inherently linked and understandable. there was an expectation that adjusted to the buoyancy of the highly cyclical EBITA for 2023 would fall as a result of advertising market. This often makes planned strategic investment, the outcome long-term target setting challenging of £489m was towards the lower-end of • Rewards strategic investment and our forecasts reflecting a more challenging transformation – focus on execution of our external environment. We are pleased to investment strategy to deliver long-term see that the balance sheet remains robust, sustainable performance, rather than enabling our targeted strategic investment short-term gain. The structure provides programme to continue and securing the flexibility, by allowing the delivery of the dividend for the full year at 5.0p, consistent strategy to be judged over the longer term, with last year. We are now in the early stages rather than within fixed three year of a new strategic restructuring and performance periods efficiency programme across the Group to • Focuses executives on long-term reshape the cost base, enhance profitability, stewardship of the brand and support the growth drivers of Studios and Streaming. By the end of 2024 we expect
118 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 119 REMUNERATION REPORT CONTINUED G O VE R NAN As our strategic transformation continues Salary increases were scaled from 6% for Incentive outcomes Remuneration Committee C and given that the Restricted Share scheme The Company’s resilient performance lower paid employees, 5% for low-mid tier E is only in its third year of operation, the despite economic headwinds was reflected roles, 4% for mid-senior roles and 3% for the WHO IS ON THE COMMITTEE Remuneration Committee has concluded in the incentive outturns. The 2023 annual more senior executives. As detailed in last that the current remuneration structure bonus was based on adjusted EBITA (60%), year’s report, a similar approach was taken The Committee is composed The current members are: Anna Manz and Duncan Painter stepped down as continues to support our strategic goals and for the 2023 salary increases, with uplifts of independent • Sharmila Nebhrajani (Chair) members of the Committee in the year. Edward Bonham enables the business to remain agile in a cash conversion (10%), individual strategic of up to 6% applied for lower paid staff. Non-executive Directors. Carter joined as a Committee member in April 2023 targets (20%), as well as a scorecard of • Salman Amin dynamic and cyclical sector where viewer ESG priorities (10%). Financial targets were In January 2023, a one-off cost of living • Andrew Cosslett Full details of attendance at Committee meetings can behaviours continue to evolve. We therefore payment was made providing £1,000 to • Edward Bonham Carter be found in the table on page 82 propose to roll forward the previous policy set in the context of advertising market all our staff earning up to £75,000. Although uncertainty, with targets set to be Detailed biographies can be found on pages 77 and 78 with only minor amendments. stretching but realistic. the 2023 Employee Bonus outcome of £764 for wider staff was lower than prior years, As part of the policy renewal process we While adjusted EBITA achievement was at reflecting the lower than expected EBITA, engaged with a number of our major the lower end of the targeted range, cash management elected to make a one-off OUR ROLE investors. Consistent with the messaging conversion was ahead of planned results additional payment to staff of £636. This received in prior years, it was clear that while combined payment of £1,400 reflects the Following each meeting, the The main role of the Committee is to: the majority of investors and mainstream and progress was made against our ESG exceptional levels of commitment shown by Committee communicates its • Review the ongoing appropriateness, relevance and effectiveness of the Remuneration Policy, including in relation proxy voting agencies continue to support scorecard measures. As noted above, the employees in delivering the transformation main discussion points and to retention and development, whilst taking into account workforce remuneration and related policies, and the business also made significant progress on findings to the Board. alignment of incentives and reward our approach to pay, a minority of investors executing our strategic goals in response to of the business. retain reservations. Although we are mindful The Committee’s terms of • Propose to shareholders changes to the Remuneration Policy as appropriate of the diverse views of our investors, we have the evolving marketplace. The overall bonus Reflecting our broader ethos, ITV remains reference can be accessed on • Approve the implementation of remuneration arrangements for the Chair, Executive Directors, Management outcome for the Executive Directors was committed to ensuring all colleagues earn our website www.itvplc.com/ Board and other senior executives (together the Senior Executive Group) considering arrangements for the wider opted to retain the current pay approach as it 56.41% of maximum, with one-third of the investors/governance continues to support our strategy. The 2021 at least the real Living Wage. The Company employee group policy represented a major shift in approach bonus award deferred into shares for three remains similarly committed to Diversity and • Approve the design of the Company’s annual bonus arrangements and long-term incentive plans, including the and the first Restricted Share awards under years. This represents a significantly lower in addition to its gender pay gap data, ITV has performance criteria that apply for the Senior Executive Group this policy will not be released until 2026; outturn than the 81.72% achieved by both voluntarily published its ethnicity pay gap • Determine the award levels for the Senior Executive Group based on performance against annual bonus targets it therefore feels premature to make further directors for 2022, primarily reflecting information since 2018, one of only a small and long-term incentive conditions radical change at this stage. the economic backdrop impacting number of FTSE companies to do so. ITV has financial performance. also been calculating its disability and The Board continues to maintain dialogue This is also the first year in which the LGBTQ+ pay gaps since 2020 and published MEETINGS IN 2023 with investors, and the Remuneration Restricted Share awarded to our Executive this information for the first time in 2023. Committee has engaged with them on Directors will vest. Although the single figure In addition to Committee January September numerous occasions over recent years. includes a value for the first award granted in Concluding remarks members, the Executive • Indicative LTIP and PSP performance • Financial performance update In many cases remuneration proposals Directors, Chief People • Annual review of the Chair’s fees • Employee reward framework, including review have been adapted in direct response to 2021, in practice these awards will only be As a Committee, we are committed to Officer, General Counsel and released in 2026 following completion of a making responsible and measured decisions Company Secretary, Group • Pay gap reporting and CEO pay ratios of remuneration and related policies and their feedback. In line with our normal two year holding period. Under this pay around pay. I hope this report provides clear Reward Director and • Compliance with shareholding guidelines remuneration trends approach, we will continue to keep the model, long-term incentive award levels and transparent disclosure, including the independent adviser Deloitte • 2023 AGM season update effectiveness of our approach to pay, attend meetings as required. February • Remuneration Policy and Shareholder developments in the market, and evolving were reduced by 50%, but with performance wider context informing these decisions. • Bonus outcomes for 2022 alignment primarily provided via the share As a Committee we will continue to engage Attendees do not take part Engagement update investor sentiment under review. price. While the short-term share price in decisions relating to their • Performance outcomes for 2020 LTIP and PSP awards December with shareholders whenever possible to • Bonus targets for 2023 performance has been disappointing, listen to feedback and discuss pay matters. own remuneration and • Review of 2023 bonus performance In terms of implementing the policy for both Executive Directors maintain sizeable In the meantime, I look forward to your potential conflicts are • Financial underpin target for 2023 ESP awards 2024, the Committee has approved a salary suitably mitigated. • 2024 Bonus framework and targets interests in ITV shares, in excess of the support for both the Remuneration Policy • Remuneration Report and compliance against the • 2024 Remuneration Policy Renewal increase of 3% for both the Chief Executive requirement under the Shareholding and the Report at the upcoming AGM. Remuneration Policy and Group CFO & COO which is in line with • Review of the Senior Executive Group • Annual pay review other senior executives but below the Guidelines, and have personal financial exposure that mirrors that of our investors. SHARMILA NEBHRAJANI OBE • Adviser independence 5%-6% increase applied for the majority of As noted above, the strategic transformation CHAIR, REMUNERATION COMMITTEE • Gender and ethnicity pay gap reporting and CEO employees. Incentive opportunities for both of the business continues and the Board 7 March 2024 pay ratios executives will be consistent with prior years. remains confident that the investments June The performance measures and weightings made today will be reflected in the • Approach for Remuneration Policy review for the 2024 annual bonus are similar to long-term performance of the business. • 2023 awards under the executive and SAYE plans 2023 with the addition of a cost savings • Committee terms of reference review metric (worth 10% of the award) to reflect Wider workforce the scale and importance of this priority, The Committee continues to focus on wider with 50% linked to adjusted EBITA. workforce pay, recognising that the cost of Consistent with prior years the targets for living continues to be a real concern for a ANNUAL REVIEW the annual bonus have been set to reflect number of our colleagues. In relation to 2024 A review of the performance • In 2023 an internally facilitated Board evaluation was undertaken, which included a review of the Committee. internal and external forecasts for the salary increases, the overall aim was to of the Committee is The results are summarised on pages 100 to 101 Company, including significant budgeted provide all employees with a meaningful conducted each year. • Overall, the evaluation concluded that the Committee is working effectively and responding appropriately to its cost savings and critical investment spend. increase to their base salary which reflected terms of reference We remain mindful of the impact of share economic realities. While the high • The Committee recommended a focus on wider comparatives in relation to international remuneration price volatility on future share awards and inflationary environment impacts everyone, investor concerns regarding potential the Committee recognises lower earning windfalls. The Committee will consider this employees suffer the consequences more at the point of grant and at vesting. Where acutely. Salary increases for more senior necessary, the Committee retains the ability roles were therefore reduced to help fund to adjust vesting outcomes to ensure they more meaningful increases for employees at are appropriate. lower pay levels.
118 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 119 REMUNERATION REPORT CONTINUED G O VE R NAN As our strategic transformation continues Salary increases were scaled from 6% for Incentive outcomes Remuneration Committee C and given that the Restricted Share scheme The Company’s resilient performance lower paid employees, 5% for low-mid tier E is only in its third year of operation, the despite economic headwinds was reflected roles, 4% for mid-senior roles and 3% for the WHO IS ON THE COMMITTEE Remuneration Committee has concluded in the incentive outturns. The 2023 annual more senior executives. As detailed in last that the current remuneration structure bonus was based on adjusted EBITA (60%), year’s report, a similar approach was taken The Committee is composed The current members are:Anna Manz and Duncan Painter stepped down as continues to support our strategic goals and for the 2023 salary increases, with uplifts of independent • Sharmila Nebhrajani (Chair) members of the Committee in the year. Edward Bonham enables the business to remain agile in a cash conversion (10%), individual strategic of up to 6% applied for lower paid staff. Non-executive Directors.Carter joined as a Committee member in April 2023 targets (20%), as well as a scorecard of • Salman Amin dynamic and cyclical sector where viewer ESG priorities (10%). Financial targets were In January 2023, a one-off cost of living • Andrew Cosslett Full details of attendance at Committee meetings can behaviours continue to evolve. We therefore payment was made providing £1,000 to • Edward Bonham Carter be found in the table on page 82 propose to roll forward the previous policy set in the context of advertising market all our staff earning up to £75,000. Although uncertainty, with targets set to be Detailed biographies can be found on pages 77 and 78 with only minor amendments. stretching but realistic. the 2023 Employee Bonus outcome of £764 for wider staff was lower than prior years, As part of the policy renewal process we While adjusted EBITA achievement was at reflecting the lower than expected EBITA, engaged with a number of our major the lower end of the targeted range, cash management elected to make a one-off OUR ROLE investors. Consistent with the messaging conversion was ahead of planned results additional payment to staff of £636. This received in prior years, it was clear that while combined payment of £1,400 reflects the Following each meeting, the The main role of the Committee is to: the majority of investors and mainstream and progress was made against our ESG exceptional levels of commitment shown by Committee communicates its • Review the ongoing appropriateness, relevance and effectiveness of the Remuneration Policy, including in relation proxy voting agencies continue to support scorecard measures. As noted above, the employees in delivering the transformation main discussion points and to retention and development, whilst taking into account workforce remuneration and related policies, and the business also made significant progress on findings to the Board. alignment of incentives and reward our approach to pay, a minority of investors executing our strategic goals in response to of the business. retain reservations. Although we are mindful The Committee’s terms of • Propose to shareholders changes to the Remuneration Policy as appropriate of the diverse views of our investors, we have the evolving marketplace. The overall bonus Reflecting our broader ethos, ITV remains reference can be accessed on • Approve the implementation of remuneration arrangements for the Chair, Executive Directors, Management outcome for the Executive Directors was committed to ensuring all colleagues earn our website www.itvplc.com/Board and other senior executives (together the Senior Executive Group) considering arrangements for the wider opted to retain the current pay approach as it 56.41% of maximum, with one-third of the investors/governance continues to support our strategy. The 2021 at least the real Living Wage. The Company employee group policy represented a major shift in approach bonus award deferred into shares for three remains similarly committed to Diversity and • Approve the design of the Company’s annual bonus arrangements and long-term incentive plans, including the and the first Restricted Share awards under years. This represents a significantly lower in addition to its gender pay gap data, ITV has performance criteria that apply for the Senior Executive Group this policy will not be released until 2026; outturn than the 81.72% achieved by both voluntarily published its ethnicity pay gap • Determine the award levels for the Senior Executive Group based on performance against annual bonus targets it therefore feels premature to make further directors for 2022, primarily reflecting information since 2018, one of only a small and long-term incentive conditions radical change at this stage. the economic backdrop impacting number of FTSE companies to do so. ITV has financial performance. also been calculating its disability and The Board continues to maintain dialogue This is also the first year in which the LGBTQ+ pay gaps since 2020 and published MEETINGS IN 2023 with investors, and the Remuneration Restricted Share awarded to our Executive this information for the first time in 2023. Committee has engaged with them on Directors will vest. Although the single figure In addition to Committee January September numerous occasions over recent years. includes a value for the first award granted in Concluding remarksmembers, the Executive • Indicative LTIP and PSP performance• Financial performance update In many cases remuneration proposals Directors, Chief People • Annual review of the Chair’s fees • Employee reward framework, including review have been adapted in direct response to 2021, in practice these awards will only be As a Committee, we are committed to Officer, General Counsel and released in 2026 following completion of a making responsible and measured decisions Company Secretary, Group • Pay gap reporting and CEO pay ratiosof remuneration and related policies and their feedback. In line with our normal two year holding period. Under this pay around pay. I hope this report provides clear Reward Director and • Compliance with shareholding guidelinesremuneration trends approach, we will continue to keep the model, long-term incentive award levels and transparent disclosure, including the independent adviser Deloitte • 2023 AGM season update effectiveness of our approach to pay, attend meetings as required.February • Remuneration Policy and Shareholder developments in the market, and evolving were reduced by 50%, but with performance wider context informing these decisions. • Bonus outcomes for 2022 alignment primarily provided via the share As a Committee we will continue to engage Attendees do not take part Engagement update investor sentiment under review.price. While the short-term share price in decisions relating to their • Performance outcomes for 2020 LTIP and PSP awardsDecember with shareholders whenever possible to • Bonus targets for 2023 performance has been disappointing, listen to feedback and discuss pay matters. own remuneration and • Review of 2023 bonus performance In terms of implementing the policy for both Executive Directors maintain sizeable In the meantime, I look forward to your potential conflicts are • Financial underpin target for 2023 ESP awards 2024, the Committee has approved a salary suitably mitigated. • 2024 Bonus framework and targets interests in ITV shares, in excess of the support for both the Remuneration Policy • Remuneration Report and compliance against the • 2024 Remuneration Policy Renewal increase of 3% for both the Chief Executive requirement under the Shareholding and the Report at the upcoming AGM. Remuneration Policy and Group CFO & COO which is in line with • Review of the Senior Executive Group • Annual pay review other senior executives but below the Guidelines, and have personal financial exposure that mirrors that of our investors. SHARMILA NEBHRAJANI OBE • Adviser independence 5%-6% increase applied for the majority of As noted above, the strategic transformation CHAIR, REMUNERATION COMMITTEE • Gender and ethnicity pay gap reporting and CEO employees. Incentive opportunities for both of the business continues and the Board 7 March 2024pay ratios executives will be consistent with prior years. remains confident that the investments June The performance measures and weightings made today will be reflected in the • Approach for Remuneration Policy review for the 2024 annual bonus are similar to long-term performance of the business. • 2023 awards under the executive and SAYE plans 2023 with the addition of a cost savings • Committee terms of reference review metric (worth 10% of the award) to reflect Wider workforce the scale and importance of this priority, The Committee continues to focus on wider with 50% linked to adjusted EBITA. workforce pay, recognising that the cost of Consistent with prior years the targets for living continues to be a real concern for a ANNUAL REVIEW the annual bonus have been set to reflect number of our colleagues. In relation to 2024 A review of the performance • In 2023 an internally facilitated Board evaluation was undertaken, which included a review of the Committee. internal and external forecasts for the salary increases, the overall aim was to of the Committee is The results are summarised on pages 100 to 101 Company, including significant budgeted provide all employees with a meaningful conducted each year.• Overall, the evaluation concluded that the Committee is working effectively and responding appropriately to its cost savings and critical investment spend. increase to their base salary which reflected terms of reference We remain mindful of the impact of share economic realities. While the high • The Committee recommended a focus on wider comparatives in relation to international remuneration price volatility on future share awards and inflationary environment impacts everyone, investor concerns regarding potential the Committee recognises lower earning windfalls. The Committee will consider this employees suffer the consequences more at the point of grant and at vesting. Where acutely. Salary increases for more senior necessary, the Committee retains the ability roles were therefore reduced to help fund to adjust vesting outcomes to ensure they more meaningful increases for employees at are appropriate.lower pay levels.
120 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 121 REMUNERATION REPORT CONTINUED G O VE R NAN C OVERVIEW OF REMUNERATION POLICY 2023 OVERVIEW OF REMUNERATION POLICY 2024 E WHAT DID EXECUTIVE DIRECTORS EARN DURING 2023? HOW WILL EXECUTIVES BE PAID IN 2024? SINGLE FIGURE REMUNERATION AT A GLANCE FIXED PAY Carolyn McCall Total £2,881,440 Chief Executive salary: Group CFO & COO salary: Salary increase of 3%. Benefits package Retirement benefits of Chris Kennedy Total £1,930,437 Increases for employees remains unchanged – 9% to align with the £1,040,729 £744,587 range from 3% to 6%. includes private medical workforce pension Salary Benefits Pension Bonus Share awards insurance and car‑related contributions. benefit. PERFORMANCE AGAINST ANNUAL BONUS TARGETS RESTRICTED SHARES – 2021 ESP ANNUAL BONUS % of maximum Restricted Shares granted in Detail on vesting is set out 2021 are due to vest in May 2024 in the report. EBITA (60% total) 2024 bonus metrics – measure and support execution of the strategy Cash (10% total) Cash element 2/3 total bonus Adjusted EBITA: Profitability of 50% underlying business ESG (10% total) BONUS OUTCOME Expand Studios globally Carolyn McCall Chris Kennedy Deferral into shares for three years 1/3 total bonus Cost savings: Rebasing the cost Individual/ strategic (20% total) 10% base of the organisation 0% 50% 100% 56.41% 56.41% Cash element Deferred shares Both bonus Optimise Broadcast Cash conversion: Effective cash Actual Maximum of maximum of maximum Chief Executive: up Chief Executive: up elements subject 10% generation to 120% of salary; to 60% of salary; to malus and Group CFO & COO: Group CFO & COO: clawback up to 110% of salary up to 55% of salary 10% ESG scorecard PERCENTAGE OF TOTAL OPPORTUNITY ALIGNMENT WITH SHAREHOLDERS Supercharge Streaming Chief Executive Group CFO & COO Share ownership 20% Individual strategic: Shareholding is a means by which the interests of the Executive Directors Deliver strategic priorities 100% 100% are aligned with those of shareholders. As at 31 December 2023 both directors had holdings in ITV that exceeded their respective shareholding 51% 51% policy requirements – 400% of salary for Carolyn McCall and 225% of salary 30% 27% 28% 29% for Chris Kennedy. RESTRICTED SHARES 37.42 62.58 % Successful execution of strategy ultimately reflected in the share price 43% 43% Carolyn McCall 537 56% 56% Released after five years Simple structure – aligns with strategy and shareholders (400% of salary) over the long term 22.33 77.67 Annual grant: Chief Executive: up to 132.5% of salary; Group CFO & COO: Total received of Total received of Chris Kennedy 372 up to 112.5% of salary – 50% discount to legacy LTIP award level Retains key talent – aligned to global talent market and peer practices maximum opportunity 67% maximum opportunity 68% Release of shares subject to performance underpin: assessed after year (225% of salary) three – ability for Remuneration Committee to scale back awards if the underpins are not met Rewards strategic investment – delivery of long-term sustainable performance, Fixed Annual Bonus (% of max) ESP (% of grant value vesting) Shares held beneficially Unvested restricted share awards not subject to Awards subject to malus and clawback rather than short-term gain performance conditions, accounted for on a net of tax basis Reflective of dynamic and cyclical nature of sector and viewer behaviours, where business needs to remain agile and adapt Focus on long-term stewardship of the brand WIDER WORKFORCE IN 2023 SALARY ALL EMPLOYEE BONUS ‘THANK YOU’ PAYMENT PENSION BROAD BENEFITS PROGRAMME SHAREHOLDING GUIDELINES up to up to Guidelines apply in post, and extend beyond tenure In‑post guideline – Chief Executive: 400% of salary and Group CFO & COO: 225% of salary See page 129 £764 £636 Applies for two years following departure – Chief Executive: 265% of salary and Group 6% 9% CFO & COO: 225% of salary 38.2% of the maximum Total combined payment of increase opportunity of £2,000 company contribution £1,400 made to eligible employees WIDER WORKFORCE IN 2024 SALARY ALL EMPLOYEE BONUS PENSION BROAD BENEFITS OPPORTUNITY PROGRAMME up to up to up to See page 129 6% £2,000 9% increase company contribution
120 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 121 REMUNERATION REPORT CONTINUED G O VE R NAN C OVERVIEW OF REMUNERATION POLICY 2023OVERVIEW OF REMUNERATION POLICY 2024 E WHAT DID EXECUTIVE DIRECTORS EARN DURING 2023?HOW WILL EXECUTIVES BE PAID IN 2024? SINGLE FIGURE REMUNERATION AT A GLANCEFIXED PAY Carolyn McCallTotal £2,881,440Chief Executive salary: Group CFO & COO salary: Salary increase of 3%. Benefits package Retirement benefits of Chris KennedyTotal £1,930,437 Increases for employees remains unchanged – 9% to align with the £1,040,729 £744,587 range from 3% to 6%. includes private medical workforce pension SalaryBenefitsPensionBonusShare awards insurance and car‑related contributions. benefit. PERFORMANCE AGAINST ANNUAL BONUS TARGETSRESTRICTED SHARES – 2021 ESP ANNUAL BONUS % of maximumRestricted Shares granted in Detail on vesting is set out 2021 are due to vest in May 2024 in the report. EBITA (60% total) 2024 bonus metrics – measure and support execution of the strategy Cash (10% total) Cash element 2/3 total bonus Adjusted EBITA: Profitability of 50% underlying business ESG (10% total)BONUS OUTCOME Expand Studios globally Carolyn McCallChris KennedyDeferral into shares for three years 1/3 total bonus Cost savings: Rebasing the cost Individual/ strategic (20% total) 10% base of the organisation 0%50%100%56.41%56.41% Cash element Deferred shares Both bonus Optimise Broadcast Cash conversion: Effective cash ActualMaximumof maximumof maximumChief Executive: up Chief Executive: up elements subject 10% generation to 120% of salary; to 60% of salary; to malus and Group CFO & COO: Group CFO & COO: clawback up to 110% of salary up to 55% of salary 10% ESG scorecard PERCENTAGE OF TOTAL OPPORTUNITYALIGNMENT WITH SHAREHOLDERS Supercharge Streaming Chief Executive Group CFO & COOShare ownership 20% Individual strategic: Shareholding is a means by which the interests of the Executive Directors Deliver strategic priorities 100%100%are aligned with those of shareholders. As at 31 December 2023 both directors had holdings in ITV that exceeded their respective shareholding 51%51%policy requirements – 400% of salary for Carolyn McCall and 225% of salary 30%27%28%29%for Chris Kennedy.RESTRICTED SHARES 37.4262.58% Successful execution of strategy ultimately reflected in the share price 43%43%Carolyn McCall537 56%56% Released after five years Simple structure – aligns with strategy and shareholders (400% of salary) over the long term 22.3377.67 Annual grant: Chief Executive: up to 132.5% of salary; Group CFO & COO: Total received of Total received of Chris Kennedy372up to 112.5% of salary – 50% discount to legacy LTIP award level Retains key talent – aligned to global talent market and peer practices maximum opportunity 67%maximum opportunity 68%Release of shares subject to performance underpin: assessed after year (225% of salary) three – ability for Remuneration Committee to scale back awards if the underpins are not met Rewards strategic investment – delivery of long-term sustainable performance, FixedAnnual Bonus (% of max)ESP (% of grant value vesting)Shares held beneficiallyUnvested restricted share awards not subject to Awards subject to malus and clawbackrather than short-term gain performance conditions, accounted for on a net of tax basis Reflective of dynamic and cyclical nature of sector and viewer behaviours, where business needs to remain agile and adapt Focus on long-term stewardship of the brand WIDER WORKFORCE IN 2023 SALARYALL EMPLOYEE BONUS ‘THANK YOU’ PAYMENTPENSIONBROAD BENEFITS PROGRAMME SHAREHOLDING GUIDELINES up toup to Guidelines apply in post, and extend beyond tenure In‑post guideline – Chief Executive: 400% of salary and Group CFO & COO: 225% of salary See page 129 £764£636 Applies for two years following departure – Chief Executive: 265% of salary and Group 6% 9% CFO & COO: 225% of salary 38.2% of the maximum Total combined payment of increaseopportunity of £2,000company contribution £1,400 made to eligible employees WIDER WORKFORCE IN 2024 SALARY ALL EMPLOYEE BONUS PENSION BROAD BENEFITS OPPORTUNITY PROGRAMME up to up to up to See page 129 6% £2,000 9% increase company contribution
122 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 123 G DIRECTORS’ REMUNERATION POLICY O VE R NAN The following sets out the proposed ITV Directors’ Remuneration Policy C BENEFITS E (the Policy). The Policy is subject to a binding shareholder vote at ITV’s Purpose and link to strategy Ensures the overall package is competitive and provides financial protection for employees and their families. AGM on 2 May 2024 and, if approved, will apply from this date. Operation The Company provides a range of market competitive benefits, which may include travel-related benefits, participation in all-employee share schemes, private medical insurance and other insurance benefits. Additional benefits may also be provided in certain circumstances, if required for business needs. For example (but not The previous Policy was last renewed at the 2021 AGM, when the Company implemented a new Restricted Shares structure. limited to), relocation expenses, housing allowance and education support. Maximum potential Set at a level which the Committee considers to be appropriately positioned taking into account typical market levels for The Committee discussed the current Policy over a series of meetings throughout 2023 and early 2024, debating its continued payment comparable roles, individual circumstances and the overall cost to the business. effectiveness given the strategic priorities of the business, the cyclical nature of the sector, evolving market trends and investor guidance. While there is no maximum monetary value for benefits, any benefits provided will be reasonable in the context of relevant We also engaged with major investors in order to better understand their views around our pay approach. Input was sought from the market practice, individual circumstances and overall cost to the business. management team, while ensuring that conflicts of interest were suitably mitigated. An external perspective was provided by the Committee’s independent advisers. The Committee undertook an extensive consultation process with major shareholders before finalising In addition, the Company may reimburse relocation expenses and/or provide for tax equalization arrangements. Participation the Policy. The key features of our approach were also assessed against the principles of clarity, simplicity, risk management, predictability, in any tax-approved all-employee share plans will be limited by the maximum permitted under the relevant legislation. proportionality and alignment to culture. As noted in the Chair’s statement, the Committee determined that the existing Restricted Shares structure continues to be an appropriate and effective long-term incentive vehicle for ITV, recognising that the first awards under this structure will vest in 2024 and will not be released Variable pay policy for Executive Directors until 2026. The Policy presented for shareholder approval at the 2024 AGM therefore contains no significant changes from the 2021 Policy. ANNUAL BONUS SCHEME (BONUS) AND DEFERRED SHARE AWARD PLAN (DSA) Minor updates have been made to the detail of the Policy to ensure it continues to operate as intended. The proposed Policy retains the key best practice features as applied under the Policy approved in 2021. Purpose and link to strategy Incentivises executives and colleagues to achieve key strategic outcomes on an annual basis. Focus on key financial metrics and corporate objectives to deliver the business strategy. Executive Director Remuneration Policy Table The element of the Bonus compulsorily deferred into shares rewards delivery of sustained long-term performance, provides Fixed pay policy for Executive Directors alignment with the shareholder experience and supports the retention of executives. Operation Measures and targets are set annually, normally based on business plans at the start of the financial year and pay-out levels BASE SALARY are determined by the Committee following the year end based on performance against objectives. Purpose and link to strategy Reflects the individual’s skills, responsibilities and experience. Supports the recruitment and retention of Executive Paid once the results have been audited. Financial results used for bonus calculation will be subject to suitable review (e.g. Directors of the calibre required to deliver the business strategy within the competitive media market. sign-off by Audit and Risk Committee) before consideration by the Committee. Operation Normally reviewed annually and paid monthly in cash. Consideration is typically given to a range of factors when determining The Committee has the discretion to amend the bonus outcome if any formulaic assessment of performance is considered salary levels, including: to be inappropriate taking into account factors such as a balanced view of overall business or individual performance for the year, and the original intentions of the plan. • Personal and Company-wide performance • Scope of role and experience Not more than two-thirds of the Bonus is delivered in cash with the balance deferred into shares under the DSA normally for a period of three years. • Typical pay levels in relevant markets for each executive whilst recognising the need for an appropriate premium to attract and retain superior talent, balanced against the need to provide a cost-effective overall remuneration package During the deferral period share awards may be reduced or cancelled in certain circumstances. Dividends or equivalents may • The wider employee pay review be earned on deferred shares. Maximum potential Ordinarily salary increases will be in line with the average increase awarded to other employees in the Company. Increases Maximum potential The maximum Bonus opportunity for any Executive Director will not exceed 200% of salary. payment may be made above this level to take account of individual and business circumstances, which may include factors such as: payment The current maximum Bonus opportunities are 180% of salary for the Chief Executive and 165% of salary for the Group an increase in size or scope of the role or responsibility; or an increase to reflect the individual’s development and CFO & COO. Increases above the current opportunities, up to the maximum limit, may be made to take account of individual performance in the role. circumstances, which may include: an increase in size or scope of the role or responsibility; a change in business While there is no maximum, salary levels for each individual are responsibly set taking into account the factors described circumstances; or an increase to reflect the individual’s development and performance in their role. above. Performance metrics Performance measures and targets are set by the Committee each year based on corporate objectives closely linked to Performance metrics None, although overall individual and business performance is considered when setting and reviewing salaries. strategic priorities of the business. The majority of the Bonus opportunity will be based on corporate and financial measures. The remainder of the Bonus will be based on performance against individual and/or strategic objectives. Details of the performance criteria for the Bonus are set out in the Annual Report on Remuneration. The payment schedule for each metric will be scaled based on the stretch of the underlying target. Normally, up to 20% of the maximum opportunity RETIREMENT BENEFITS will be received for threshold performance. Purpose and link to strategy To provide competitive post-retirement benefits or cash allowance as a framework to save for retirement. Supports the recruitment and retention of Executive Directors of the calibre required to deliver the business strategy within the competitive media market. Operation Executives can choose to participate in the ITV defined contribution scheme, receive a cash allowance or receive payments into a personal pension or a combination thereof. Contributions are set as a percentage of base salary. Post-retirement benefits do not form part of the base salary for the purposes of determining incentives. Maximum potential The maximum benefit will normally be capped at a level comparable to the benefit available to the wider employee base. This payment is currently 9% of salary. Performance metrics None
122 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 123 G DIRECTORS’ REMUNERATION POLICY O VE R NAN The following sets out the proposed ITV Directors’ Remuneration Policy C BENEFITS E (the Policy). The Policy is subject to a binding shareholder vote at ITV’s Purpose and link to strategy Ensures the overall package is competitive and provides financial protection for employees and their families. AGM on 2 May 2024 and, if approved, will apply from this date.OperationThe Company provides a range of market competitive benefits, which may include travel-related benefits, participation in all-employee share schemes, private medical insurance and other insurance benefits. Additional benefits may also be provided in certain circumstances, if required for business needs. For example (but not The previous Policy was last renewed at the 2021 AGM, when the Company implemented a new Restricted Shares structure.limited to), relocation expenses, housing allowance and education support. Maximum potential Set at a level which the Committee considers to be appropriately positioned taking into account typical market levels for The Committee discussed the current Policy over a series of meetings throughout 2023 and early 2024, debating its continued paymentcomparable roles, individual circumstances and the overall cost to the business. effectiveness given the strategic priorities of the business, the cyclical nature of the sector, evolving market trends and investor guidance. While there is no maximum monetary value for benefits, any benefits provided will be reasonable in the context of relevant We also engaged with major investors in order to better understand their views around our pay approach. Input was sought from the market practice, individual circumstances and overall cost to the business. management team, while ensuring that conflicts of interest were suitably mitigated. An external perspective was provided by the Committee’s independent advisers. The Committee undertook an extensive consultation process with major shareholders before finalising In addition, the Company may reimburse relocation expenses and/or provide for tax equalization arrangements. Participation the Policy. The key features of our approach were also assessed against the principles of clarity, simplicity, risk management, predictability, in any tax-approved all-employee share plans will be limited by the maximum permitted under the relevant legislation. proportionality and alignment to culture. As noted in the Chair’s statement, the Committee determined that the existing Restricted Shares structure continues to be an appropriate and effective long-term incentive vehicle for ITV, recognising that the first awards under this structure will vest in 2024 and will not be released Variable pay policy for Executive Directors until 2026. The Policy presented for shareholder approval at the 2024 AGM therefore contains no significant changes from the 2021 Policy. ANNUAL BONUS SCHEME (BONUS) AND DEFERRED SHARE AWARD PLAN (DSA) Minor updates have been made to the detail of the Policy to ensure it continues to operate as intended. The proposed Policy retains the key best practice features as applied under the Policy approved in 2021.Purpose and link to strategyIncentivises executives and colleagues to achieve key strategic outcomes on an annual basis. Focus on key financial metrics and corporate objectives to deliver the business strategy. Executive Director Remuneration Policy Table The element of the Bonus compulsorily deferred into shares rewards delivery of sustained long-term performance, provides Fixed pay policy for Executive Directors alignment with the shareholder experience and supports the retention of executives. Operation Measures and targets are set annually, normally based on business plans at the start of the financial year and pay-out levels BASE SALARY are determined by the Committee following the year end based on performance against objectives. Purpose and link to strategyReflects the individual’s skills, responsibilities and experience. Supports the recruitment and retention of Executive Paid once the results have been audited. Financial results used for bonus calculation will be subject to suitable review (e.g. Directors of the calibre required to deliver the business strategy within the competitive media market.sign-off by Audit and Risk Committee) before consideration by the Committee. OperationNormally reviewed annually and paid monthly in cash. Consideration is typically given to a range of factors when determining The Committee has the discretion to amend the bonus outcome if any formulaic assessment of performance is considered salary levels, including: to be inappropriate taking into account factors such as a balanced view of overall business or individual performance for the year, and the original intentions of the plan. • Personal and Company-wide performance • Scope of role and experience Not more than two-thirds of the Bonus is delivered in cash with the balance deferred into shares under the DSA normally for a period of three years. • Typical pay levels in relevant markets for each executive whilst recognising the need for an appropriate premium to attract and retain superior talent, balanced against the need to provide a cost-effective overall remuneration packageDuring the deferral period share awards may be reduced or cancelled in certain circumstances. Dividends or equivalents may • The wider employee pay review be earned on deferred shares. Maximum potential Ordinarily salary increases will be in line with the average increase awarded to other employees in the Company. Increases Maximum potential The maximum Bonus opportunity for any Executive Director will not exceed 200% of salary. paymentmay be made above this level to take account of individual and business circumstances, which may include factors such as: paymentThe current maximum Bonus opportunities are 180% of salary for the Chief Executive and 165% of salary for the Group an increase in size or scope of the role or responsibility; or an increase to reflect the individual’s development and CFO & COO. Increases above the current opportunities, up to the maximum limit, may be made to take account of individual performance in the role. circumstances, which may include: an increase in size or scope of the role or responsibility; a change in business While there is no maximum, salary levels for each individual are responsibly set taking into account the factors described circumstances; or an increase to reflect the individual’s development and performance in their role. above. Performance metrics Performance measures and targets are set by the Committee each year based on corporate objectives closely linked to Performance metricsNone, although overall individual and business performance is considered when setting and reviewing salaries.strategic priorities of the business. The majority of the Bonus opportunity will be based on corporate and financial measures. The remainder of the Bonus will be based on performance against individual and/or strategic objectives. Details of the performance criteria for the Bonus are set out in the Annual Report on Remuneration. The payment schedule for each metric will be scaled based on the stretch of the underlying target. Normally, up to 20% of the maximum opportunity RETIREMENT BENEFITS will be received for threshold performance. Purpose and link to strategyTo provide competitive post-retirement benefits or cash allowance as a framework to save for retirement. Supports the recruitment and retention of Executive Directors of the calibre required to deliver the business strategy within the competitive media market. OperationExecutives can choose to participate in the ITV defined contribution scheme, receive a cash allowance or receive payments into a personal pension or a combination thereof. Contributions are set as a percentage of base salary. Post-retirement benefits do not form part of the base salary for the purposes of determining incentives. Maximum potential The maximum benefit will normally be capped at a level comparable to the benefit available to the wider employee base. This paymentis currently 9% of salary. Performance metricsNone
124 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 125 REMUNERATION REPORT CONTINUED G O VE R NAN Performance measures and target setting C RESTRICTED SHARES The annual bonus is assessed against financial, strategic and individual targets determined by the Committee. This enables the Committee to E Purpose and link to strategy Incentivises Executive Directors to deliver the business strategy and aligns with longer-term Company performance and the reward annual financial performance delivered for shareholders, and performance against specific financial, operational or strategic shareholder experience. objectives set for each director, which are closely linked to the strategic priorities of the business. The Committee sets targets taking into account external forecasts, internal budgets and business priorities. Acts as a retention tool to retain the executives required to deliver the business strategy. Operation Awards may be structured as conditional rights or nil-cost options (or economic equivalent). Awards will normally be A key feature of Restricted Share awards is that the successful execution of the strategy and the success of the business is ultimately reflected granted annually with vesting after three years, subject to satisfaction of a performance underpin. Awards will normally be in the share price, therefore providing strong alignment with the interests of our shareholders. The vesting of Restricted Share awards is required to be held for an additional two year holding period so that the award is released after five years. During the holding subject to a performance underpin. For 2024 awards, the Committee will retain the ability to reduce vesting on the Restricted Shares (including period awards may be reduced or cancelled in certain circumstances. Further detail is provided in the Annual Report to nil) where adjusted Return on Capital Employed is below the Company’s cost of capital. In addition, the Committee has retained a broader on Remuneration. discretion to also enable reduction in vesting levels where there is a material weakness in the underlying financial health and sustainability of Dividends (or equivalents) may be earned in respect of any vested shares. the business. These underpins have been selected as they are considered to provide a robust and sustainable safeguard against payments for Maximum potential The maximum award level is 175% of salary. failure. Further detail on performance criteria is set out in the Annual Report on Remuneration. payment Our current operational policy is to make annual awards of 132.5% of salary to the Chief Executive and 112.5% to the When considering performance outcomes, the Committee will look beyond formulaic results to ensure the outcomes align with the overall Group CFO & COO. business or individual performance. The Committee may adjust the targets for awards or the calculation of performance measures and vesting Performance metrics The Committee may define the terms of the performance underpin. The criteria may be based on financial and/or non- outcomes for events not foreseen at the time the targets were set to ensure they remain a fair reflection of performance over the relevant financial metrics and include reference to corporate, divisional or individual performance. When determining vesting the period. Discretion will be exercised mindful of broader performance, and any change to the outcome will be disclosed in the next Annual Remuneration Committee will take into account all factors deemed relevant at the time (e.g. progress against execution of Report on Remuneration. the strategy, the nature of the wider trading environment). As the underpin is qualitative, there are no performance condition weightings applicable, nor is there a threshold-max vesing range. Application of Remuneration Policy Information on the individual award grants is set out in the Annual Report on Remuneration. The chart below provides an indication of the level of remuneration that would be received by each Executive Director under the following three assumed performance scenarios: SHAREHOLDING GUIDELINES Below threshold performance Fixed elements of remuneration only – base salary, benefits and pension Purpose and link to strategy To create alignment between Executive Directors and shareholders both during service and after departure. Mid-performance Assumes 50% pay-out under the annual bonus Operation Shareholding guidelines are in place which encourage Executive Directors to build up a holding in Company shares during the Assumes 100% vesting of the Restricted Shares course of tenure. The shareholding guideline for the Chief Executive is 400% of base salary and for the Group CFO & COO 225%. Maximum performance Assumes 100% pay-out under the annual bonus Assumes 100% vesting of the Restricted Shares Executive Directors will normally also be expected to retain an interest in Company shares for two years following departure. The expected holding requirement following departure will be equal to two times the Executive Director’s Restricted Shares grant level. Further details of current shareholdings of the Executive Directors, together with further detail on the operation of the Scenario charts shareholding guidelines are set out in the Annual Report on Remuneration. Carolyn McCall 100% £1.2m Minimum 0 10 20 30 40 50 60 70 Detailed provisions 33% 27% 40% £3.5m Mid performance 0 10 20 30 40 5070 60 The Committee may make any remuneration payments and payments for loss of office (including exercising any discretion available to it in 26% 43% 31% £4.4m connection with such payments) notwithstanding that they are not in line with the Policy set out above, where the terms of the payment were Maximum agreed either: (i) during the term of, and was consistent with any previous policy; or (ii) at a time when the relevant individual was not a director 0 1,000,000 2,000,000 3,000,000 4,000,000 of the Company and the payment was not in consideration for the individual becoming a director of the Company. This includes the ability to make payments in recognition of legacy Long Term Incentive Plan (LTIP) awards, awarded under any previous Policy. Chris Kennedy 100% £0.8m The Committee may adjust or amend Bonus and share awards only in accordance with the provisions of the relevant plan rules. This includes Minimum 0 10 20 30 40 50 60 70 making adjustment to reflect one-off corporate events, such as a change of control or a change in the Company’s capital structure. In accordance 36% 27% 37% £2.3m Mid performance with the plan rules, share awards may be settled in cash rather than shares where the Committee considers this appropriate (e.g. to comply 0 10 20 30 40 50 60 70 with securities law). 29% 42% 29% £2.9m Maximum 0 30 60 The Committee may make minor amendments to the Policy to aid its operation or implementation without seeking shareholder approvals 0 1,000,000 2,000,000 3,000,000 4,000,000 (e.g. for regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation) provided that any such change is not to the material advantage of the Director. Notes: 1. Fixed pay is the salary as at 1 January 2024, pension is per the Policy, and the value for benefits is equivalent to that included in the remuneration table on page 130. Malus and clawback 2. Annual bonus is based on 180% of salary for Carolyn McCall and 165% of salary for Chris Kennedy. 3. Based on Restricted Share grants of 132.5% for Carolyn McCall and 112.5% for Chris Kennedy. Malus and clawback provisions may be operated at the discretion of the Committee in respect of any cash and deferred share elements of the bonus, Restricted Share and legacy LTIP awards. Under malus, unvested share awards (including any Restricted Share or legacy LTIP awards subject to a post-vesting holding period) can be reduced (down to zero if considered appropriate) or be made subject to additional conditions. Clawback allows for repayment of bonuses previously paid and/or shares previously received following vesting. Malus/clawback can be operated up to four years following the start of the relevant bonus year for bonuses, and up to six years from the relevant date of grant for Restricted Share and legacy LTIP awards. For awards granted from 2020 onwards, the Committee has the discretion to apply malus and/or clawback in the event of the following circumstances: material misstatement of financial results; gross misconduct; fraud; payments based on an erroneous calculation or data; serious reputational damage; or material corporate failure.
124 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 125 REMUNERATION REPORT CONTINUED G O VE R NAN Performance measures and target setting C RESTRICTED SHARES The annual bonus is assessed against financial, strategic and individual targets determined by the Committee. This enables the Committee to E Purpose and link to strategyIncentivises Executive Directors to deliver the business strategy and aligns with longer-term Company performance and the reward annual financial performance delivered for shareholders, and performance against specific financial, operational or strategic shareholder experience. objectives set for each director, which are closely linked to the strategic priorities of the business. The Committee sets targets taking into account external forecasts, internal budgets and business priorities. Acts as a retention tool to retain the executives required to deliver the business strategy. OperationAwards may be structured as conditional rights or nil-cost options (or economic equivalent). Awards will normally be A key feature of Restricted Share awards is that the successful execution of the strategy and the success of the business is ultimately reflected granted annually with vesting after three years, subject to satisfaction of a performance underpin. Awards will normally be in the share price, therefore providing strong alignment with the interests of our shareholders. The vesting of Restricted Share awards is required to be held for an additional two year holding period so that the award is released after five years. During the holding subject to a performance underpin. For 2024 awards, the Committee will retain the ability to reduce vesting on the Restricted Shares (including period awards may be reduced or cancelled in certain circumstances. Further detail is provided in the Annual Report to nil) where adjusted Return on Capital Employed is below the Company’s cost of capital. In addition, the Committee has retained a broader on Remuneration. discretion to also enable reduction in vesting levels where there is a material weakness in the underlying financial health and sustainability of Dividends (or equivalents) may be earned in respect of any vested shares. the business. These underpins have been selected as they are considered to provide a robust and sustainable safeguard against payments for Maximum potential The maximum award level is 175% of salary. failure. Further detail on performance criteria is set out in the Annual Report on Remuneration. paymentOur current operational policy is to make annual awards of 132.5% of salary to the Chief Executive and 112.5% to the When considering performance outcomes, the Committee will look beyond formulaic results to ensure the outcomes align with the overall Group CFO & COO. business or individual performance. The Committee may adjust the targets for awards or the calculation of performance measures and vesting Performance metricsThe Committee may define the terms of the performance underpin. The criteria may be based on financial and/or non- outcomes for events not foreseen at the time the targets were set to ensure they remain a fair reflection of performance over the relevant financial metrics and include reference to corporate, divisional or individual performance. When determining vesting the period. Discretion will be exercised mindful of broader performance, and any change to the outcome will be disclosed in the next Annual Remuneration Committee will take into account all factors deemed relevant at the time (e.g. progress against execution of Report on Remuneration. the strategy, the nature of the wider trading environment). As the underpin is qualitative, there are no performance condition weightings applicable, nor is there a threshold-max vesing range. Application of Remuneration Policy Information on the individual award grants is set out in the Annual Report on Remuneration. The chart below provides an indication of the level of remuneration that would be received by each Executive Director under the following three assumed performance scenarios: SHAREHOLDING GUIDELINES Below threshold performance Fixed elements of remuneration only – base salary, benefits and pension Purpose and link to strategyTo create alignment between Executive Directors and shareholders both during service and after departure. Mid-performance Assumes 50% pay-out under the annual bonus OperationShareholding guidelines are in place which encourage Executive Directors to build up a holding in Company shares during the Assumes 100% vesting of the Restricted Shares course of tenure. The shareholding guideline for the Chief Executive is 400% of base salary and for the Group CFO & COO 225%. Maximum performance Assumes 100% pay-out under the annual bonus Assumes 100% vesting of the Restricted Shares Executive Directors will normally also be expected to retain an interest in Company shares for two years following departure. The expected holding requirement following departure will be equal to two times the Executive Director’s Restricted Shares grant level. Further details of current shareholdings of the Executive Directors, together with further detail on the operation of the Scenario charts shareholding guidelines are set out in the Annual Report on Remuneration. Carolyn McCall 100% £1.2m Minimum 0 10 20 30 40 50 60 70 Detailed provisions 33% 27% 40% £3.5m Mid performance 0 10 20 30 40 5070 60 The Committee may make any remuneration payments and payments for loss of office (including exercising any discretion available to it in 26% 43% 31% £4.4m connection with such payments) notwithstanding that they are not in line with the Policy set out above, where the terms of the payment were Maximum agreed either: (i) during the term of, and was consistent with any previous policy; or (ii) at a time when the relevant individual was not a director 0 1,000,000 2,000,000 3,000,000 4,000,000 of the Company and the payment was not in consideration for the individual becoming a director of the Company. This includes the ability to make payments in recognition of legacy Long Term Incentive Plan (LTIP) awards, awarded under any previous Policy. Chris Kennedy 100% £0.8m The Committee may adjust or amend Bonus and share awards only in accordance with the provisions of the relevant plan rules. This includes Minimum 0 10 20 30 40 50 60 70 making adjustment to reflect one-off corporate events, such as a change of control or a change in the Company’s capital structure. In accordance 36% 27% 37% £2.3m Mid performance with the plan rules, share awards may be settled in cash rather than shares where the Committee considers this appropriate (e.g. to comply 0 10 20 30 40 50 60 70 with securities law). 29% 42% 29% £2.9m Maximum 0 30 60 The Committee may make minor amendments to the Policy to aid its operation or implementation without seeking shareholder approvals 0 1,000,000 2,000,000 3,000,000 4,000,000 (e.g. for regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation) provided that any such change is not to the material advantage of the Director. Notes: 1. Fixed pay is the salary as at 1 January 2024, pension is per the Policy, and the value for benefits is equivalent to that included in the remuneration table on page 130. Malus and clawback 2. Annual bonus is based on 180% of salary for Carolyn McCall and 165% of salary for Chris Kennedy. 3. Based on Restricted Share grants of 132.5% for Carolyn McCall and 112.5% for Chris Kennedy. Malus and clawback provisions may be operated at the discretion of the Committee in respect of any cash and deferred share elements of the bonus, Restricted Share and legacy LTIP awards. Under malus, unvested share awards (including any Restricted Share or legacy LTIP awards subject to a post-vesting holding period) can be reduced (down to zero if considered appropriate) or be made subject to additional conditions. Clawback allows for repayment of bonuses previously paid and/or shares previously received following vesting. Malus/clawback can be operated up to four years following the start of the relevant bonus year for bonuses, and up to six years from the relevant date of grant for Restricted Share and legacy LTIP awards. For awards granted from 2020 onwards, the Committee has the discretion to apply malus and/or clawback in the event of the following circumstances: material misstatement of financial results; gross misconduct; fraud; payments based on an erroneous calculation or data; serious reputational damage; or material corporate failure.
126 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 127 REMUNERATION REPORT CONTINUED G O VE R NAN In accordance with the terms of the relevant incentive plans rules, the Committee retains discretion to determine the treatment of any Impact of share price C The value of Restricted Shares will fluctuate based on the share price over the relevant vesting period. For example, if the share price outstanding awards held by a departing Executive Director. The appropriate treatment will vary depending on the relevant facts and E increased by 50% over the relevant vesting and holding period, the maximum values shown in the charts above would increase to £5.1 million circumstances at the time. The table below sets out the general position and range of approaches in respect of incentive arrangements. for Carolyn McCall and to £3.3 million for Chris Kennedy. Conversely if the share price was to fall by 50%, the maximum values shown in the charts above would reduce to £3.7 million for Carolyn McCall and to £2.5 million for Chris Kennedy. Plan Good leaver (e.g. ill health) Bad leaver (e.g. dismissed for cause) Change of control Recruitment remuneration Bonus Executive Directors may be eligible for a Awards lapse. Awards would normally continue unless When agreeing the components of a remuneration package for a new Executive Director, the Committee will apply the principles bonus award prorated to reflect the the Committee determined otherwise. detailed below. proportion of the financial year for which they were employed and subject to the performance achieved, normally provided The package will be competitive to attract and retain the most suitable candidate for the job. Where possible, the Committee will always seek they have a minimum of three months’ to align the remuneration package with the Policy outlined above. However, where appropriate, detailed elements of the package may be service in that bonus year. tailored to the circumstances of the individual upon recruitment. The Committee will ensure that the arrangements are in the best interests of both ITV and its shareholders and remain subject to the overall variable pay limits set out below. DSA Injury, ill health, disability or transfer of Awards lapse. Awards release in full at effective date undertakings. Awards release in full at the of change. Ongoing remuneration In determining an appropriate remuneration structure and levels, the Committee will take into account all relevant factors to leaving date. ensure that ITV is able to recruit the most appropriate candidate for the job and that the arrangements are in the best interests of both ITV and its shareholders. The Committee will typically seek to align the ongoing remuneration package with For other good leavers identified by the the ongoing Policy outlined in this Report. Committee, awards release at the end of the deferral period unless the Committee Fixed pay will be determined in line with the policy table in this Report. The Committee may also hire a new Executive Director decides to release the shares earlier. at a lower salary, with more significant increases to salary being awarded as the individual gains experience. The maximum level of variable remuneration which may be granted to a new director upon appointment (excluding any Restricted Shares Awards are typically prorated for time Awards lapse. Outstanding awards would normally vest buyout awards for forfeited remuneration) will be capped in line with the Policy table above. Within the limits of the Policy during the served (where departure occurs during and be released subject to satisfaction of table the Committee may also rebalance the relative weighting of fixed pay and variable pay elements to reflect the performance period the first three years) and vest subject to performance underpins and capped circumstances on appointment. satisfaction of performance underpins. based on the time elapsed since grant, Buyout awards for The Committee may make awards to ‘buyout’ a candidate’s remuneration arrangements that are forfeited as a result of Awards are released at the end of holding subject to the discretion of the forfeited remuneration joining the Company. period unless the Committee decides to Committee. In doing so, the Committee will take account of relevant factors, including any performance conditions attaching to forfeited release the shares earlier. awards, the likelihood of the awards vesting and the form and timing of the awards. The Committee will typically seek to make buyout awards on a comparable basis to those that have been forfeited but, particularly where the performance period Restricted Shares Awards are released at end of holding Awards are normally retained, and are Awards are released at the effective date is substantially complete, may reflect such conditions in some other way, such as through an appropriate discount to the face – during the period unless the Committee decides to released at end of holding period unless of change. value of awards forfeited. Exceptionally, where necessary, this may include a guaranteed or non-prorated annual bonus in additional holding release the shares earlier. the Committee decides to release the the year of joining. period shares earlier. In exceptional circumstances, the Committee may grant a buyout award under a structure not included in the Policy but that In the case of misconduct, awards will is consistent with the principles set out above (and may rely upon Listing Rule 9.4.2 in structuring such a buyout). lapse. The Committee will take all relevant factors into account (including the candidate’s location, the calibre of the individual, external influences, internal relativities and the overall business context) when determining the new remuneration package and seek to ensure that no more is paid External appointments than necessary. With specific prior approval of the Board, Executive Directors may normally undertake one external appointment as a non-executive director In the Remuneration Report following the appointment, the Committee will fully explain to shareholders the remuneration package for the of another publicly quoted company and retain any related fees or share awards paid to them for their services. appointed individual and the rationale for such arrangements. Non-executive Directors On the appointment of a new Non-executive Chair or Non-executive Director, the terms and fees will normally be consistent with the fee policy The table below summarises the main elements of remuneration for Non-executive Directors. outlined in the Policy. Service contracts and loss of office Component Operation Maximum potential payment Executive Directors Non-executive Director fees The Committee determines the fees of the Non-executive The aggregate fees of the Chair and Non-executive Chair. The Chair and the Executive Directors determine the Directors will not exceed the limit from time to time Executive Directors have rolling service contracts that provide for 12 months’ notice on either side. For a new joiner, the contract may fees of the Non-executive Directors, which are accepted by prescribed within the Company’s Articles of Association commence with a notice period of up to two years reducing to the standard 12 months over time. There are no special provisions that apply the Board. (currently £1,500,000 p.a.). The value of benefits (including in the event of a change of control. Service contracts are available for inspection at the Company’s registered office. The fees are set at a level that is considered to be the reimbursement of travel and other expenses, and appropriate, taking into account the size and complexity of associated taxes) provided will be reasonable in the market A payment in lieu of notice, including base salary, benefits and retirement benefits may be made in certain circumstances, including if: the business and the expected time commitment and context and take account of the individual circumstances contribution of the role. and requirements of the Company. • The Company terminates the employment of the executive with immediate effect, or without due notice • Or termination is agreed by mutual consent Additional fees may be payable for membership and/or chair of a committee or other additional responsibilities. Service contracts normally include clauses requiring departing directors to mitigate losses from termination, balancing the commercial Non-executive Directors are not entitled to any circumstances at the time (e.g. impact on non-compete/non-solicitation clauses, protection of intellectual property). performance-related pay or pension. Role-appropriate benefits may also be provided in certain Where appropriate, the Company may also provide benefits in connection with departure which may include making a payment in respect of circumstances. This includes the reimbursement of any outplacement costs, legal fees and the cost of any settlement agreement. travel expenses (and associated tax on those expenses). With the exception of termination for cause, Executive Directors may be eligible for a bonus award prorated to reflect the proportion of the financial year for which they were employed and subject to the performance achieved, normally provided they have a minimum of three months’ service in that bonus year.
126 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 127 REMUNERATION REPORT CONTINUED G O VE R NAN In accordance with the terms of the relevant incentive plans rules, the Committee retains discretion to determine the treatment of any Impact of share price C The value of Restricted Shares will fluctuate based on the share price over the relevant vesting period. For example, if the share price outstanding awards held by a departing Executive Director. The appropriate treatment will vary depending on the relevant facts and E increased by 50% over the relevant vesting and holding period, the maximum values shown in the charts above would increase to £5.1 million circumstances at the time. The table below sets out the general position and range of approaches in respect of incentive arrangements. for Carolyn McCall and to £3.3 million for Chris Kennedy. Conversely if the share price was to fall by 50%, the maximum values shown in the charts above would reduce to £3.7 million for Carolyn McCall and to £2.5 million for Chris Kennedy.PlanGood leaver (e.g. ill health)Bad leaver (e.g. dismissed for cause)Change of control Recruitment remunerationBonus Executive Directors may be eligible for a Awards lapse. Awards would normally continue unless When agreeing the components of a remuneration package for a new Executive Director, the Committee will apply the principles bonus award prorated to reflect the the Committee determined otherwise. detailed below. proportion of the financial year for which they were employed and subject to the performance achieved, normally provided The package will be competitive to attract and retain the most suitable candidate for the job. Where possible, the Committee will always seek they have a minimum of three months’ to align the remuneration package with the Policy outlined above. However, where appropriate, detailed elements of the package may be service in that bonus year. tailored to the circumstances of the individual upon recruitment. The Committee will ensure that the arrangements are in the best interests of both ITV and its shareholders and remain subject to the overall variable pay limits set out below. DSA Injury, ill health, disability or transfer of Awards lapse. Awards release in full at effective date undertakings. Awards release in full at the of change. Ongoing remunerationIn determining an appropriate remuneration structure and levels, the Committee will take into account all relevant factors to leaving date. ensure that ITV is able to recruit the most appropriate candidate for the job and that the arrangements are in the best interests of both ITV and its shareholders. The Committee will typically seek to align the ongoing remuneration package with For other good leavers identified by the the ongoing Policy outlined in this Report. Committee, awards release at the end of the deferral period unless the Committee Fixed pay will be determined in line with the policy table in this Report. The Committee may also hire a new Executive Director decides to release the shares earlier. at a lower salary, with more significant increases to salary being awarded as the individual gains experience. The maximum level of variable remuneration which may be granted to a new director upon appointment (excluding any Restricted Shares Awards are typically prorated for time Awards lapse.Outstanding awards would normally vest buyout awards for forfeited remuneration) will be capped in line with the Policy table above. Within the limits of the Policy during the served (where departure occurs during and be released subject to satisfaction of table the Committee may also rebalance the relative weighting of fixed pay and variable pay elements to reflect the performance periodthe first three years) and vest subject to performance underpins and capped circumstances on appointment. satisfaction of performance underpins. based on the time elapsed since grant, Buyout awards for The Committee may make awards to ‘buyout’ a candidate’s remuneration arrangements that are forfeited as a result of Awards are released at the end of holding subject to the discretion of the forfeited remunerationjoining the Company. period unless the Committee decides to Committee. In doing so, the Committee will take account of relevant factors, including any performance conditions attaching to forfeited release the shares earlier. awards, the likelihood of the awards vesting and the form and timing of the awards. The Committee will typically seek to make buyout awards on a comparable basis to those that have been forfeited but, particularly where the performance period Restricted Shares Awards are released at end of holding Awards are normally retained, and are Awards are released at the effective date is substantially complete, may reflect such conditions in some other way, such as through an appropriate discount to the face – during the period unless the Committee decides to released at end of holding period unless of change. value of awards forfeited. Exceptionally, where necessary, this may include a guaranteed or non-prorated annual bonus in additional holding release the shares earlier.the Committee decides to release the the year of joining. period shares earlier. In exceptional circumstances, the Committee may grant a buyout award under a structure not included in the Policy but that In the case of misconduct, awards will is consistent with the principles set out above (and may rely upon Listing Rule 9.4.2 in structuring such a buyout).lapse. The Committee will take all relevant factors into account (including the candidate’s location, the calibre of the individual, external influences, internal relativities and the overall business context) when determining the new remuneration package and seek to ensure that no more is paid External appointments than necessary. With specific prior approval of the Board, Executive Directors may normally undertake one external appointment as a non-executive director In the Remuneration Report following the appointment, the Committee will fully explain to shareholders the remuneration package for the of another publicly quoted company and retain any related fees or share awards paid to them for their services. appointed individual and the rationale for such arrangements.Non-executive Directors On the appointment of a new Non-executive Chair or Non-executive Director, the terms and fees will normally be consistent with the fee policy The table below summarises the main elements of remuneration for Non-executive Directors. outlined in the Policy. Service contracts and loss of officeComponent Operation Maximum potential payment Executive Directors Non-executive Director fees The Committee determines the fees of the Non-executive The aggregate fees of the Chair and Non-executive Chair. The Chair and the Executive Directors determine the Directors will not exceed the limit from time to time Executive Directors have rolling service contracts that provide for 12 months’ notice on either side. For a new joiner, the contract may fees of the Non-executive Directors, which are accepted by prescribed within the Company’s Articles of Association commence with a notice period of up to two years reducing to the standard 12 months over time. There are no special provisions that apply the Board.(currently £1,500,000 p.a.). The value of benefits (including in the event of a change of control. Service contracts are available for inspection at the Company’s registered office.The fees are set at a level that is considered to be the reimbursement of travel and other expenses, and appropriate, taking into account the size and complexity of associated taxes) provided will be reasonable in the market A payment in lieu of notice, including base salary, benefits and retirement benefits may be made in certain circumstances, including if:the business and the expected time commitment and context and take account of the individual circumstances contribution of the role. and requirements of the Company. • The Company terminates the employment of the executive with immediate effect, or without due notice • Or termination is agreed by mutual consent Additional fees may be payable for membership and/or chair of a committee or other additional responsibilities. Service contracts normally include clauses requiring departing directors to mitigate losses from termination, balancing the commercial Non-executive Directors are not entitled to any circumstances at the time (e.g. impact on non-compete/non-solicitation clauses, protection of intellectual property).performance-related pay or pension. Role-appropriate benefits may also be provided in certain Where appropriate, the Company may also provide benefits in connection with departure which may include making a payment in respect of circumstances. This includes the reimbursement of any outplacement costs, legal fees and the cost of any settlement agreement.travel expenses (and associated tax on those expenses). With the exception of termination for cause, Executive Directors may be eligible for a bonus award prorated to reflect the proportion of the financial year for which they were employed and subject to the performance achieved, normally provided they have a minimum of three months’ service in that bonus year.
128 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 129 REMUNERATION REPORT CONTINUED G O VE R NAN Each Non-executive Director, including the Chair, has a contract of service or letter of appointment with the Company. Non-executive C Directors will serve for an initial term of three years, subject to election and annual re-election by shareholders, unless otherwise terminated CASCADE OF REMUNERATION THROUGH THE ORGANISATION E earlier by and at the discretion of either party upon one month’s written notice (12 months for the Chair). The Directors’ service contracts and letters of appointment are available for inspection at the Company’s registered office. Employment conditions elsewhere in the Company The table below summarises how remuneration compares across the different groups of employees The Committee has responsibility for ensuring effective engagement and alignment with the workforce in relation to remuneration and throughout the company. related policies and practices. When setting the policy for Directors’ remuneration, the Committee considers the pay and employment EMPLOYEES AT ALL LEVELS conditions of employees to ensure fairness across the organisation. Although it does not consult directly with employees in respect of determining the Directors’ Remuneration Policy, it receives general feedback from employees via the HR function as part of the output from Element of pay Description the employee Engagement and Culture survey and receives a report on employment practices elsewhere in the Company. Graham Cooke, Base salary Salaries are reviewed annually, with Executive Directors normally receiving a salary increase in line with that received by the as our designated Workforce Engagement Director, regularly attends Ambassador meetings to understand any views and concerns colleagues wider workforce. In 2024 there was a tiered approach to the annual pay review based on salary level. Lower earners in the business may have on this matter and is responsible for sharing these with the Committee – more information on this can be found in the Corporate received 6%, higher earners including the Executive Directors and Management Board received 3%, and all other employees received Governance section of this Report. In her role as Chair of the Committee, Sharmila Nebhrajani joined Graham at an Ambassador meeting in between 4-5%. June 2023 in order to share the Committee’s approach to remuneration in the wider context. ITV has held the Living Wage accreditation since 2014 and was the first broadcaster to do so. We pay the London Living Wage in London and the Living Wage outside of London. This means that we pay everyone, from employees and apprentices to contractors The approach to determining the compensation for employees globally follows the same principles as for our Executive Directors. and temporary workers, at least the hourly rate set independently and updated annually by the Living Wage Foundation, which is Consideration is given to the level of experience, responsibility, individual performance and remuneration paid for comparable roles within higher than the government’s National Minimum Wage and National Living Wage rates. the market. The Committee considers data on pay trends and practices, such as gender pay gap information, and the CEO to worker pay ratio. Flexible benefits A range of benefits are available to all employees, providing financial security, encouraging a healthy and balanced lifestyle, and Incentive arrangements across the Company are tailored based on the nature of the role. Bonuses operate on a wide basis across the helping individuals make their pay go further. Company and long-term share awards are offered to senior management. Being a great place to work is key to developing our culture. Pay is All employees receive the following benefits: just one factor used to attract, retain and develop a talented and diverse workforce. More information on ITV’s commitment to investing in • Five weeks holiday each year, plus bank holidays, and an extra two days after five years’ service and building a productive, creative and diverse workforce can be found in the Social Purpose section of this Annual Report and Accounts. • Enhanced Company sick pay and family friendly policies, including maternity, paternity, adoption and shared parental leave • Income protection cover of 50% of salary Shareholder views • Life assurance cover at four times annual basic salary The Committee maintains regular and transparent communication with shareholders. We believe that it is important to regularly meet with • Wellbeing benefits, including an annual wellbeing day, a range of digital health services and an Employee Assistance Programme our key shareholders to understand their views on our remuneration arrangements and what they would like to see going forward. We welcome (EAP) providing a confidential helpline and additional support feedback from shareholders at any time during the year. There are also voluntary benefits available for employees to choose from, including the opportunity to buy up to six weeks’ extra holiday, a Cycle to Work scheme, a salary sacrifice car benefit, gym membership, private healthcare and a health cash plan, which Where we are proposing to make any significant changes to the remuneration framework or the manner in which the framework is operated we includes optional hospital treatment insurance. would seek major shareholders’ views and take these into account. In recent years, the Committee has consulted with major shareholders We continually look for opportunities to evolve our employee benefits in cost effective ways that support both the needs of the regarding the operation of the Policy on numerous occasions. business and our diverse workforce. Prior to the adoption of the Policy at the 2021 AGM the Committee undertook extensive consultation with major investors regarding the Pension Employees at all levels can participate in our pension arrangements. proposed changes to the pay structure. Engagement with investors on matters relating to executive pay have continued in subsequent years Eligible employees are invited to join the Defined Contribution Plan and can choose to make a core contribution between 3–6% of their and discussions were held prior to the proposed renewal of the Policy at the 2024 AGM. Throughout the period the major proxy agencies have pensionable earnings, which ITV will match and in addition pay a further 3% (i.e. up to 9% in total). remained supportive of our remuneration proposals. Whilst the vast majority of our investors have consistently voted in favour of our pay A small number of senior executives have pension contributions paid into their personal pension or receive a cash allowance in lieu resolutions, the Committee recognises that there are a diverse range of views amongst investors, particularly in relation to restricted share of contributions. proposals. Whilst the Committee remains satisfied regarding the rationale and benefits of the existing pay model, it will continue to monitor Save As You Earn All eligible UK employees have the opportunity to benefit from ITV’s long-term performance and share price growth by participating in the effectiveness of the Policy going forward to ensure it continues to support execution of the strategy and the views of our major the Save As You Earn plan. They can save up to £500 per month over a three or five year period to acquire shares in the Company at a shareholders continue to inform and guide our overall approach. 20% discount to the share price at the start of the savings period. We intend to maintain a dialogue with our shareholders in future years, particularly when the Committee anticipates any substantial change Annual All ITV employees have an annual bonus opportunity which is based on a % of salary for senior roles and those in Sales, or the same to the remuneration framework. bonus – cash maximum monetary value for all other employees. In 2023 the employee bonus opportunity was £2,000, with the 2023 bonus paying out at £764. A thank you payment of £636 was made to uplift the amount paid to employees. SENIOR EXECUTIVES Element Summary of policy Deferred Share Senior Executives are required to defer one-third of their bonus into ITV shares for three years. Award Plan Executive Share Share-based awards are granted to selected senior leaders across the business which vest on the third anniversary of grant subject to Plan the Committee’s assessment of the performance underpin. Grant levels are generally expressed as a % of salary, with award levels linked to role and seniority. The detailed terms of operation vary by jurisdiction to reflect local market, legal and tax considerations. For Executive Directors any vested awards are subject to an additional two year holding period. Shareholding The Executive Directors and other members of the Management Board, are subject to shareholding guidelines that align their guidelines interests with those of shareholders. The Executive Directors are also subject to post-cessation shareholding guidelines, aligning their interests to shareholders for two years after their employment with ITV ceases.
128 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 129 REMUNERATION REPORT CONTINUED G O VE R NAN Each Non-executive Director, including the Chair, has a contract of service or letter of appointment with the Company. Non-executive C Directors will serve for an initial term of three years, subject to election and annual re-election by shareholders, unless otherwise terminated CASCADE OF REMUNERATION THROUGH THE ORGANISATIONE earlier by and at the discretion of either party upon one month’s written notice (12 months for the Chair). The Directors’ service contracts and letters of appointment are available for inspection at the Company’s registered office. Employment conditions elsewhere in the CompanyThe table below summarises how remuneration compares across the different groups of employees The Committee has responsibility for ensuring effective engagement and alignment with the workforce in relation to remuneration and throughout the company. related policies and practices. When setting the policy for Directors’ remuneration, the Committee considers the pay and employment EMPLOYEES AT ALL LEVELS conditions of employees to ensure fairness across the organisation. Although it does not consult directly with employees in respect of determining the Directors’ Remuneration Policy, it receives general feedback from employees via the HR function as part of the output from Element of payDescription the employee Engagement and Culture survey and receives a report on employment practices elsewhere in the Company. Graham Cooke, Base salarySalaries are reviewed annually, with Executive Directors normally receiving a salary increase in line with that received by the as our designated Workforce Engagement Director, regularly attends Ambassador meetings to understand any views and concerns colleagues wider workforce. In 2024 there was a tiered approach to the annual pay review based on salary level. Lower earners in the business may have on this matter and is responsible for sharing these with the Committee – more information on this can be found in the Corporate received 6%, higher earners including the Executive Directors and Management Board received 3%, and all other employees received Governance section of this Report. In her role as Chair of the Committee, Sharmila Nebhrajani joined Graham at an Ambassador meeting in between 4-5%. June 2023 in order to share the Committee’s approach to remuneration in the wider context.ITV has held the Living Wage accreditation since 2014 and was the first broadcaster to do so. We pay the London Living Wage in London and the Living Wage outside of London. This means that we pay everyone, from employees and apprentices to contractors The approach to determining the compensation for employees globally follows the same principles as for our Executive Directors. and temporary workers, at least the hourly rate set independently and updated annually by the Living Wage Foundation, which is Consideration is given to the level of experience, responsibility, individual performance and remuneration paid for comparable roles within higher than the government’s National Minimum Wage and National Living Wage rates. the market. The Committee considers data on pay trends and practices, such as gender pay gap information, and the CEO to worker pay ratio. Flexible benefits A range of benefits are available to all employees, providing financial security, encouraging a healthy and balanced lifestyle, and Incentive arrangements across the Company are tailored based on the nature of the role. Bonuses operate on a wide basis across the helping individuals make their pay go further. Company and long-term share awards are offered to senior management. Being a great place to work is key to developing our culture. Pay is All employees receive the following benefits: just one factor used to attract, retain and develop a talented and diverse workforce. More information on ITV’s commitment to investing in • Five weeks holiday each year, plus bank holidays, and an extra two days after five years’ service and building a productive, creative and diverse workforce can be found in the Social Purpose section of this Annual Report and Accounts. • Enhanced Company sick pay and family friendly policies, including maternity, paternity, adoption and shared parental leave • Income protection cover of 50% of salary Shareholder views • Life assurance cover at four times annual basic salary The Committee maintains regular and transparent communication with shareholders. We believe that it is important to regularly meet with • Wellbeing benefits, including an annual wellbeing day, a range of digital health services and an Employee Assistance Programme our key shareholders to understand their views on our remuneration arrangements and what they would like to see going forward. We welcome (EAP) providing a confidential helpline and additional support feedback from shareholders at any time during the year.There are also voluntary benefits available for employees to choose from, including the opportunity to buy up to six weeks’ extra holiday, a Cycle to Work scheme, a salary sacrifice car benefit, gym membership, private healthcare and a health cash plan, which Where we are proposing to make any significant changes to the remuneration framework or the manner in which the framework is operated we includes optional hospital treatment insurance. would seek major shareholders’ views and take these into account. In recent years, the Committee has consulted with major shareholders We continually look for opportunities to evolve our employee benefits in cost effective ways that support both the needs of the regarding the operation of the Policy on numerous occasions.business and our diverse workforce. Prior to the adoption of the Policy at the 2021 AGM the Committee undertook extensive consultation with major investors regarding the PensionEmployees at all levels can participate in our pension arrangements. proposed changes to the pay structure. Engagement with investors on matters relating to executive pay have continued in subsequent years Eligible employees are invited to join the Defined Contribution Plan and can choose to make a core contribution between 3–6% of their and discussions were held prior to the proposed renewal of the Policy at the 2024 AGM. Throughout the period the major proxy agencies have pensionable earnings, which ITV will match and in addition pay a further 3% (i.e. up to 9% in total). remained supportive of our remuneration proposals. Whilst the vast majority of our investors have consistently voted in favour of our pay A small number of senior executives have pension contributions paid into their personal pension or receive a cash allowance in lieu resolutions, the Committee recognises that there are a diverse range of views amongst investors, particularly in relation to restricted share of contributions. proposals. Whilst the Committee remains satisfied regarding the rationale and benefits of the existing pay model, it will continue to monitor Save As You EarnAll eligible UK employees have the opportunity to benefit from ITV’s long-term performance and share price growth by participating in the effectiveness of the Policy going forward to ensure it continues to support execution of the strategy and the views of our major the Save As You Earn plan. They can save up to £500 per month over a three or five year period to acquire shares in the Company at a shareholders continue to inform and guide our overall approach. 20% discount to the share price at the start of the savings period. We intend to maintain a dialogue with our shareholders in future years, particularly when the Committee anticipates any substantial change Annual All ITV employees have an annual bonus opportunity which is based on a % of salary for senior roles and those in Sales, or the same to the remuneration framework.bonus – cashmaximum monetary value for all other employees. In 2023 the employee bonus opportunity was £2,000, with the 2023 bonus paying out at £764. A thank you payment of £636 was made to uplift the amount paid to employees. SENIOR EXECUTIVES Element Summary of policy Deferred Share Senior Executives are required to defer one-third of their bonus into ITV shares for three years. Award Plan Executive Share Share-based awards are granted to selected senior leaders across the business which vest on the third anniversary of grant subject to Plan the Committee’s assessment of the performance underpin. Grant levels are generally expressed as a % of salary, with award levels linked to role and seniority. The detailed terms of operation vary by jurisdiction to reflect local market, legal and tax considerations. For Executive Directors any vested awards are subject to an additional two year holding period. Shareholding The Executive Directors and other members of the Management Board, are subject to shareholding guidelines that align their guidelines interests with those of shareholders. The Executive Directors are also subject to post-cessation shareholding guidelines, aligning their interests to shareholders for two years after their employment with ITV ceases.
130 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 131 G ANNUAL REPORT ON REMUNERATION O VE R NAN The performance measures and weightings for 2023 bonuses were the same as in previous years. For 2023, 10% of the bonus was assessed The sections of the Annual Report on Remuneration that have been audited C against a scorecard of ESG measures linked to our carbon footprint, the sustainability of our UK productions and commissions and progress E by PwC are indicated with headings throughout the report. towards our diversity goals. The balance of the bonus was linked to EBITA (60%), cash conversion (10%) and individual personal and strategic targets (20%). The majority of the 2023 bonus (70%) was based on the achievement of corporate and financial targets, with bonus outcomes determined in Remuneration Policy application in 2023 accordance with pre-set target ranges. In line with the principles applied in previous years, the financial outcomes used for the bonus are The following section provides details of how the current Remuneration Policy was implemented in 2023. adjusted (both positively and negatively) for certain items, such as acquisitions and currency movements to ensure a fair like-for-like comparison with the targets set at the start of the year. Executive Directors – Audited The table below sets out in a single figure the total remuneration for both Executive Directors for the financial year. As part of the assessment of performance, the Committee also undertook a holistic review of overall performance, to ensure that outcomes were a fair reflection of the underlying business performance. Carolyn McCall Chris Kennedy The corporate and financial targets applied for 2023, together with performance against those targets and the resulting level of bonus, are set 2023 2022 2023 2022 out in the table below. Notes £000 £000 £000 £000 Salary 1,010 971 723 695 Taxable benefits 18 18 18 18 The adjusted EBITA ranges were set at the start of the year to reflect the market expectations for an anticipated slowdown in advertising Pension 91 146 65 62 spend, as well as the impact of our continued budgeted investment in content and technology. The target ranges set therefore reflect this Total fixed remuneration 1,119 1,135 806 775 external market and investment context. Annual Incentive (Bonus – cash and shares) 1 1,026 1,429 673 937 Performance required ESP / LTIP awards 2, 3 736 1,126 447 684 Performance Pay-out level Save As You Earn (SAYE) 4 – – 5 – Performance measure Weighting 20% 50% 80% 100% achieved (% of maximum) ITV adjusted EBITA1 60% £473m £503m £523m £573m £491m 38.2% Total variable remuneration 1,762 2,555 1,125 1,621 ITV cash conversion2 10% 66% 72% 75.6% 78% 102% 100% Total 2,881 3,690 1,931 2,396 1. The ITV EBITA outcome was adjusted for translational currency movements. Outperformance in Studios profitability was balanced by the impact of contraction in the wider advertising market. This resulted in EBITA performance towards the lower end of the range. 1. Two-thirds of the annual bonus is settled in cash and one-third is deferred into shares awarded under the ITV Deferred Share Award plan which automatically release on the third 2. While overall cash conversion performance was strong and supported the payout level, it was recognised that performance relative to the target range was partly attributable anniversary of the award, subject to continued employment. to a favourable movement in working capital, in part due to the impact of the US writers and actors strike expected to unwind in 2024. See page 14 for more information. 2. The 2021 ESP awards were subject to a performance underpin assessed based on results for the year ended 31 December 2023. The amount shown is the indicative vesting value using the average share price in Q4 of 2023 (63.31 pence). The awards will vest in May 2024 and will include dividend shares reinvested. Following a two year holding period, they will become exercisable from May 2026. These awards were granted based on a share price of 123.37 pence, therefore the values shown do not include an amount attributable to share The annual ESG targets applied for 2023, together with performance against those targets are set out below. price growth. 3. In the 2022 Annual Remuneration Report, the amount shown for share awards for both Executive Directors was the indicative vesting value of the 2020 LTIP award that was subject to performance conditions measured to 31 December 2022 using the average share price in Q4 2022 (70.67 pence). The figure shown in the table above represents the subsequent Social purpose goal Scorecard objectives Achievement value received on the vesting date of 6 April 2023 using the share price on that date (80.82 pence). These awards are subject to a two year holding period. 4. Chris Kennedy was granted share options under the SAYE on 13 September 2023 at a 20% discount of the ITV share price at the time of grant. The amount disclosed is the value of Net zero carbon emissions1 Scope 1 and 2 emissions to be below 7,271 tonnes of CO e, in Combined scope 1 and 2 emissions were 42% lower than the the total discount when investing the maximum (£500 per month) over a three year contracted period. 2 line with our SBTi trajectory. target set for 2023. The aggregate emoluments for all Directors as required under Schedule 5 (SI 2008/410), is the total remuneration shown in the table above Business travel emissions to be below 39,257 tonnes of Scope 3 business travel emissions were 39% lower than the CO2e, in line with our SBTi trajectory. target set for 2023. less share awards but including gains on exercise of options and amounts receivable under LTIPs, plus the total emolument figures for Non-executive Directors shown on page 134. Actual emissions performance is reflective of reduced studios output due to the industry strikes during 2023. Further information in relation to each of the elements of remuneration for 2023 set out in the table above is detailed below. An explanation 100% albert certified2 100% albert certification for new programmes produced In 2023 94% of the programmes produced by ITV Studios for 2022 is set out in detail in our 2022 Annual Report and Accounts which can be found on our website www.itvplc.com/investors and commissioned in the UK (excluding acquisitions of had albert certification. 64% of the shows commissioned by finished programmes and repeats). Certification includes ITV had albert certification, up from 42% in 2022. There was The Single Figure outcome has decreased for the Chief Executive from £3,690k in 2022 to £2,881k in 2023, while for the Group CFO & COO programme makers taking part in albert’s Creative Offsets good progress made in this area and the business continues it has decreased from £2,396k in 2022 to £ 1,931k in 2023. Largely this is a result of the 2021 ESP that was awarded at 50% of previous LTIP initiative or approved equivalent to make their production to work with the albert team and wider production awards vesting in 2023 as well as the restatement of the 2019 LTIP that vested in 2022. carbon neutral. community to achieve our 100% aspiration, while recognising the challenges we are still facing in engaging producers. See page 65 for more information on delivery of Salary climate related targets. As disclosed in last year’s report, both Carolyn McCall and Chris Kennedy received a 4% salary increase for 2023. This was in line with other Increase diversity on and To hit the following targets for: In 2023, progress continued to be made towards our senior executives but lower than the 5-6% increase awarded to the majority of employees. Carolyn McCall’s salary was £1,010,416 and off-screen by the end of 20233 Representation on-screen colleague and on-screen diversity targets, exceeding or Chris Kennedy’s salary was £722,900. • 50% Women close to hitting targets for most characteristics. On-screen targets were exceeded for LGBTQ+ and People of Colour, • 20% People of Colour but representation of Deaf, Disabled and Neurodivergent Taxable benefits and pension – Audited • 12% Deaf, Disabled or Neurodiverse people was below the target level. Targets were exceeded The benefits provided to the Executive Directors are the cost of private medical insurance and car-related benefits. • 7% LGBTQ+ for Deaf, Disabled or Neurodivergent colleagues at ITV (increasing to 12.3% from 11.4% in 2022) as well as women All colleague representation and LGBTQ+ colleagues. More needs to be done to increase The Executive Directors were not part of an ITV pension scheme but receive a cash allowance in lieu of pension. ITV was a first mover in • 50% Women the representation of People of Colour and colleagues from reducing executive pension levels. In 2017, the level for the Chief Executive was reduced from 25% of salary to 15% of salary (prior to the 2018 a working class background at ITV and the Committee Corporate Governance Code (the Code) coming into force). In accordance with the Code the Committee determined that directors joining from • 31.8% from working class backgrounds • 16.9% People of Colour noted the continuing work to achieve all of ITV’s diversity 1 January 2019 would receive pension contributions in line with the wider employee group, therefore Chris Kennedy received a cash allowance targets. in lieu of pension of 9% of salary. This is aligned with the maximum matching percentage amount payable to employees in the ITV Defined • 12% Deaf, Disabled or Neurodiverse Contribution Pension plan, which is the pension scheme offered to the majority of Group employees. To bring Carolyn McCall in line with the • 7% LGBTQ+ policy and the wider employee group, her cash allowance was reduced to 9% from 1 January 2023. Training • 80% of managers to have completed ‘Creating Disability Annual Incentive – Bonus (cash and shares) – Audited Inclusion’ training and/or ‘License to Hire’ training. Annual incentives are provided to Executive Directors through the bonus, with one-third of any award deferred into shares under the Deferred Share Award Plan (DSA). The maximum bonus opportunity for the year for the Chief Executive was 180% and for the Group CFO 1. ITV emissions reduction targets and performance are validated and published as part of the Science Based Targets initiative (SBTi) (https://sciencebasedtargets.org/). Further information on ITV’s Climate Action targets and scope can be found at itvplc.com/socialpurpose and in the Social Purpose section of the Annual Report. & COO was 165%. 2. albert certification is an externally audited process that recognises programmes that have embedded sustainability not only within the production process but also through considering sustainability messaging included in programmes. 3. On-screen diversity is measured via Diamond, a single online system delivered through the Creative Diversity Network (CDN) and used by UK broadcasters to obtain consistent diversity data on UK-originated productions they commission (https://creativediversitynetwork.com/diamond/).
130 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 131 G ANNUAL REPORT ON REMUNERATION O VE R NAN The performance measures and weightings for 2023 bonuses were the same as in previous years. For 2023, 10% of the bonus was assessed The sections of the Annual Report on Remuneration that have been audited C against a scorecard of ESG measures linked to our carbon footprint, the sustainability of our UK productions and commissions and progress E by PwC are indicated with headings throughout the report. towards our diversity goals. The balance of the bonus was linked to EBITA (60%), cash conversion (10%) and individual personal and strategic targets (20%). The majority of the 2023 bonus (70%) was based on the achievement of corporate and financial targets, with bonus outcomes determined in Remuneration Policy application in 2023accordance with pre-set target ranges. In line with the principles applied in previous years, the financial outcomes used for the bonus are The following section provides details of how the current Remuneration Policy was implemented in 2023.adjusted (both positively and negatively) for certain items, such as acquisitions and currency movements to ensure a fair like-for-like comparison with the targets set at the start of the year. Executive Directors – Audited The table below sets out in a single figure the total remuneration for both Executive Directors for the financial year. As part of the assessment of performance, the Committee also undertook a holistic review of overall performance, to ensure that outcomes were a fair reflection of the underlying business performance. Carolyn McCallChris Kennedy The corporate and financial targets applied for 2023, together with performance against those targets and the resulting level of bonus, are set 2023202220232022 out in the table below. Notes£000£000£000£000 Salary1,010971723695 Taxable benefits18181818 The adjusted EBITA ranges were set at the start of the year to reflect the market expectations for an anticipated slowdown in advertising Pension911466562 spend, as well as the impact of our continued budgeted investment in content and technology. The target ranges set therefore reflect this Total fixed remuneration1,1191,135806775external market and investment context. Annual Incentive (Bonus – cash and shares)11,0261,429673937 Performance required ESP / LTIP awards2, 37361,126447684 Performance Pay-out level Save As You Earn (SAYE)4––5– Performance measure Weighting 20% 50% 80% 100% achieved (% of maximum) ITV adjusted EBITA1 60% £473m £503m £523m £573m £491m 38.2% Total variable remuneration1,7622,5551,1251,621 ITV cash conversion2 10% 66% 72% 75.6% 78% 102% 100% Total2,8813,6901,9312,396 1. The ITV EBITA outcome was adjusted for translational currency movements. Outperformance in Studios profitability was balanced by the impact of contraction in the wider advertising market. This resulted in EBITA performance towards the lower end of the range. 1. Two-thirds of the annual bonus is settled in cash and one-third is deferred into shares awarded under the ITV Deferred Share Award plan which automatically release on the third 2. While overall cash conversion performance was strong and supported the payout level, it was recognised that performance relative to the target range was partly attributable anniversary of the award, subject to continued employment.to a favourable movement in working capital, in part due to the impact of the US writers and actors strike expected to unwind in 2024. See page 14 for more information. 2. The 2021 ESP awards were subject to a performance underpin assessed based on results for the year ended 31 December 2023. The amount shown is the indicative vesting value using the average share price in Q4 of 2023 (63.31 pence). The awards will vest in May 2024 and will include dividend shares reinvested. Following a two year holding period, they will become exercisable from May 2026. These awards were granted based on a share price of 123.37 pence, therefore the values shown do not include an amount attributable to share The annual ESG targets applied for 2023, together with performance against those targets are set out below. price growth. 3. In the 2022 Annual Remuneration Report, the amount shown for share awards for both Executive Directors was the indicative vesting value of the 2020 LTIP award that was subject to performance conditions measured to 31 December 2022 using the average share price in Q4 2022 (70.67 pence). The figure shown in the table above represents the subsequent Social purpose goalScorecard objectivesAchievement value received on the vesting date of 6 April 2023 using the share price on that date (80.82 pence). These awards are subject to a two year holding period. 4. Chris Kennedy was granted share options under the SAYE on 13 September 2023 at a 20% discount of the ITV share price at the time of grant. The amount disclosed is the value of Net zero carbon emissions1 Scope 1 and 2 emissions to be below 7,271 tonnes of CO e, in Combined scope 1 and 2 emissions were 42% lower than the the total discount when investing the maximum (£500 per month) over a three year contracted period. 2 line with our SBTi trajectory. target set for 2023. The aggregate emoluments for all Directors as required under Schedule 5 (SI 2008/410), is the total remuneration shown in the table above Business travel emissions to be below 39,257 tonnes of Scope 3 business travel emissions were 39% lower than the CO2e, in line with our SBTi trajectory. target set for 2023. less share awards but including gains on exercise of options and amounts receivable under LTIPs, plus the total emolument figures for Non-executive Directors shown on page 134. Actual emissions performance is reflective of reduced studios output due to the industry strikes during 2023. Further information in relation to each of the elements of remuneration for 2023 set out in the table above is detailed below. An explanation 100% albert certified2100% albert certification for new programmes produced In 2023 94% of the programmes produced by ITV Studios for 2022 is set out in detail in our 2022 Annual Report and Accounts which can be found on our website www.itvplc.com/investorsand commissioned in the UK (excluding acquisitions of had albert certification. 64% of the shows commissioned by finished programmes and repeats). Certification includes ITV had albert certification, up from 42% in 2022. There was The Single Figure outcome has decreased for the Chief Executive from £3,690k in 2022 to £2,881k in 2023, while for the Group CFO & COO programme makers taking part in albert’s Creative Offsets good progress made in this area and the business continues it has decreased from £2,396k in 2022 to £ 1,931k in 2023. Largely this is a result of the 2021 ESP that was awarded at 50% of previous LTIP initiative or approved equivalent to make their production to work with the albert team and wider production awards vesting in 2023 as well as the restatement of the 2019 LTIP that vested in 2022. carbon neutral. community to achieve our 100% aspiration, while recognising the challenges we are still facing in engaging producers. See page 65 for more information on delivery of Salary climate related targets. As disclosed in last year’s report, both Carolyn McCall and Chris Kennedy received a 4% salary increase for 2023. This was in line with other Increase diversity on and To hit the following targets for:In 2023, progress continued to be made towards our senior executives but lower than the 5-6% increase awarded to the majority of employees. Carolyn McCall’s salary was £1,010,416 and off-screen by the end of 20233Representation on-screen colleague and on-screen diversity targets, exceeding or Chris Kennedy’s salary was £722,900. • 50% Women close to hitting targets for most characteristics. On-screen targets were exceeded for LGBTQ+ and People of Colour, • 20% People of Colour but representation of Deaf, Disabled and Neurodivergent Taxable benefits and pension – Audited • 12% Deaf, Disabled or Neurodiverse people was below the target level. Targets were exceeded The benefits provided to the Executive Directors are the cost of private medical insurance and car-related benefits. • 7% LGBTQ+ for Deaf, Disabled or Neurodivergent colleagues at ITV (increasing to 12.3% from 11.4% in 2022) as well as women All colleague representation and LGBTQ+ colleagues. More needs to be done to increase The Executive Directors were not part of an ITV pension scheme but receive a cash allowance in lieu of pension. ITV was a first mover in • 50% Women the representation of People of Colour and colleagues from reducing executive pension levels. In 2017, the level for the Chief Executive was reduced from 25% of salary to 15% of salary (prior to the 2018 a working class background at ITV and the Committee Corporate Governance Code (the Code) coming into force). In accordance with the Code the Committee determined that directors joining from • 31.8% from working class backgrounds • 16.9% People of Colour noted the continuing work to achieve all of ITV’s diversity 1 January 2019 would receive pension contributions in line with the wider employee group, therefore Chris Kennedy received a cash allowance targets. in lieu of pension of 9% of salary. This is aligned with the maximum matching percentage amount payable to employees in the ITV Defined • 12% Deaf, Disabled or Neurodiverse Contribution Pension plan, which is the pension scheme offered to the majority of Group employees. To bring Carolyn McCall in line with the • 7% LGBTQ+ policy and the wider employee group, her cash allowance was reduced to 9% from 1 January 2023.Training • 80% of managers to have completed ‘Creating Disability Annual Incentive – Bonus (cash and shares) – Audited Inclusion’ training and/or ‘License to Hire’ training. Annual incentives are provided to Executive Directors through the bonus, with one-third of any award deferred into shares under the Deferred Share Award Plan (DSA). The maximum bonus opportunity for the year for the Chief Executive was 180% and for the Group CFO 1. ITV emissions reduction targets and performance are validated and published as part of the Science Based Targets initiative (SBTi) (https://sciencebasedtargets.org/). Further information on ITV’s Climate Action targets and scope can be found at itvplc.com/socialpurpose and in the Social Purpose section of the Annual Report. & COO was 165%. 2. albert certification is an externally audited process that recognises programmes that have embedded sustainability not only within the production process but also through considering sustainability messaging included in programmes. 3. On-screen diversity is measured via Diamond, a single online system delivered through the Creative Diversity Network (CDN) and used by UK broadcasters to obtain consistent diversity data on UK-originated productions they commission (https://creativediversitynetwork.com/diamond/).
132 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 133 REMUNERATION REPORT CONTINUED G O VE R NAN The annual Social Purpose targets goals can be found on our website www.itvplc.com. Consistent with the requirements of the Code, the Committee considers wider performance before approving the formulaic outcomes from C incentive plans. Where appropriate the Committee has scope to apply judgement and discretion. To assist the Committee with determining E The Committee noted the progress that had been made against our ESG targets in 2023 and agreed that based on holistic assessment whether adjustments are required, the Committee applies a framework which considers performance from multiple perspectives, including against the balanced scorecard this element should deliver an outcome of 75% of maximum. the underlying strength of results, the execution of strategic priorities, performance indicators which do not form part of the formulaic assessment, and non-financial factors, such as culture and our focus on duty of care. The Committee has a track record of adjusting outcomes The remainder of the bonus (20%) was based upon the Committee’s assessment of the contribution each Executive Director made to where appropriate, with negative discretion applied in both 2018 and 2019, and the cancellation of the bonus for 2020. the overall strategy through the delivery of specific targets. The Committee applies suitable judgement when assessing performance in this regard. Value delivered in Outcome shares under (% of maximum) Total value the DSA Value paid in cash Carolyn McCall 56.41 £1,025,875 £341,958 £683,917 Area of focus Achievement Chris Kennedy 56.41 £672,839 £224,280 £448,559 Chief Executive objectives Maximise the potential of ITV Studios globally: by working ITV Studios Iberia set up during the year to be the to identify, create and deliver opportunities to maximise exclusive home of ITV Studios’ formats in Spain, joining an scale and increase value. international production and distribution group that spans The final outcome of 56.41% is below the 81.72% bonus outcome achieved in 2022. This largely reflected the challenging advertising 13 countries. environment, with depressed advertising volumes impacting performance against the stretching adjusted EBITA target. This was balanced Overall, ITV Studios delivered total organic revenue with outperformance in the Studio’s scripted titles and strong deal making in Global Partnerships, as well as continued strong performance growth of 3% and adjusted EBITA margin of 13% in the against the cash conversion target, and successful delivery on key ESG, strategic and individual objectives. year. ITV Studios total revenue from streaming platforms grew to 32%, hitting the target three years early. The value delivered in shares under the DSA is deferred for three years and released on the third anniversary of the award subject to continued Continue to deliver the Digital Transformation agenda: Key achievements include the stabilisation and growth employment. In line with the Remuneration Policy, bonus awards (including deferred elements) remain subject to malus and clawback achieving key programme milestones with particular focus of ITVX, including across core partner platforms, and provisions which seek to safeguard against payments for failure. on digital culture and products. the delivery of Planet V and ITV’s data strategy in line with plans. Restricted Share awards – Audited Phase one of ITV Together went live, delivering changes Restricted Share awards were made under the ITV plc Executive Share Plan (the ITV ESP) to Carolyn McCall and Chris Kennedy on 13 May 2021 in core People and Finance activities. and were subject to a financial underpin measured to 31 December 2023. Dividends paid accumulated on a reinvestment basis during the Delivered the second series of ITV Fast Forward, three year vesting period and will be released on the vesting date. The indicative value of these awards are set out below. to build the digital and data capabilities of colleagues, with sessions exploring the use of generative AI, design thinking, machine learning and digital disruptors. Number of Dividend shares Value at share options Value at reinvested at Number of options 31 December 1 2 3 4 (nil-cost) award date 31 December 2023 vesting 2023 Develop the equity story: by evolving the external Regular engagement with investors and analysts to Carolyn McCall 1,013,062 £1,249,815 150,288 1,163,350 £736,517 positioning and communication of the successful execution update on key achievements and progress against the of the More Than TV Strategy. Highlight the value created by strategy, particularly focusing on the value created Chris Kennedy 615,390 £759,207 91,294 706,684 £447,402 the strategy through key delivery milestones and the through ITV’s digital transformation and digital 1. The share price used to calculate the number of shares under award was 123.37 pence (the three-day trading average of the share price before grant, 13 May 2021). achievement of KPIs. revenue growth. 2. Dividends earned on the award were reinvested over the vesting period. Subject to shareholder approval, the award will be eligible for the May 2024 dividend payment which has not Implement People strategy: with a focus on retaining key 70% of colleagues participated in the 2023 engagement been included in the table above. talent and capabilities, and delivering a strong, diverse and culture survey, which resulted in an overall ITV 3. The vesting share options will become exercisable after a two year holding period on 13 May 2026. succession pipeline of talent, supporting inclusivity and the engagement score of 68% (1% higher than the last 4. The share price used to value the shares at 31 December 2023 is the average share price for the final quarter of 2023 (63.31 pence). delivery of ITV’s DEI plans and KPIs. survey in 2021). The Nominations Committee was satisfied with the The ITV ESP was approved by shareholders at the 2021 AGM. The initial award under this Plan was made in May 2021, with grant levels reduced talent and succession planning information shared by 50% compared to the annual LTIP awards granted in previous years. during the year in respect of the Management Board and Executive Leadership Team roles, including the As disclosed at grant, awards normally vest after three years following the date of award subject to the satisfaction of a performance underpin. diversity of identified successors. Any vested awards would then be subject to a two year holding period. Group CFO & COO objectives Cost – maintain continuous focus across all divisions and Delivered £24m of permanent cost savings in 2023, functions: by executing on current cost savings ahead of the £15m target set for the year. A new ongoing The Committee retains the ability to reduce vesting of the Restricted Shares (including to nil) where: programmes; by planning and beginning restructuring of strategic restructuring and efficiency programme has long-term cost base; and by focusing on different cost areas been established to deliver further cost savings in 2024. • Adjusted Return on Capital Employed is below the Company’s cost of capital; and/or to deliver 2023 cost saving target. • There is a material weakness in the underlying financial health or sustainability of the business Capital – review allocation and demonstrate clear Capital allocation improved in 2023 with a key focus on returns: by improving capital allocation across divisions; by returns and business case lead investment proposals. The Committee has assessed the underpin conditions that apply to the 2021 awards and determined that it is appropriate for these awards to demonstrating return on investment; by a focus on working vest. The Group’s adjusted return on capital was above the Group’s cost of capital based on the 2023 audited results, while the Committee capital management; and by ensuring effective Group judged the financial health and sustainability of the business to be robust. The balance sheet remains strong as demonstrated by continued Investment Committee and streamlining Group approvals investment in the business and planned returns to shareholders. The Group performed strongly against key financial and non-financial process. metrics across the vesting period, demonstrating resilience given ongoing macroeconomic challenges. In line with the disclosure requirement, Equity – ensure clarity of message and drive value Regular engagement with investors and analysts, focusing the award value is shown following the assessment of the underpin. In practice, the value to participants will be based on the share price at the creation: by creating communication plan and materials to on the value created by the growing global Studios end of the two year holding period applicable to awards, demonstrating the long-term performance alignment of the pay structure. provide clear and simple external messaging; by business and the digital transformation of M&E, through establishing ITVX and AVOD as lead KPIs for M&E; and by ITVX and Planet V. ITV Studios Iberia established during evaluating and executing options to increase scale and value the year, further increasing the scale of ITV Studios. for Studios. Digital – increase digital revenues and launch ITV Delivered total digital revenue growth of 19% to £490m, Together: by maximising revenue opportunities from ITVX; driven by digital advertising revenue, which was up 21%. by driving test and learn mantra using financial data and Launched the first phase of ITV Together in April 2023, insight; and by launching ITV Together and embedding new delivering changes in core People and Finance activities. ways of working across Finance. As noted above, there was strong achievement against the objectives set at the start of the year. The Committee therefore agreed that this element should deliver an outcome of 80% of maximum for the Chief Executive and 80% of maximum for the Group CFO & COO.
132 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 133 REMUNERATION REPORT CONTINUED G O VE R NAN The annual Social Purpose targets goals can be found on our website www.itvplc.com.Consistent with the requirements of the Code, the Committee considers wider performance before approving the formulaic outcomes from C incentive plans. Where appropriate the Committee has scope to apply judgement and discretion. To assist the Committee with determining E The Committee noted the progress that had been made against our ESG targets in 2023 and agreed that based on holistic assessment whether adjustments are required, the Committee applies a framework which considers performance from multiple perspectives, including against the balanced scorecard this element should deliver an outcome of 75% of maximum.the underlying strength of results, the execution of strategic priorities, performance indicators which do not form part of the formulaic assessment, and non-financial factors, such as culture and our focus on duty of care. The Committee has a track record of adjusting outcomes The remainder of the bonus (20%) was based upon the Committee’s assessment of the contribution each Executive Director made to where appropriate, with negative discretion applied in both 2018 and 2019, and the cancellation of the bonus for 2020. the overall strategy through the delivery of specific targets. The Committee applies suitable judgement when assessing performance in this regard. Value delivered in Outcome shares under (% of maximum) Total value the DSA Value paid in cash Carolyn McCall 56.41 £1,025,875 £341,958 £683,917 Area of focusAchievement Chris Kennedy 56.41 £672,839 £224,280 £448,559 Chief Executive objectivesMaximise the potential of ITV Studios globally: by working ITV Studios Iberia set up during the year to be the to identify, create and deliver opportunities to maximise exclusive home of ITV Studios’ formats in Spain, joining an scale and increase value.international production and distribution group that spans The final outcome of 56.41% is below the 81.72% bonus outcome achieved in 2022. This largely reflected the challenging advertising 13 countries. environment, with depressed advertising volumes impacting performance against the stretching adjusted EBITA target. This was balanced Overall, ITV Studios delivered total organic revenue with outperformance in the Studio’s scripted titles and strong deal making in Global Partnerships, as well as continued strong performance growth of 3% and adjusted EBITA margin of 13% in the against the cash conversion target, and successful delivery on key ESG, strategic and individual objectives. year. ITV Studios total revenue from streaming platforms grew to 32%, hitting the target three years early.The value delivered in shares under the DSA is deferred for three years and released on the third anniversary of the award subject to continued Continue to deliver the Digital Transformation agenda: Key achievements include the stabilisation and growth employment. In line with the Remuneration Policy, bonus awards (including deferred elements) remain subject to malus and clawback achieving key programme milestones with particular focus of ITVX, including across core partner platforms, and provisions which seek to safeguard against payments for failure. on digital culture and products. the delivery of Planet V and ITV’s data strategy in line with plans. Restricted Share awards – Audited Phase one of ITV Together went live, delivering changes Restricted Share awards were made under the ITV plc Executive Share Plan (the ITV ESP) to Carolyn McCall and Chris Kennedy on 13 May 2021 in core People and Finance activities.and were subject to a financial underpin measured to 31 December 2023. Dividends paid accumulated on a reinvestment basis during the Delivered the second series of ITV Fast Forward, three year vesting period and will be released on the vesting date. The indicative value of these awards are set out below. to build the digital and data capabilities of colleagues, with sessions exploring the use of generative AI, design thinking, machine learning and digital disruptors. Number of Dividend shares Value at share options Value at reinvested at Number of options 31 December 1 2 3 4 (nil-cost) award date 31 December 2023 vesting 2023 Develop the equity story: by evolving the external Regular engagement with investors and analysts to Carolyn McCall 1,013,062 £1,249,815 150,288 1,163,350 £736,517 positioning and communication of the successful execution update on key achievements and progress against the of the More Than TV Strategy. Highlight the value created by strategy, particularly focusing on the value created Chris Kennedy 615,390 £759,207 91,294 706,684 £447,402 the strategy through key delivery milestones and the through ITV’s digital transformation and digital 1. The share price used to calculate the number of shares under award was 123.37 pence (the three-day trading average of the share price before grant, 13 May 2021). achievement of KPIs.revenue growth.2. Dividends earned on the award were reinvested over the vesting period. Subject to shareholder approval, the award will be eligible for the May 2024 dividend payment which has not Implement People strategy: with a focus on retaining key 70% of colleagues participated in the 2023 engagement been included in the table above. talent and capabilities, and delivering a strong, diverse and culture survey, which resulted in an overall ITV 3. The vesting share options will become exercisable after a two year holding period on 13 May 2026. succession pipeline of talent, supporting inclusivity and the engagement score of 68% (1% higher than the last 4. The share price used to value the shares at 31 December 2023 is the average share price for the final quarter of 2023 (63.31 pence). delivery of ITV’s DEI plans and KPIs.survey in 2021). The Nominations Committee was satisfied with the The ITV ESP was approved by shareholders at the 2021 AGM. The initial award under this Plan was made in May 2021, with grant levels reduced talent and succession planning information shared by 50% compared to the annual LTIP awards granted in previous years. during the year in respect of the Management Board and Executive Leadership Team roles, including the As disclosed at grant, awards normally vest after three years following the date of award subject to the satisfaction of a performance underpin. diversity of identified successors.Any vested awards would then be subject to a two year holding period. Group CFO & COO objectivesCost – maintain continuous focus across all divisions and Delivered £24m of permanent cost savings in 2023, functions: by executing on current cost savings ahead of the £15m target set for the year. A new ongoing The Committee retains the ability to reduce vesting of the Restricted Shares (including to nil) where: programmes; by planning and beginning restructuring of strategic restructuring and efficiency programme has long-term cost base; and by focusing on different cost areas been established to deliver further cost savings in 2024. • Adjusted Return on Capital Employed is below the Company’s cost of capital; and/or to deliver 2023 cost saving target. • There is a material weakness in the underlying financial health or sustainability of the business Capital – review allocation and demonstrate clear Capital allocation improved in 2023 with a key focus on returns: by improving capital allocation across divisions; by returns and business case lead investment proposals.The Committee has assessed the underpin conditions that apply to the 2021 awards and determined that it is appropriate for these awards to demonstrating return on investment; by a focus on working vest. The Group’s adjusted return on capital was above the Group’s cost of capital based on the 2023 audited results, while the Committee capital management; and by ensuring effective Group judged the financial health and sustainability of the business to be robust. The balance sheet remains strong as demonstrated by continued Investment Committee and streamlining Group approvals investment in the business and planned returns to shareholders. The Group performed strongly against key financial and non-financial process. metrics across the vesting period, demonstrating resilience given ongoing macroeconomic challenges. In line with the disclosure requirement, Equity – ensure clarity of message and drive value Regular engagement with investors and analysts, focusing the award value is shown following the assessment of the underpin. In practice, the value to participants will be based on the share price at the creation: by creating communication plan and materials to on the value created by the growing global Studios end of the two year holding period applicable to awards, demonstrating the long-term performance alignment of the pay structure. provide clear and simple external messaging; by business and the digital transformation of M&E, through establishing ITVX and AVOD as lead KPIs for M&E; and by ITVX and Planet V. ITV Studios Iberia established during evaluating and executing options to increase scale and value the year, further increasing the scale of ITV Studios. for Studios. Digital – increase digital revenues and launch ITV Delivered total digital revenue growth of 19% to £490m, Together: by maximising revenue opportunities from ITVX; driven by digital advertising revenue, which was up 21%. by driving test and learn mantra using financial data and Launched the first phase of ITV Together in April 2023, insight; and by launching ITV Together and embedding new delivering changes in core People and Finance activities. ways of working across Finance. As noted above, there was strong achievement against the objectives set at the start of the year. The Committee therefore agreed that this element should deliver an outcome of 80% of maximum for the Chief Executive and 80% of maximum for the Group CFO & COO.
134 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 135 REMUNERATION REPORT CONTINUED G O VE R NAN Restricted Share awards made in 2023 – Audited Remuneration Policy application in 2024 C On 28 March 2023 awards were made under the ITV plc Executive Share Plan (the ITV ESP) to Carolyn McCall and Chris Kennedy as set out Executive Directors E below. The following section provides details of how the Policy will be implemented in 2024. Number of Salary share options Performance Performance measure % salary awarded (nil cost)1 Value at award date period ends Holding period Release date Salaries are paid in line with the Policy. Both Executive Directors received an increase of 3% from 1 January 2024 which is in line with other Carolyn McCall 132.5 1,643,105 £1,338,802 28 March 2026 2 years 28 March 2028 senior executives, but below the 5-6% increase applied for the majority of employees. When considering salary increases for the wider Chris Kennedy 112.5 998,114 £813,263 28 March 2026 2 years 28 March 2028 workforce, the overall aim was to provide all employees with a meaningful increase to their base salary which reflected the broader economic 1. Nil cost options were granted based on the average share price on the three trading days preceding the award which was 81.48 pence. context. While the high inflationary environment was impacting all employees, it was recognised that lower paid employees were being impacted more acutely. Salary increases for the more senior roles were reduced to help fund more meaningful increases for employees at lower pay levels. The salary increases therefore were scaled from 6% for lower paid employees, 5% for mid-low tier roles, 4% for mid-high tier The awards are over restricted shares with grant levels reduced by 50% compared to the annual LTIP awards granted in previous years. roles and 3% for the more senior executives. Awards will normally vest after three years following the date of award subject to the satisfaction of a performance underpin assessed at 2024 Salary 31 December 2025. As the awards have a performance underpin, there are no performance condition weightings applicable, nor is there a Carolyn McCall £1,040,729 threshold-max vesting range. Any vested awards would then be subject to a two year holding period. Chris Kennedy £744,587 For the awards granted in 2023, the Committee will retain the ability to reduce vesting of the Restricted Shares (including to nil) where: Taxable benefits and pension • Adjusted Return on Capital Employed is below the Company’s cost of capital; and/or These are provided in line with the Policy. Both Executive Directors receive private medical cover, car-related benefits, and a cash allowance in lieu of participation in any ITV pension scheme. • There is a material weakness in the underlying financial health or sustainability of the business Both Executive Directors receive a cash allowance in lieu of pension of 9% of salary, which is aligned with the wider employee group. When assessing the latter, the Committee will consider all factors deemed relevant at the time, including for example, progress against execution of the strategy, performance against financial and non-financial KPIs and the nature of the wider trading environment. In line with Annual Incentive – Bonus (cash and shares) best practice, the Remuneration Committee will retain the discretion to adjust any incentive awards where vesting outcomes are considered The maximum bonus opportunity for 2024 remains unchanged: Carolyn McCall – 180% of salary; and Chris Kennedy – 165% of salary. Awards to be inappropriate. Further detail on the assessment of the performance underpin will be disclosed at the time of vesting in 2026. made to Executive Directors through the bonus will be paid two-thirds in cash and one-third deferred into shares under the DSA. As a further safeguard malus and clawback provisions may be operated at the discretion of the Committee in respect of any element of these The targets that will apply for the 2024 annual bonus have been set taking into account internal and external forecasts for company and awards. Under malus, unvested share awards (including any portion of the award subject to a post-vesting holding period) can be reduced market performance and continued strategic investments. Cost savings objectives have been included for 2024, recognising the strategic (down to zero if considered appropriate) or be made subject to additional conditions. Clawback allows for repayment of shares previously importance of reshaping the business for the future. The Board considers the actual targets for 2024 to be commercially sensitive at this time, received following vesting or release from a holding period if applicable. Malus/clawback can be operated up to six years from the relevant date however, envisage providing retrospective disclosure of these targets in next year’s report. of grant for Restricted Share awards. The circumstances in which the operation of these provisions would be applied may be considered from time to time but currently include material misstatement of financial results, gross misconduct or fraud and material reputational damage. The Committee may adjust bonus targets or outcomes to reflect significant one-off events (e.g. major transactions), foreign exchange The Committee maintains sufficient scope in the ITV ESP rules to exercise discretion and judgement in line with the spirit of the Code. movements or material changes to assumed plan conditions to ensure that the plan continues to reward performance fairly. Chair and Non‑executive Directors – Audited The Committee may amend the bonus pay-out should any formulaic assessment of performance not reflect overall performance in the year. The table below sets out in a single figure the total remuneration for Non-executive Directors for the financial year. The annual fee for the Chair was £400k which is unchanged from appointment. For 2023 , the Non-executive Directors received a 4% increase to the base fee, Restricted Share awards which was the first increase to fees paid to Non-executive Directors since 2016. No increases were made to the other fees. Awards in 2024 will be made to the Executive Directors with a value of 132.5% of salary for Carolyn McCall and 112.5% of salary for Chris Kennedy. These levels remain unchanged from the awards made in 2023. Fees Taxable benefits1 Total 2023 2022 2023 2022 2023 2022 Awards will normally vest after three years following the date of award subject to the satisfaction of a performance underpin. Any vested Notes £000 £000 £000 £000 £000 £000 Andrew Cosslett (Chair) 2 400 124 1 – 401 124 awards would then be subject to a two year holding period. Dawn Allen 3 18 – – – 18 – For 2024 awards, in line with the performance underpin that applied to awards made in 2023, the Committee will retain the ability to reduce Salman Amin 73 70 1 1 74 71 vesting of the Restricted Shares (including to nil) where: Peter Bazalgette (former Chair) 4 – 336 – 6 – 342 Edward Bonham Carter 5 102 95 1 1 103 96 • Adjusted Return on Capital Employed is below the Company’s cost of capital; and/or Graham Cooke 73 70 1 1 74 71 • There is a material weakness in the underlying financial health or sustainability of the business Margaret Ewing 88 85 1 1 89 86 When assessing the latter, the Committee will consider all factors deemed relevant at the time, including for example, progress against Marjorie Kaplan 6 23 – – – 23 – execution of the strategy, performance against financial and non-financial KPIs and the nature of the wider trading environment. In line with Mary Harris 7 25 77 2 4 27 81 best practice, the Committee will retain the discretion to adjust any incentive awards where vesting outcomes are considered to be Gidon Katz 8 68 30 1 23 69 53 inappropriate. Further detail on the assessment of the financial underpin will be disclosed at the time of vesting. Anna Manz 9 52 76 1 1 53 77 Sharmila Nebhrajani 10 88 80 – 1 88 81 Malus and clawback: Malus and clawback provisions may be operated at the discretion of the Committee in respect of any cash and deferred share elements of the bonus and Restricted Share awards. Under malus, unvested share awards (including any Restricted Share awards Duncan Painter 11 67 70 1 1 68 71 subject to a post-vesting holding period) can be reduced (down to zero if considered appropriate) or be made subject to additional conditions. 1,077 1,113 10 40 1,087 1,153 Clawback allows for repayment of bonuses previously paid and/or shares previously received following vesting or release from a holding period 1. The amounts disclosed in the table above relate to the reimbursement of taxable relevant travel and accommodation expenses (and associated taxes) for attending Board if applicable. Malus/clawback can be operated up to four years following the start of the relevant bonus year for bonuses (for cash and shares), meetings and related business. In addition, Peter Bazalgette received private healthcare for the time he served as a director. and up to six years from the relevant date of grant for Restricted Share awards. The circumstances in which the operation of these provisions 2. Andrew Cosslett joined the Board on 1 June 2022 as a Non-executive Director. He was appointed the Chair of the Board on 29 September 2022. He received the basic would be applied may be considered from time to time but currently include material misstatement of financial results, gross misconduct or NED fee up until his appointment as Chair. Following his appointment as Chair his annual fee is £400,000. 3. Dawn Allen joined the Board and Audit & Risk Committee on 2 October 2023. fraud and material reputational damage. The Committee maintains sufficient scope in the ITV plc Executive Share Plan rules to exercise 4. Peter Bazalgette stepped down from the Board on 29 September 2022. discretion and judgement in line with the spirit of the Code. 5. Edward Bonham Carter became a member of the Remuneration Committee in April 2023. 6. Marjorie Kaplan joined the Board on 1 September 2023. 7. Mary Harris stepped down as Chair of the Remuneration Committee on 29 April 2022 and from the Board on 3 May 2023. 8. Gidon Katz joined the Board on 18 July 2022. 9. Anna Manz stepped down from the Board on 31 August 2023. 10. Sharmila Nebhrajani was appointed Chair of the Remuneration Committee on 29 April 2022. 11. Duncan Painter stepped down from the Board on 30 November 2023.
134 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 135 REMUNERATION REPORT CONTINUED G O VE R NAN Restricted Share awards made in 2023 – Audited Remuneration Policy application in 2024 C On 28 March 2023 awards were made under the ITV plc Executive Share Plan (the ITV ESP) to Carolyn McCall and Chris Kennedy as set out Executive Directors E below. The following section provides details of how the Policy will be implemented in 2024. Number of Salary share options Performance Performance measure% salary awarded(nil cost)1Value at award date period endsHolding periodRelease date Salaries are paid in line with the Policy. Both Executive Directors received an increase of 3% from 1 January 2024 which is in line with other Carolyn McCall132.51,643,105£1,338,80228 March 20262 years28 March 2028senior executives, but below the 5-6% increase applied for the majority of employees. When considering salary increases for the wider Chris Kennedy112.5998,114£813,26328 March 20262 years28 March 2028workforce, the overall aim was to provide all employees with a meaningful increase to their base salary which reflected the broader economic 1. Nil cost options were granted based on the average share price on the three trading days preceding the award which was 81.48 pence. context. While the high inflationary environment was impacting all employees, it was recognised that lower paid employees were being impacted more acutely. Salary increases for the more senior roles were reduced to help fund more meaningful increases for employees at lower pay levels. The salary increases therefore were scaled from 6% for lower paid employees, 5% for mid-low tier roles, 4% for mid-high tier The awards are over restricted shares with grant levels reduced by 50% compared to the annual LTIP awards granted in previous years. roles and 3% for the more senior executives. Awards will normally vest after three years following the date of award subject to the satisfaction of a performance underpin assessed at 2024 Salary 31 December 2025. As the awards have a performance underpin, there are no performance condition weightings applicable, nor is there a Carolyn McCall £1,040,729 threshold-max vesting range. Any vested awards would then be subject to a two year holding period.Chris Kennedy £744,587 For the awards granted in 2023, the Committee will retain the ability to reduce vesting of the Restricted Shares (including to nil) where:Taxable benefits and pension • Adjusted Return on Capital Employed is below the Company’s cost of capital; and/or These are provided in line with the Policy. Both Executive Directors receive private medical cover, car-related benefits, and a cash allowance in lieu of participation in any ITV pension scheme. • There is a material weakness in the underlying financial health or sustainability of the business Both Executive Directors receive a cash allowance in lieu of pension of 9% of salary, which is aligned with the wider employee group. When assessing the latter, the Committee will consider all factors deemed relevant at the time, including for example, progress against execution of the strategy, performance against financial and non-financial KPIs and the nature of the wider trading environment. In line with Annual Incentive – Bonus (cash and shares) best practice, the Remuneration Committee will retain the discretion to adjust any incentive awards where vesting outcomes are considered The maximum bonus opportunity for 2024 remains unchanged: Carolyn McCall – 180% of salary; and Chris Kennedy – 165% of salary. Awards to be inappropriate. Further detail on the assessment of the performance underpin will be disclosed at the time of vesting in 2026.made to Executive Directors through the bonus will be paid two-thirds in cash and one-third deferred into shares under the DSA. As a further safeguard malus and clawback provisions may be operated at the discretion of the Committee in respect of any element of these The targets that will apply for the 2024 annual bonus have been set taking into account internal and external forecasts for company and awards. Under malus, unvested share awards (including any portion of the award subject to a post-vesting holding period) can be reduced market performance and continued strategic investments. Cost savings objectives have been included for 2024, recognising the strategic (down to zero if considered appropriate) or be made subject to additional conditions. Clawback allows for repayment of shares previously importance of reshaping the business for the future. The Board considers the actual targets for 2024 to be commercially sensitive at this time, received following vesting or release from a holding period if applicable. Malus/clawback can be operated up to six years from the relevant date however, envisage providing retrospective disclosure of these targets in next year’s report. of grant for Restricted Share awards. The circumstances in which the operation of these provisions would be applied may be considered from time to time but currently include material misstatement of financial results, gross misconduct or fraud and material reputational damage. The Committee may adjust bonus targets or outcomes to reflect significant one-off events (e.g. major transactions), foreign exchange The Committee maintains sufficient scope in the ITV ESP rules to exercise discretion and judgement in line with the spirit of the Code.movements or material changes to assumed plan conditions to ensure that the plan continues to reward performance fairly. Chair and Non‑executive Directors – AuditedThe Committee may amend the bonus pay-out should any formulaic assessment of performance not reflect overall performance in the year. The table below sets out in a single figure the total remuneration for Non-executive Directors for the financial year. The annual fee for the Chair was £400k which is unchanged from appointment. For 2023 , the Non-executive Directors received a 4% increase to the base fee, Restricted Share awards which was the first increase to fees paid to Non-executive Directors since 2016. No increases were made to the other fees. Awards in 2024 will be made to the Executive Directors with a value of 132.5% of salary for Carolyn McCall and 112.5% of salary for Chris Kennedy. These levels remain unchanged from the awards made in 2023. FeesTaxable benefits1Total 202320222023202220232022Awards will normally vest after three years following the date of award subject to the satisfaction of a performance underpin. Any vested Notes£000£000£000£000£000£000 Andrew Cosslett (Chair)24001241–401124awards would then be subject to a two year holding period. Dawn Allen318–––18– For 2024 awards, in line with the performance underpin that applied to awards made in 2023, the Committee will retain the ability to reduce Salman Amin7370117471 vesting of the Restricted Shares (including to nil) where: Peter Bazalgette (former Chair)4–336–6–342 Edward Bonham Carter5102951110396• Adjusted Return on Capital Employed is below the Company’s cost of capital; and/or Graham Cooke7370117471 • There is a material weakness in the underlying financial health or sustainability of the business Margaret Ewing8885118986When assessing the latter, the Committee will consider all factors deemed relevant at the time, including for example, progress against Marjorie Kaplan623–––23–execution of the strategy, performance against financial and non-financial KPIs and the nature of the wider trading environment. In line with Mary Harris72577242781 best practice, the Committee will retain the discretion to adjust any incentive awards where vesting outcomes are considered to be Gidon Katz868301236953 inappropriate. Further detail on the assessment of the financial underpin will be disclosed at the time of vesting. Anna Manz95276115377 Sharmila Nebhrajani108880–18881Malus and clawback: Malus and clawback provisions may be operated at the discretion of the Committee in respect of any cash and deferred share elements of the bonus and Restricted Share awards. Under malus, unvested share awards (including any Restricted Share awards Duncan Painter116770116871subject to a post-vesting holding period) can be reduced (down to zero if considered appropriate) or be made subject to additional conditions. 1,0771,11310401,0871,153Clawback allows for repayment of bonuses previously paid and/or shares previously received following vesting or release from a holding period 1. The amounts disclosed in the table above relate to the reimbursement of taxable relevant travel and accommodation expenses (and associated taxes) for attending Board if applicable. Malus/clawback can be operated up to four years following the start of the relevant bonus year for bonuses (for cash and shares), meetings and related business. In addition, Peter Bazalgette received private healthcare for the time he served as a director.and up to six years from the relevant date of grant for Restricted Share awards. The circumstances in which the operation of these provisions 2. Andrew Cosslett joined the Board on 1 June 2022 as a Non-executive Director. He was appointed the Chair of the Board on 29 September 2022. He received the basic would be applied may be considered from time to time but currently include material misstatement of financial results, gross misconduct or NED fee up until his appointment as Chair. Following his appointment as Chair his annual fee is £400,000. 3. Dawn Allen joined the Board and Audit & Risk Committee on 2 October 2023.fraud and material reputational damage. The Committee maintains sufficient scope in the ITV plc Executive Share Plan rules to exercise 4. Peter Bazalgette stepped down from the Board on 29 September 2022.discretion and judgement in line with the spirit of the Code. 5. Edward Bonham Carter became a member of the Remuneration Committee in April 2023. 6. Marjorie Kaplan joined the Board on 1 September 2023. 7. Mary Harris stepped down as Chair of the Remuneration Committee on 29 April 2022 and from the Board on 3 May 2023. 8. Gidon Katz joined the Board on 18 July 2022. 9. Anna Manz stepped down from the Board on 31 August 2023. 10. Sharmila Nebhrajani was appointed Chair of the Remuneration Committee on 29 April 2022. 11. Duncan Painter stepped down from the Board on 30 November 2023.
136 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 137 REMUNERATION REPORT CONTINUED G O VE R NAN Non‑executive Directors CEO pay ratio C In line with the Executive Directors the Chair and Non‑executive Directors received a 3% increase to the Board fees from 1 January 2024. E Year Methodology 25th percentile pay ratio Median pay ratio 75th percentile pay ratio 2023 Option A 70.1 52:1 38.1 Current fees are as set out below. 2022 Option A 93:1 69:1 50.1 2021 Option A 92:1 68:1 49:1 1 January 2024 1 January 2023 £ £ % Change 2020 Option A 33:1 24:1 18:1 Chair 412,000 400,000 3 2019 Option A 89:1 66:1 49:1 Board fee 69,686 67,656 3 Additional fees for: Senior Independent Director 25,000 25,000 – The employee at the 25th percentile, median and 75th percentile was determined based on the single figure of total remuneration for every Audit and Risk Committee Chair 20,000 20,000 – UK employee at 31 December 2023, Option A in the Reporting Regulations. This method is the most statistically accurate approach and aligned Audit and Risk Committee member 5,371 5,371 – with majority practice in the FTSE 250. Remuneration Committee Chair 20,000 20,000 – Our 2022 ratios have been updated to reflect the final actual 2022 remuneration values for the CEO and all other employees. Our 2023 pay Remuneration Committee member 5,371 5,371 – ratios are based on the current CEO single figure and the indicative value of share awards that were subject to performance measured to 31 December, based on the average share price over the final quarter of the year. The 2023 ratios will be restated in the 2024 Remuneration Report to reflect the updated CEO single figure and the actual value of shares on the vesting date. Details of Committee membership can be found on page 82. The total remuneration of each comparator employee has been calculated using the actual values received in respect of the full financial year Comparison of Directors to wider employees and in accordance with the methodology used to calculate the single figure of remuneration for the CEO. We have not omitted any component from their pay and benefits and no adjustments have been made to their actual remuneration. In line with the requirements in The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, which implement Articles 9a and 9b of European Directive 2017/828/EC1 (commonly known as the Revised Shareholder Rights Directive or SRD), the The full-time equivalent remuneration values for the individuals in the table above are as follows: table below provides details of the percentage change in the base salary, benefits and bonus of the Directors between 31 December 2020 and 31 December 2023 compared with the average percentage change for other UK employees. 2023 The figures for all Directors are calculated based on remuneration received in the relevant year as set out in the tables on pages 130 and 134. CEO 25th percentile Median 75th percentile For base salary/fees, part year figures have been pro‑rated up for the purposes of this disclosure. In addition, the figures below reflect the Salary £1,010,416 £36,450 £46,339 £71,055 voluntary decision taken by members of the Board to take a 20% cut in salary/fees for the period from April to October 2020. There was also no Total remuneration £2,881,440 £41,448 £55,393 £76,714 global salary review in 2021 and no annual bonus payments paid for 2020 to the Executive Directors and wider workforce. 2022‑2023 2021‑2022 2020‑2021 2019‑2020 2022 Salary/fee Benefits Bonus Salary/fee B e n e f i t s B o n u s Salary/fee Benefits B o n u s Salary/fee B e n e f i t s Bonus Notes change% change% change% change % change % change % change % change % change % change % change % change % CEO 25th percentile Median 75th percentile Average employee 1 85(27) 43(11) 45–46– Salary £971,554 £31,502 £46,891 £64,771 Salman Amin 2 4––– 51 – 13 140 – (12) (81) – Total remuneration £3,689,906 £39,849 £53,485 £73,558 Dawn Allen 2, 5 –––––––––––– Edward Bonham Carter 2, 6 7––– 51 – 13 140 – (12) (92) – Graham Cooke 2 4––6 51 – 15 ––––– The median pay ratio for 2023 is considered to be consistent with the pay, reward and progression policies during the year for the Company’s Andrew Cosslett (Chair) 2, 7 – 100 – ––––––––– UK employees taken as a whole. Our UK headcount and the total remuneration values for the comparator employees have both increased Margaret Ewing 2 3–––––13 ––(12) (92) – year-on-year. We implemented Company-wide annual pay review increases of 4-6% in January 2023, with the higher increases made to Marjorie Kaplan 2, 8 –––––––––––– employees at lower pay levels. We also remain committed to ensuring colleagues earn at least the real Living Wage or higher. Mary Harris 2, 9 (5) (50) – (18) 63 – 13 155 – (12) (84) – Gidon Katz 2, 10 4 (96) – ––––––––– To help our employees manage with the rising cost of living, over 80% of UK employees received a payment of £1,000 each in January 2023. Chris Kennedy (Group CFO & COO) 3, 4 4–(28) 33(12) 13 12 – (10) (9) – This followed a previous payment of £1,000 that was made in October 2022. An annual bonus arrangement extends to all employees who don’t Anna Manz 2, 11 3––– 51 – 13 140 – (12) (88) – participate in a management or sales bonus scheme and is paid in March each year. The 2023 employee bonus opportunity was up to £2,000, Carolyn McCall (Chief Executive) 3, 4 4–(28) 33(13) 13 12 – (10) (9) – based on ITV plc EBITA performance, and the actual payout was up to £764 for every eligible employee. All comparator employees identified in Sharmila Nebhrajani 2,12 9 (100) – 12 78 – 13 ––––– the pay ratio calculations were eligible for the employee bonus and the cost of living payment. Duncan Painter 2, 13 4 – – – 51 – 13 140 – (11) (88) – Our 2023 pay ratios have reduced because the total remuneration figure for the CEO is lower than in previous years. A significant proportion 1. The percentage change in benefits is the average change for all UK employees (excluding the Chief Executive and Group CFO & COO) with any of the same benefits as the Chief of the remuneration for the CEO is performance related and the level of actual performance outcomes has a corresponding effect on the Executive and Group CFO & COO. CEO pay ratios. The total remuneration values for the comparator employees have also all increased year-on-year. 2. Calculated using the fees and taxable benefits disclosed under the Non‑executive Directors’ remuneration in the table on page 134. Taxable benefits for Non‑executive Directors comprise expense reimbursements relating to attendance at Board meetings rather than conventional employee benefits. The increases seen in the period 2020‑2021 are primarily due to the ability for Directors to attend some meetings in person during 2021, against the majority of meetings being held on a virtual basis during 2020. The increases seen in the Other Disclosures period 2021‑2022 are primarily due to the attendance at two board dinners in the year, against one dinner in 2021. 3. Calculated using the data from the single figure table on page 130. Benefits include the cost of medical insurance and car‑related benefits. Shareholder views 4. The Executive Directors are the only employees of the parent company, and therefore there is no comparator data for this sample. In the interests of transparency, the percentage The Committee maintains regular and transparent communication with shareholders. We believe that it is important to regularly meet with change in pay for all UK employees has been disclosed on a voluntary basis. As the majority of employees are based in the UK and share the same benefits as the Executive our key shareholders to understand their views on our remuneration arrangements and what they would like to see going forward. We welcome Directors, overseas employees have not been included. 5. Dawn Allen joined the Board on 2 October 2023 and therefore no comparison has been provided to 2022. feedback from shareholders at any time during the year. 6. Edward Bonham Carter became a member of the Remuneration Committee in April 2023. 7. Andrew Cosslett joined the Board in June 2022. To enable a comparison for the purposes of this disclosure, his 2022 fees have been pro‑rated up. Where we are proposing to make any significant changes to the remuneration framework or the manner in which the framework is operated 8. Marjorie Kaplan joined the Board on 1 September 2023 and therefore no comparison has been provided to 2022. we would seek major shareholders’ views and take these into account. In recent years, the Committee has consulted with major shareholders 9. Mary Harris stepped down as Remuneration Committee Chair in April 2022 and from the Board in May 2023 and received fees up to this point only. To enable a comparison for the regarding both the design and operation of the Policy. purposes of this disclosure, her 2023 fees have been pro‑rated up. 10. Gidon Katz joined the Board in July 2022. To enable a comparison for the purposes of this disclosure, his 2022 fees have been pro‑rated up. 11. Anna Manz stepped down from the Board in August 2023 and received fees up to this point only. To enable a comparison for the purposes of this disclosure, her 2023 fees have been Prior to the finalisation of the 2024 Remuneration Policy, the Committee consulted with major shareholders to consider their views. We intend pro‑rated up. to maintain a dialogue with our shareholders in future years, particularly when the Committee anticipates any substantial change to the 12. Sharmila Nebhrajani was appointed as Chair of the Remuneration Committee in May 2022. remuneration framework. 13. Duncan Painter stepped down from the Board in November 2023 and received fees up to this point only. To enable a comparison for the purposes of this disclosure, his 2023 fees have been pro‑rated up.
136 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 137 REMUNERATION REPORT CONTINUED G O VE R NAN Non‑executive Directors CEO pay ratio C In line with the Executive Directors the Chair and Non‑executive Directors received a 3% increase to the Board fees from 1 January 2024. E Year Methodology 25th percentile pay ratio Median pay ratio 75th percentile pay ratio 2023 Option A 70.1 52:1 38.1 Current fees are as set out below.2022 Option A 93:1 69:1 50.1 2021 Option A 92:1 68:1 49:1 1 January 2024 1 January 2023 ££% Change 2020 Option A 33:1 24:1 18:1 Chair412,000400,0003 2019 Option A 89:1 66:1 49:1 Board fee69,68667,6563 Additional fees for: Senior Independent Director25,00025,000–The employee at the 25th percentile, median and 75th percentile was determined based on the single figure of total remuneration for every Audit and Risk Committee Chair20,00020,000–UK employee at 31 December 2023, Option A in the Reporting Regulations. This method is the most statistically accurate approach and aligned Audit and Risk Committee member5,3715,371–with majority practice in the FTSE 250. Remuneration Committee Chair20,00020,000–Our 2022 ratios have been updated to reflect the final actual 2022 remuneration values for the CEO and all other employees. Our 2023 pay Remuneration Committee member5,3715,371–ratios are based on the current CEO single figure and the indicative value of share awards that were subject to performance measured to 31 December, based on the average share price over the final quarter of the year. The 2023 ratios will be restated in the 2024 Remuneration Report to reflect the updated CEO single figure and the actual value of shares on the vesting date. Details of Committee membership can be found on page 82. The total remuneration of each comparator employee has been calculated using the actual values received in respect of the full financial year Comparison of Directors to wider employeesand in accordance with the methodology used to calculate the single figure of remuneration for the CEO. We have not omitted any component from their pay and benefits and no adjustments have been made to their actual remuneration. In line with the requirements in The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, which implement Articles 9a and 9b of European Directive 2017/828/EC1 (commonly known as the Revised Shareholder Rights Directive or SRD), the The full-time equivalent remuneration values for the individuals in the table above are as follows: table below provides details of the percentage change in the base salary, benefits and bonus of the Directors between 31 December 2020 and 31 December 2023 compared with the average percentage change for other UK employees.2023 The figures for all Directors are calculated based on remuneration received in the relevant year as set out in the tables on pages 130 and 134. CEO 25th percentile Median 75th percentile For base salary/fees, part year figures have been pro‑rated up for the purposes of this disclosure. In addition, the figures below reflect the Salary£1,010,416 £36,450 £46,339 £71,055 voluntary decision taken by members of the Board to take a 20% cut in salary/fees for the period from April to October 2020. There was also no Total remuneration£2,881,440 £41,448 £55,393 £76,714 global salary review in 2021 and no annual bonus payments paid for 2020 to the Executive Directors and wider workforce. 2022‑20232021‑20222020‑20212019‑20202022 Salary/fee Benefits Bonus Salary/fee B e n e f i t s B o n u s Salary/fee Benefits B o n u s Salary/fee B e n e f i t s Bonus Noteschange% change% change%change % change % change %change % change % change %change % change % change % CEO 25th percentile Median 75th percentile Average employee185(27)43(11)45–46–Salary £971,554 £31,502 £46,891 £64,771 Salman Amin24––– 51 – 13 140 – (12) (81)–Total remuneration £3,689,906 £39,849 £53,485 £73,558 Dawn Allen2, 5–––––––––––– Edward Bonham Carter2, 67––– 51 – 13 140 – (12) (92)– Graham Cooke24––6 51 – 15 –––––The median pay ratio for 2023 is considered to be consistent with the pay, reward and progression policies during the year for the Company’s Andrew Cosslett (Chair)2, 7–100––––––––––UK employees taken as a whole. Our UK headcount and the total remuneration values for the comparator employees have both increased Margaret Ewing23–––––13 ––(12) (92) –year-on-year. We implemented Company-wide annual pay review increases of 4-6% in January 2023, with the higher increases made to Marjorie Kaplan2, 8––––––––––––employees at lower pay levels. We also remain committed to ensuring colleagues earn at least the real Living Wage or higher. Mary Harris 2, 9(5)(50)–(18)63–13155–(12)(84)– Gidon Katz2, 104(96)–––––––––– To help our employees manage with the rising cost of living, over 80% of UK employees received a payment of £1,000 each in January 2023. Chris Kennedy (Group CFO & COO) 3, 44–(28)33(12)1312–(10)(9)–This followed a previous payment of £1,000 that was made in October 2022. An annual bonus arrangement extends to all employees who don’t Anna Manz2, 113––– 51 – 13 140 – (12) (88)–participate in a management or sales bonus scheme and is paid in March each year. The 2023 employee bonus opportunity was up to £2,000, Carolyn McCall (Chief Executive) 3, 44–(28)33(13)1312–(10)(9)–based on ITV plc EBITA performance, and the actual payout was up to £764 for every eligible employee. All comparator employees identified in Sharmila Nebhrajani2,129(100)–1278–13–––––the pay ratio calculations were eligible for the employee bonus and the cost of living payment. Duncan Painter2, 134 –––51–13140–(11)(88)–Our 2023 pay ratios have reduced because the total remuneration figure for the CEO is lower than in previous years. A significant proportion 1. The percentage change in benefits is the average change for all UK employees (excluding the Chief Executive and Group CFO & COO) with any of the same benefits as the Chief of the remuneration for the CEO is performance related and the level of actual performance outcomes has a corresponding effect on the Executive and Group CFO & COO. CEO pay ratios. The total remuneration values for the comparator employees have also all increased year-on-year. 2. Calculated using the fees and taxable benefits disclosed under the Non‑executive Directors’ remuneration in the table on page 134. Taxable benefits for Non‑executive Directors comprise expense reimbursements relating to attendance at Board meetings rather than conventional employee benefits. The increases seen in the period 2020‑2021 are primarily due to the ability for Directors to attend some meetings in person during 2021, against the majority of meetings being held on a virtual basis during 2020. The increases seen in the Other Disclosures period 2021‑2022 are primarily due to the attendance at two board dinners in the year, against one dinner in 2021. 3. Calculated using the data from the single figure table on page 130. Benefits include the cost of medical insurance and car‑related benefits. Shareholder views 4. The Executive Directors are the only employees of the parent company, and therefore there is no comparator data for this sample. In the interests of transparency, the percentage The Committee maintains regular and transparent communication with shareholders. We believe that it is important to regularly meet with change in pay for all UK employees has been disclosed on a voluntary basis. As the majority of employees are based in the UK and share the same benefits as the Executive our key shareholders to understand their views on our remuneration arrangements and what they would like to see going forward. We welcome Directors, overseas employees have not been included. 5. Dawn Allen joined the Board on 2 October 2023 and therefore no comparison has been provided to 2022.feedback from shareholders at any time during the year. 6. Edward Bonham Carter became a member of the Remuneration Committee in April 2023. 7. Andrew Cosslett joined the Board in June 2022. To enable a comparison for the purposes of this disclosure, his 2022 fees have been pro‑rated up.Where we are proposing to make any significant changes to the remuneration framework or the manner in which the framework is operated 8. Marjorie Kaplan joined the Board on 1 September 2023 and therefore no comparison has been provided to 2022.we would seek major shareholders’ views and take these into account. In recent years, the Committee has consulted with major shareholders 9. Mary Harris stepped down as Remuneration Committee Chair in April 2022 and from the Board in May 2023 and received fees up to this point only. To enable a comparison for the regarding both the design and operation of the Policy. purposes of this disclosure, her 2023 fees have been pro‑rated up. 10. Gidon Katz joined the Board in July 2022. To enable a comparison for the purposes of this disclosure, his 2022 fees have been pro‑rated up. 11. Anna Manz stepped down from the Board in August 2023 and received fees up to this point only. To enable a comparison for the purposes of this disclosure, her 2023 fees have been Prior to the finalisation of the 2024 Remuneration Policy, the Committee consulted with major shareholders to consider their views. We intend pro‑rated up. to maintain a dialogue with our shareholders in future years, particularly when the Committee anticipates any substantial change to the 12. Sharmila Nebhrajani was appointed as Chair of the Remuneration Committee in May 2022.remuneration framework. 13. Duncan Painter stepped down from the Board in November 2023 and received fees up to this point only. To enable a comparison for the purposes of this disclosure, his 2023 fees have been pro‑rated up.
138 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 139 REMUNERATION REPORT CONTINUED G O VE R NAN Compliance with the 2018 Corporate Governance Code Payments to past Directors ‑ Audited C The table below shows how the Committee addressed the principles of clarity, simplicity, risk, predictability, proportionality and There were no payments made to past Directors in 2023. E alignment to culture when determining the Directors’ remuneration policy. The Committee notes the release by the FRC of the revised Corporate Governance Code 2024 and will work to ensure full compliance. Payments for loss of office ‑ Audited There were no payments made to Directors for loss of office in 2023. IMPACT OF THE 2018 CORPORATE GOVERNANCE CODE Directors’ share interests and post‑cessation shareholding ‑ Audited Clarity The Committee continues to recognise the importance of Directors being shareholders so as to align their interests with other shareholders. Code provision: Remuneration • The presentation of the Remuneration Report is intended to provide clarity on the Company’s approach Shareholding guidelines are in place, which encourage Executive Directors to build up a holding of ITV plc shares based on a percentage of arrangements should be transparent and • We aim to be completely transparent about our remuneration policy and arrangements and comply with promote effective engagement with certain disclosure requirements ahead of when we are required to do so for openness and transparency base salary. shareholders and the workforce. • Great importance placed on engaging with our stakeholders, particularly with shareholders and the workforce on remuneration. The Chief People Officer attends all Committee meetings and our Workforce Engagement Where the value of shares required to be held increases as a result of a salary increase (or an increase in the relevant percentage), the Director, Graham Cooke, provides regular feedback. Employees also have the opportunity to comment Executive Directors must increase their holdings to achieve compliance. The Committee may change the guidelines so long as they are not, through the Ambassador network and employee surveys. This ensures the views of employees are considered overall, in the view of the Committee, less onerous. during Committee deliberations. Non-executive Directors are required to build and then maintain a holding of 100% of their base fee (unless for some reason they are unable to Simplicity retain their fees). Code provision: Remuneration structures The Company operates an approach to remuneration that is simple to understand and familiar to key should avoid complexity and their rationale stakeholders and has three key elements: Interests in share awards following departure enable departing Executive Directors to remain aligned with the interest of shareholders for an and operation should be easy to • Fixed element: comprising base salary, taxable benefits and a pension allowance extended period after leaving the Company. Deferred Share Awards, legacy LTIP and ESP awards subject to a holding period will normally vest understand. • Short‑term element: an annual performance-related bonus with a selection of financial and non-financial (and be released from their holding periods) at the normal time. This means that Executive Directors may retain a significant interest in shares targets measured over the financial year, two-thirds paid in cash and one-third in shares deferred for a three for up to five years following departure from the Company. Following adoption of the policy in 2021, Executive Directors will normally be year period required to retain an interest equivalent to two times their annual ESP grant (265% for the Chief Executive and 225% for the Group CFO & COO) • Restricted share element: normally released after five years subject to achievement of a performance for two years following departure. In order to enforce this requirement, on vesting, relevant shares are automatically transferred to a secure underpin nominee arrangement until the appropriate level of interest has been achieved. The shares will be retained in this arrangement until the end of Risk the two year period. Code provision: Remuneration A combination of short and long-term incentives with the majority delivered in shares encourages Executive The figures set out below represent shareholdings in the ordinary share capital of ITV plc beneficially owned by Directors and their family arrangements should ensure reputational Directors to deliver long-term sustainable shareholder returns, discouraging decision-making that only focuses interests at 31 December 2023. To show alignment with the shareholding guidelines the net number of unvested share awards not subject to and other risks from excessive rewards, on the short term. performance conditions and the vested LTIP in holding periods are included for the Executive Directors. The Committee continues to keep and behavioural risks that might arise from The Committee retains flexibility to adjust payments through malus and clawback provisions, and an overriding both the shareholding guidelines and actual Director shareholdings under review and will take appropriate action should they feel it necessary. target-based incentive plans, are identified discretion to depart from formulaic outcomes where behaviours may be viewed as inappropriate or criteria on and mitigated. which the award was based do not reflect the underlying performance of the Company. Interests in shares Predictability % of salary/fees Unconditional Restricted Restricted Unconditional required Code provision: The range of possible Shareholders are kept fully informed and consulted on the values that can be earned under the incentive plans shares held at shares held at shares held at shares held at to be held under 31 December 31 December 31 December % shareholding 31 December shareholding values of awards to individual directors and for different levels of performance. Notes 20231 20232 20233 guidelines met4 2022 guidelines any other limits or discretions should be The Remuneration Policy provides estimates of potential future reward in different performance scenarios. Executive Directors identified and explained at the time of Carolyn McCall 1,721,466 1,716,030 2,117,214 134 1,277,456 400 approving the policy. Chris Kennedy 664,596 1,077,956 1,286,114 166 458,368 225 Proportionality Non‑executive Directors Code provision: The link between The Restricted Share awards reward the creation of shareholder value, which ultimately focuses on the Dawn Allen 5 – – – – – 100 individual awards, the delivery of strategy long-term achievement of strategic deliverables. Salman Amin 50,674 – – 103 50,674 100 and the long-term performance of the Performance measures and personal objectives in the bonus are designed to align with strategy and financial Company should be clear. Outcomes Edward Bonham Carter 100,000 – – 124 100,000 100 should not reward poor performance. performance and provide for a range of pay out levels which are dependent on and linked to Company Graham Cooke 6 – – – – – 100 performance. Deferral periods and holding periods (including in the bonus) help to further align incentive outcomes for Andrew Cosslett 621,242 – – 114 621,242 100 executives to the shareholder experience in the long term. Margaret Ewing 7 57,700 – – 97 57,700 100 The Committee has overriding discretion over eventual outcomes when they do not reflect business Marjorie Kaplan 8 – – – – – 100 performance, and/or shareholder experience, and ensures that poor performance would not be rewarded. Mary Harris 9 – – – – 90,517 100 Alignment to culture Gidon Katz 10 75,000 – – 83 75,000 100 Anna Manz 11 – – – – 46,312 100 Code provision: Incentive schemes should When considering the alignment of incentive plans and culture the Committee considers the following: Sharmila Nebhrajani 12 15,620 – – 21 10,000 100 drive behaviours consistent with company • Metrics: ensuring that performance targets are aligned to culture and do not drive the wrong behaviours purpose, values and strategy. Duncan Painter 13 – – – – 82,087 100 • Governance: ensuring adoption of best practice through a robust malus and clawback policy with a substantial list of relevant trigger events, such as corporate failure and reputational damage. The Committee 1. Shares beneficially held by Directors and family interests. also retains discretion under the plan rules to override formulaic vesting outcomes and to extend holding 2. Restricted Share awards under the DSA and LTIP subject to continued service are accounted for on a net of tax basis. periods. These elements enable the Committee to satisfy itself that the right steps have been taken to ensure 3. Restricted Share awards under the ESP subject to performance underpin are accounted for on a net of tax basis. executive remuneration is appropriate from a cultural context 4. In order to reflect economic exposure, shareholding guidelines are assessed on the greater of the share price on 31 December 2023 (63.28 pence) and the value at acquisition/grant. • Engagement: understanding remuneration for the wider workforce and ensuring that pay decisions are 5. Dawn Allen was appointed to the Board on 2 October 2023 and has until 2029 to meet her shareholding requirements. aligned across the Group and wider engagement with our stakeholders, including our employees 6. Graham Cooke was appointed to the Board on 1 May 2020 and has until 2026 to meet his shareholding requirements. 7. Following an increase to fees in 2023 Margaret Ewing’s interest has fallen to 97%. Shares will be acquired at the earliest opportunity to ensure full compliance with the requirement to hold shares with a value of 100% of the basic fees. 8. Marjorie Kaplan was appointed to the Board on 1 September 2023 and has until 2029 to meet her shareholding requirements. 9. Mary Harris stepped down from the Board on 3 May 2023. 10. Gidon Katz was appointed to the Board on 18 July 2022 and has until 2028 to meet his shareholding requirements. 11. Anna Manz stepped down from the Board on 31 August 2023. 12. Sharmila Nebhrajani was appointed to the Board on 10 December 2020 and has until 2026 to meet her shareholding requirements. 13. Duncan Painter stepped down from the Board on 30 November 2023.
138 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 139 REMUNERATION REPORT CONTINUED G O VE R NAN Compliance with the 2018 Corporate Governance CodePayments to past Directors ‑ Audited C The table below shows how the Committee addressed the principles of clarity, simplicity, risk, predictability, proportionality and There were no payments made to past Directors in 2023. E alignment to culture when determining the Directors’ remuneration policy. The Committee notes the release by the FRC of the revised Corporate Governance Code 2024 and will work to ensure full compliance.Payments for loss of office ‑ Audited There were no payments made to Directors for loss of office in 2023. IMPACT OF THE 2018 CORPORATE GOVERNANCE CODEDirectors’ share interests and post‑cessation shareholding ‑ Audited Clarity The Committee continues to recognise the importance of Directors being shareholders so as to align their interests with other shareholders. Code provision: Remuneration • The presentation of the Remuneration Report is intended to provide clarity on the Company’s approachShareholding guidelines are in place, which encourage Executive Directors to build up a holding of ITV plc shares based on a percentage of arrangements should be transparent and • We aim to be completely transparent about our remuneration policy and arrangements and comply with promote effective engagement with certain disclosure requirements ahead of when we are required to do so for openness and transparencybase salary. shareholders and the workforce.• Great importance placed on engaging with our stakeholders, particularly with shareholders and the workforce on remuneration. The Chief People Officer attends all Committee meetings and our Workforce Engagement Where the value of shares required to be held increases as a result of a salary increase (or an increase in the relevant percentage), the Director, Graham Cooke, provides regular feedback. Employees also have the opportunity to comment Executive Directors must increase their holdings to achieve compliance. The Committee may change the guidelines so long as they are not, through the Ambassador network and employee surveys. This ensures the views of employees are considered overall, in the view of the Committee, less onerous. during Committee deliberations. Non-executive Directors are required to build and then maintain a holding of 100% of their base fee (unless for some reason they are unable to Simplicity retain their fees). Code provision: Remuneration structures The Company operates an approach to remuneration that is simple to understand and familiar to key should avoid complexity and their rationale stakeholders and has three key elements:Interests in share awards following departure enable departing Executive Directors to remain aligned with the interest of shareholders for an and operation should be easy to • Fixed element: comprising base salary, taxable benefits and a pension allowanceextended period after leaving the Company. Deferred Share Awards, legacy LTIP and ESP awards subject to a holding period will normally vest understand.• Short‑term element: an annual performance-related bonus with a selection of financial and non-financial (and be released from their holding periods) at the normal time. This means that Executive Directors may retain a significant interest in shares targets measured over the financial year, two-thirds paid in cash and one-third in shares deferred for a three for up to five years following departure from the Company. Following adoption of the policy in 2021, Executive Directors will normally be year period required to retain an interest equivalent to two times their annual ESP grant (265% for the Chief Executive and 225% for the Group CFO & COO) • Restricted share element: normally released after five years subject to achievement of a performance for two years following departure. In order to enforce this requirement, on vesting, relevant shares are automatically transferred to a secure underpin nominee arrangement until the appropriate level of interest has been achieved. The shares will be retained in this arrangement until the end of Risk the two year period. Code provision: Remuneration A combination of short and long-term incentives with the majority delivered in shares encourages Executive The figures set out below represent shareholdings in the ordinary share capital of ITV plc beneficially owned by Directors and their family arrangements should ensure reputational Directors to deliver long-term sustainable shareholder returns, discouraging decision-making that only focuses interests at 31 December 2023. To show alignment with the shareholding guidelines the net number of unvested share awards not subject to and other risks from excessive rewards, on the short term.performance conditions and the vested LTIP in holding periods are included for the Executive Directors. The Committee continues to keep and behavioural risks that might arise from The Committee retains flexibility to adjust payments through malus and clawback provisions, and an overriding both the shareholding guidelines and actual Director shareholdings under review and will take appropriate action should they feel it necessary. target-based incentive plans, are identified discretion to depart from formulaic outcomes where behaviours may be viewed as inappropriate or criteria on and mitigated.which the award was based do not reflect the underlying performance of the Company. Interests in shares Predictability % of salary/fees Unconditional Restricted Restricted Unconditional required Code provision: The range of possible Shareholders are kept fully informed and consulted on the values that can be earned under the incentive plans shares held atshares held at shares held at shares held at to be held under 31 December 31 December 31 December % shareholding 31 December shareholding values of awards to individual directors and for different levels of performance. Notes 20231 20232 20233 guidelines met4 2022 guidelines any other limits or discretions should be The Remuneration Policy provides estimates of potential future reward in different performance scenarios.Executive Directors identified and explained at the time of Carolyn McCall 1,721,466 1,716,030 2,117,214 134 1,277,456 400 approving the policy. Chris Kennedy 664,596 1,077,956 1,286,114 166 458,368 225 Proportionality Non‑executive Directors Code provision: The link between The Restricted Share awards reward the creation of shareholder value, which ultimately focuses on the Dawn Allen 5– – – – – 100 individual awards, the delivery of strategy long-term achievement of strategic deliverables. Salman Amin 50,674 – – 103 50,674 100 and the long-term performance of the Performance measures and personal objectives in the bonus are designed to align with strategy and financial Company should be clear. Outcomes Edward Bonham Carter 100,000 – – 124 100,000 100 should not reward poor performance.performance and provide for a range of pay out levels which are dependent on and linked to Company Graham Cooke6– – – – – 100 performance. Deferral periods and holding periods (including in the bonus) help to further align incentive outcomes for Andrew Cosslett621,242 – – 114 621,242 100 executives to the shareholder experience in the long term.Margaret Ewing 7 57,700 – – 97 57,700 100 The Committee has overriding discretion over eventual outcomes when they do not reflect business Marjorie Kaplan8 – – – – – 100 performance, and/or shareholder experience, and ensures that poor performance would not be rewarded.Mary Harris9 – – – – 90,517 100 Alignment to culture Gidon Katz 10 75,000 – – 83 75,000 100 Anna Manz 11 – – – – 46,312 100 Code provision: Incentive schemes should When considering the alignment of incentive plans and culture the Committee considers the following: Sharmila Nebhrajani1215,620– – 21 10,000 100 drive behaviours consistent with company • Metrics: ensuring that performance targets are aligned to culture and do not drive the wrong behaviours purpose, values and strategy. Duncan Painter 13 – – – – 82,087 100 • Governance: ensuring adoption of best practice through a robust malus and clawback policy with a substantial list of relevant trigger events, such as corporate failure and reputational damage. The Committee 1. Shares beneficially held by Directors and family interests. also retains discretion under the plan rules to override formulaic vesting outcomes and to extend holding 2. Restricted Share awards under the DSA and LTIP subject to continued service are accounted for on a net of tax basis. periods. These elements enable the Committee to satisfy itself that the right steps have been taken to ensure 3. Restricted Share awards under the ESP subject to performance underpin are accounted for on a net of tax basis. executive remuneration is appropriate from a cultural context4. In order to reflect economic exposure, shareholding guidelines are assessed on the greater of the share price on 31 December 2023 (63.28 pence) and the value at acquisition/grant. • Engagement: understanding remuneration for the wider workforce and ensuring that pay decisions are 5. Dawn Allen was appointed to the Board on 2 October 2023 and has until 2029 to meet her shareholding requirements. aligned across the Group and wider engagement with our stakeholders, including our employees6. Graham Cooke was appointed to the Board on 1 May 2020 and has until 2026 to meet his shareholding requirements. 7. Following an increase to fees in 2023 Margaret Ewing’s interest has fallen to 97%. Shares will be acquired at the earliest opportunity to ensure full compliance with the requirement to hold shares with a value of 100% of the basic fees. 8. Marjorie Kaplan was appointed to the Board on 1 September 2023 and has until 2029 to meet her shareholding requirements. 9. Mary Harris stepped down from the Board on 3 May 2023. 10. Gidon Katz was appointed to the Board on 18 July 2022 and has until 2028 to meet his shareholding requirements. 11. Anna Manz stepped down from the Board on 31 August 2023. 12. Sharmila Nebhrajani was appointed to the Board on 10 December 2020 and has until 2026 to meet her shareholding requirements. 13. Duncan Painter stepped down from the Board on 30 November 2023.
140 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 141 REMUNERATION REPORT CONTINUED G O VE R NAN Outstanding interests under share plans External directorships C The following tables provide details of the Executive Directors’ interests in outstanding share awards. With specific approval of the Board, Executive Directors may undertake external appointments as a non‑executive director of other E publicly quoted companies and retain any related fees paid to them. During the year, the Executive Directors retained fees for the Share price Share S h a r e directorships set out below. At At used for option price at Holding 1 January Awarded Vested Exercised Lapsed 31 December award price exercise Vesting period Notes 2023 in year in year in year in year 2023 (pence) (pence) (pence) date ends 2023 Carolyn McCall Company £000 LTIP Carolyn McCall Bridgepoint Group plc 107 28 March 28 March Chris Kennedy Whitbread plc 87 28 March 2018 1 144,989 ––144,989 – – 145.25 – 80.83 2021 2023 28 March 28 March 28 March 2019 1 692,937 ––––692,937 126.37 ––2022 2024 6 April 6 April The Board and Committee are satisfied that these commitments do not compromise their duties as Executive Directors of ITV plc. 6 April 2020 1 3,575,495 – 1,393,013 – 2,182,482 1,393,013 69.91 ––2023 2025 Service contracts ESP The Directors’ service contracts and letters of appointment are available for inspection at the Company’s registered office. 13 May 13 May 13 May 2021 2 1,013,062 ––––1,013,062 123.37 ––2024 2026 Executive Directors: Executive Directors have rolling service contracts that provide for 12 months’ notice on either side. There are no special 28 March 28 March provisions that apply in the event of a change of control. 28 March 2022 2 1,338,577 ––––1,338,577 96.17 ––2025 2027 28 March 28 March 28 March 2023 2–1,643,105 –––1,643,105 81.48––2026 2028 Notice period Notice period Compensation for Date of appointment Nature of contract from Company from Director early termination DSA3 Carolyn McCall 8 January 2018 Rolling 12 months 12 months None 6 April Chris Kennedy 21 February 2019 Rolling 12 months 12 months None 6 April 2020 4 692,767 – 692,767 692,767 – – 69.91 – 80.82 2023 28 March 28 March 2022 567,177 ––––567,177 96.17 ––2025 28 March Non‑executive Directors: Each Non‑executive Director, including the Chair, has a letter of appointment with the Company. Non‑executive 28 March 2023 5– 584,666 –––584,666 81.48––2026 Directors will serve for an initial term of three years, subject to election and then annual re‑election by shareholders, unless otherwise terminated earlier by and at the discretion of either party upon one month’s written notice (12 months for the current Chair). After the initial Chris Kennedy three year term, reappointment is on an annual basis. LTIP 28 March 28 March All Non‑executive Directors are subject to re‑election at the AGM in 2024. Details of appointment and tenure are set out in the table on page 77 28 March 2019 1 420,928 ––––420,928 126.37 ––2022 2024 to 78. 6 April 6 April 6 April 2020 1 2,171,954 – 846,194 – 1,325,760 846,194 69.91 ––2023 2025 Committee membership and advisers ESP The Directors who were members of the Committee when matters relating to the Executive Directors’ remuneration for the year were considered are set out on page 119. 13 May 13 May 13 May 2021 2 615,390 ––––615,390 123.37 ––2024 2026 28 March 28 March The Committee obtains advice from various sources in order to ensure it makes informed decisions. The Executive Directors are invited to 28 March 2022 2 813,126 ––––813,126 96.17 ––2025 2027 attend Committee meetings as appropriate. No individual is involved in decisions relating to their own remuneration. 28 March 28 March 28 March 2023 2–998,114 –––998,114 81.48––2026 2028 The Chief People Officer is the main internal adviser and provides updates on remuneration, employee relations and human resource issues. DSA3 Deloitte LLP was appointed by the Committee as the independent adviser on remuneration policy and the external remuneration environment 6 April with effect from September 2017 following a review of other advisers in the market place. Total fees for advice provided to the Committee 6 April 2020 4 389,111 – 389,111 389,111 – – 69.91 – 80.82 2023 28 March during the year amounted to £88,400 on a time/material basis (exclusive of VAT and expenses). Deloitte are members of the Remuneration 28 March 2022 367,120 ––––367,120 96.17 ––2025 Consultants Group and abide by its Code of Conduct in relation to remuneration consulting in the UK. 28 March 28 March 2023 5–383,421 –––383,421 81.48––2026 The Committee regularly reviews the quality and objectivity of the advice it receives from Deloitte in private sessions and this is challenged as a part of the Board evaluation process. It is satisfied that the advice it has received has been objective and independent, and that any SAYE conflicts have been appropriately managed. The Committee is satisfied that the Deloitte LLP engagement partner and advisory team that 1 June provide remuneration advice to the Committee, do not have any connections with the Company or individual directors that may impair 7 April 2020 6 24,426 –––24,426 – 92.11 73.69 – 2023 their independence. 1 November 13 September 2023 6–32,907 ––– 32,907 70.46 56.37 – 2026 The wider UK Deloitte firm provided ITV with a number of other services during the year relating to risk and internal audit (until April 2022), 1. Awards under the LTIP are subject to performance over a three year period. Any proportion of the award that meets the performance conditions will become exercisable after a two tax, financial advice and consultancy. The members of the executive remuneration consulting team are not incentivised to cross‑sell year holding period. 2. Awards under the ESP vest after three years subject to a financial underpin condition being met. The award will then become exercisable after a two year holding period. The face non‑related services to ITV. value of awards granted in the financial year to Carolyn McCall under the ESP was £1,338,801 and to Chris Kennedy was £813,262. 3. There were no DSA awards made in 2021 for 2020 performance. Relative importance of spend on pay 4. For awards released during the year, sufficient shares were sold to cover income tax and national insurance liabilities, with the balance of shares retained by the Executive Director. The shares are included in the balance of unconditional shares in the table on page 139. The table below shows pay for all employees compared with other key financial indicators. 5. Awards under the DSA were granted as nil cost options and become exercisable after three years subject to continued employment. The face value of awards granted in the financial year to Carolyn McCall was £476,385 and to Chris Kennedy was £312,411. Awards were granted based on the average share price on the three trading days preceding the award. 2023 2022 6. Share options under the SAYE were granted at a 20% discount of the ITV share price at the time of grant. £m £m % Change Employee pay1 693 631 10 Ordinary dividend 201 201 – Employee headcount2 6,869 6,677 3 1. Employee pay is the total remuneration paid to all employees across ITV on a fulltime equivalent basis. More detail is set out in note 2.1 to the financial statements. 2. Employee headcount is the monthly average number of employees across ITV on a fulltime equivalent basis. More detail is set out in note 2.1 to the financial statements. This number is included to contextualise the employee pay figure. There were no share buybacks during either year.
140 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 141 REMUNERATION REPORT CONTINUED G O VE R NAN Outstanding interests under share plansExternal directorships C The following tables provide details of the Executive Directors’ interests in outstanding share awards.With specific approval of the Board, Executive Directors may undertake external appointments as a non‑executive director of other E publicly quoted companies and retain any related fees paid to them. During the year, the Executive Directors retained fees for the Share price Share S h a r e directorships set out below. At At used for option price at Holding 1 January Awarded Vested Exercised Lapsed 31 December award price exercise Vesting period Notes2023in yearin yearin year in year2023(pence)(pence)(pence)dateends 2023 Carolyn McCall Company £000 LTIP Carolyn McCall Bridgepoint Group plc 107 28 March28 March Chris Kennedy Whitbread plc 87 28 March 20181144,989––144,989––145.25–80.8320212023 28 March28 March 28 March 20191692,937––––692,937 126.37––2022 2024 6 April6 April The Board and Committee are satisfied that these commitments do not compromise their duties as Executive Directors of ITV plc. 6 April 20201 3,575,495– 1,393,013 – 2,182,482 1,393,01369.91––2023 2025 Service contracts ESP The Directors’ service contracts and letters of appointment are available for inspection at the Company’s registered office. 13 May13 May 13 May 20212 1,013,062––––1,013,062 123.37––2024 2026Executive Directors: Executive Directors have rolling service contracts that provide for 12 months’ notice on either side. There are no special 28 March28 March provisions that apply in the event of a change of control. 28 March 20222 1,338,577––––1,338,577 96.17––2025 2027 28 March28 March 28 March 20232–1,643,105–––1,643,105 81.48––20262028 Notice period Notice period Compensation for Date of appointment Nature of contract from Company from Director early termination DSA3 Carolyn McCall 8 January 2018 Rolling 12 months 12 months None 6 April Chris Kennedy 21 February 2019 Rolling 12 months 12 months None 6 April 20204692,767–692,767692,767––69.91–80.822023 28 March 28 March 2022567,177––––567,177 96.17––2025 28 March Non‑executive Directors: Each Non‑executive Director, including the Chair, has a letter of appointment with the Company. Non‑executive 28 March 20235– 584,666 –––584,666 81.48––2026Directors will serve for an initial term of three years, subject to election and then annual re‑election by shareholders, unless otherwise terminated earlier by and at the discretion of either party upon one month’s written notice (12 months for the current Chair). After the initial Chris Kennedy three year term, reappointment is on an annual basis. LTIP 28 March28 March All Non‑executive Directors are subject to re‑election at the AGM in 2024. Details of appointment and tenure are set out in the table on page 77 28 March 20191420,928––––420,928 126.37––2022 2024to 78. 6 April6 April 6 April 202012,171,954–846,194– 1,325,760846,19469.91––2023 2025Committee membership and advisers ESP The Directors who were members of the Committee when matters relating to the Executive Directors’ remuneration for the year were considered are set out on page 119. 13 May13 May 13 May 20212615,390––––615,390 123.37––2024 2026 28 March28 March The Committee obtains advice from various sources in order to ensure it makes informed decisions. The Executive Directors are invited to 28 March 20222813,126––––813,126 96.17––2025 2027attend Committee meetings as appropriate. No individual is involved in decisions relating to their own remuneration. 28 March28 March 28 March 20232–998,114–––998,114 81.48––2026 2028The Chief People Officer is the main internal adviser and provides updates on remuneration, employee relations and human resource issues. DSA3 Deloitte LLP was appointed by the Committee as the independent adviser on remuneration policy and the external remuneration environment 6 April with effect from September 2017 following a review of other advisers in the market place. Total fees for advice provided to the Committee 6 April 20204389,111–389,111 389,111 ––69.91–80.822023 28 March during the year amounted to £88,400 on a time/material basis (exclusive of VAT and expenses). Deloitte are members of the Remuneration 28 March 2022367,120––––367,120 96.17––2025Consultants Group and abide by its Code of Conduct in relation to remuneration consulting in the UK. 28 March 28 March 20235–383,421–––383,421 81.48––2026The Committee regularly reviews the quality and objectivity of the advice it receives from Deloitte in private sessions and this is challenged as a part of the Board evaluation process. It is satisfied that the advice it has received has been objective and independent, and that any SAYE conflicts have been appropriately managed. The Committee is satisfied that the Deloitte LLP engagement partner and advisory team that 1 June provide remuneration advice to the Committee, do not have any connections with the Company or individual directors that may impair 7 April 2020624,426–––24,426–92.1173.69–2023their independence. 1 November 13 September 20236–32,907––– 32,907 70.4656.37–2026 The wider UK Deloitte firm provided ITV with a number of other services during the year relating to risk and internal audit (until April 2022), 1. Awards under the LTIP are subject to performance over a three year period. Any proportion of the award that meets the performance conditions will become exercisable after a two tax, financial advice and consultancy. The members of the executive remuneration consulting team are not incentivised to cross‑sell year holding period. 2. Awards under the ESP vest after three years subject to a financial underpin condition being met. The award will then become exercisable after a two year holding period. The face non‑related services to ITV. value of awards granted in the financial year to Carolyn McCall under the ESP was £1,338,801 and to Chris Kennedy was £813,262. 3. There were no DSA awards made in 2021 for 2020 performance.Relative importance of spend on pay 4. For awards released during the year, sufficient shares were sold to cover income tax and national insurance liabilities, with the balance of shares retained by the Executive Director. The shares are included in the balance of unconditional shares in the table on page 139.The table below shows pay for all employees compared with other key financial indicators. 5. Awards under the DSA were granted as nil cost options and become exercisable after three years subject to continued employment. The face value of awards granted in the financial year to Carolyn McCall was £476,385 and to Chris Kennedy was £312,411. Awards were granted based on the average share price on the three trading days preceding the award. 2023 2022 6. Share options under the SAYE were granted at a 20% discount of the ITV share price at the time of grant. £m £m % Change Employee pay1 693 631 10 Ordinary dividend 201 201 – Employee headcount2 6,869 6,677 3 1. Employee pay is the total remuneration paid to all employees across ITV on a fulltime equivalent basis. More detail is set out in note 2.1 to the financial statements. 2. Employee headcount is the monthly average number of employees across ITV on a fulltime equivalent basis. More detail is set out in note 2.1 to the financial statements. This number is included to contextualise the employee pay figure. There were no share buybacks during either year.
142 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 143 REMUNERATION REPORT CONTINUED G DIRECTORS’ REPORT O VE R NAN Historical performance The Directors present their Annual Report and the audited consolidated and C The graph below shows the TSR performance of the Company against the FTSE 100 index over the ten year period to 31 December 2023. E The FTSE 100 was chosen as ITV has been a member of the FTSE 100 during the ten year period. parent company financial statements for the year ended 31 December 2023. 180 ) 3 160 1 The Directors’ Report comprises this report and the entire Governance section including the Chair’s Governance Statement. In accordance 0 r 2 with the Financial Conduct Authority’s Listing Rules, the information to be included in the 2023 Annual Report and Accounts, where applicable, e 140 b m under LR 9.8.4, is set out in this Directors’ Report. Other information that is relevant to this report, and which is incorporated by reference, e 120 c e can be located as follows: 1 D 100 t 3 0 a 80 0 INFORMATION PAGE NUMBER o 1 60 d t e s Carbon and greenhouse gas emissions See page 35 a 40 b e r R ( 20 Corporate Governance Report See pages 75 to 142 S T 0 Culture See pages 96 to 99 31/12/2013 31/12/2014 31/12/2015 31/12/2016 31/12/2017 31/12/2018 31/12/2019 31/12/2020 31/12/2021 31/12/2022 31/12/2023 Directors’ service contracts See page 126 ITV FTSE 100 Employee engagement and involvement See pages 94 to 95 Source: Thomson Reuters Datastream Employee equality, diversity, reward, investment and inclusion See pages 37 to 39 Chief Executive remuneration Future developments of the business of the Group See pages 10 to 11 The table below provides a summary of the total remuneration received by the Chief Executive over the last ten years, including details of the Membership of the Board during the 2023 financial year See page 77 to 78 annual bonus pay-out and long-term incentive award vesting level in each year. Research and development See pages 10 to 11 Total Stakeholder engagement and Company’s business relationships See pages 84 to 91 remuneration Bonus % Award vesting £000 of maximum % of maximum Award type 2023 Carolyn McCall 2,881 56.41 100 ESP 2022 Carolyn McCall 3,690 81.72 38.96 LTIP Corporate 2021 Carolyn McCall 3,307 96.38 35.82 LTIP 2020 Carolyn McCall 1,150 – 8.83 LTIP Articles of Association: The Articles of Association may only be amended by special resolution of the shareholders. The current Articles 2019 Carolyn McCall 3,122 87.5 62.35 LTIP were adopted as the Articles of Association of the Company at the conclusion of the 2022 AGM and are available on our website. 2018 Carolyn McCall 3,695 73.6 – LTIP www.itvplc.com/investors/governance 2017 Peter Bazalgette (for the six month period served) 225 – – LTIP Adam Crozier (for the six month period served) 2,050 97.9 63 LTIP Auditor: The external auditor for the 2023 financial year was PricewaterhouseCoopers LLP. The Independent Auditor’s Report starting 2016 Adam Crozier 3,632 40 80 LTIP on page 149 sets out the information contained in the Annual Report which has been audited by the external auditor. 2015 Adam Crozier 3,881 96 75 LTIP 2014 Adam Crozier 4,842 94 75 LTIP The Audit and Risk Committee considered the performance and audit fees of the external auditor, and the level of non-audit work undertaken. It recommended to the Board that a resolution for the reappointment of PricewaterhouseCoopers LLP for a further year as the Company’s auditor be proposed to shareholders at the AGM on 2 May 2024. The long-term incentive award vesting percentage relates to the proportion of the award that met performance conditions in the relevant Change of control: No person holds securities in the Company carrying special rights with regard to control of the Company. All of financial year. the Company’s share schemes contain provisions relating to a change of control. Outstanding awards and options would normally vest and become exercisable on a change of control, subject to the satisfaction of any performance conditions and proration for time Shareholder voting where appropriate. At the 2023 AGM, the majority of investors and mainstream proxy voting agencies were supportive of the Remuneration Report. The Committee recognises that a limited minority of shareholders opted to not support the Director’s Remuneration Report, and it is understood that this was Certain of the Group’s debt and derivative instruments have change of control clauses whereby the counterparty can require ITV to repay or driven by a mix of factors. Select shareholders continue to retain reservations regarding the remuneration policy, which was approved by 92% redeem the instruments in the event of a change of control (although in some cases only if it is accompanied by a credit rating downgrade to of shareholders in 2021, and is subject to renewal at the 2024 AGM. Voting in some cases was partially influenced by broader company factors sub investment grade). The Company is not aware of any other significant agreements to which it is a party that take effect, alter or terminate not directly related to our pay practices. An extensive shareholder consultation was undertaken by the Committee in 2023 in advance of the upon a change of control of the Company. Policy renewal, with shareholders given the opportunity to raise these concerns. The Board continues to maintain dialogue with investors, and the Remuneration Committee has engaged with investors on numerous occasions over recent years. In many cases remuneration proposals Other agreements: The Company does not have any agreements with any Director or employee that would provide compensation for loss of have been adapted in direct response to investor feedback. While there is a recognition that there are differing viewpoints amongst our major office or employment resulting from change of control following a takeover bid. investors on matters relating to pay, we will continue to constructively engage with investors on matters and take into account their feedback as we make key executive pay decisions. Dividends: The Board has proposed a final dividend of 3.3 pence for the year ended 31 December 2023 subject to shareholder approval at the AGM on 2 May 2024. The final dividend will be paid on 23 May 2024 to shareholders on the register on 12 April 2024 (the record date). The Votes cast by proxy and at the meeting by poll in respect of the Executive Directors’ remuneration were as follows: ex-dividend date is 11 April 2024. For more information please refer to page 5. Resolution Number of shares Voting for % Number of shares Voting against % Total votes cast Votes withheld Political contributions: It is the Company’s policy not to make cash contributions to any political party. However, within the normal activities Remuneration Policy (2021 AGM) 2,708,902,059 92.23 228,270,767 7.77 2,937,172,826 250,200,490 of the Company’s national and regional news-gathering operations, there may be occasions when an activity might fall within the broader Annual Report on Remuneration (2023 AGM) 2,467,727,854 88.23 329,265,772 11.77 2,796,957,548 52,988,620 definition of ‘political expenditure’ contained within the Companies Act 2006. Shareholder authority for such expenditure was given at the 2023 AGM. During 2023 there were no payments made by the Group falling within this definition (2022: nil). The Directors will seek to renew this authority at the 2024 AGM. This Remuneration Report was approved by the Board on 7 March 2024 and has been signed on behalf of the Directors by Branches: Branches of the Group outside the United Kingdom are indicated in the Subsidiary undertakings and investments section on pages 238 to 242. SHARMILA NEBHRAJANI OBE CHAIR, REMUNERATION COMMITTEE 7 March 2024
142 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 143 REMUNERATION REPORT CONTINUED G DIRECTORS’ REPORT O VE R NAN Historical performance The Directors present their Annual Report and the audited consolidated and C The graph below shows the TSR performance of the Company against the FTSE 100 index over the ten year period to 31 December 2023. E The FTSE 100 was chosen as ITV has been a member of the FTSE 100 during the ten year period.parent company financial statements for the year ended 31 December 2023. 180 ) 3160 1 The Directors’ Report comprises this report and the entire Governance section including the Chair’s Governance Statement. In accordance 0 r 2 with the Financial Conduct Authority’s Listing Rules, the information to be included in the 2023 Annual Report and Accounts, where applicable, e140 b m under LR 9.8.4, is set out in this Directors’ Report. Other information that is relevant to this report, and which is incorporated by reference, e120 c e can be located as follows: 1 D100 t 3 0 a80 0 INFORMATION PAGE NUMBER o 160 d t e s Carbon and greenhouse gas emissions See page 35 a40 b e r R (20 Corporate Governance Report See pages 75 to 142 S T 0 Culture See pages 96 to 99 31/12/201331/12/201431/12/201531/12/201631/12/201731/12/201831/12/201931/12/202031/12/202131/12/202231/12/2023 Directors’ service contracts See page 126 ITVFTSE 100 Employee engagement and involvement See pages 94 to 95 Source: Thomson Reuters Datastream Employee equality, diversity, reward, investment and inclusion See pages 37 to 39 Chief Executive remunerationFuture developments of the business of the Group See pages 10 to 11 The table below provides a summary of the total remuneration received by the Chief Executive over the last ten years, including details of the Membership of the Board during the 2023 financial yearSee page 77 to 78 annual bonus pay-out and long-term incentive award vesting level in each year. Research and development See pages 10 to 11 Total Stakeholder engagement and Company’s business relationships See pages 84 to 91 remuneration Bonus % Award vesting £000of maximum% of maximumAward type 2023Carolyn McCall2,88156.41100ESP 2022Carolyn McCall3,69081.7238.96LTIPCorporate 2021Carolyn McCall3,30796.3835.82LTIP 2020Carolyn McCall1,150–8.83LTIPArticles of Association: The Articles of Association may only be amended by special resolution of the shareholders. The current Articles 2019Carolyn McCall3,12287.562.35LTIPwere adopted as the Articles of Association of the Company at the conclusion of the 2022 AGM and are available on our website. 2018Carolyn McCall3,69573.6–LTIPwww.itvplc.com/investors/governance 2017Peter Bazalgette (for the six month period served)225––LTIP Adam Crozier (for the six month period served)2,05097.963LTIPAuditor: The external auditor for the 2023 financial year was PricewaterhouseCoopers LLP. The Independent Auditor’s Report starting 2016Adam Crozier3,6324080LTIPon page 149 sets out the information contained in the Annual Report which has been audited by the external auditor. 2015Adam Crozier3,8819675LTIP 2014Adam Crozier4,8429475LTIPThe Audit and Risk Committee considered the performance and audit fees of the external auditor, and the level of non-audit work undertaken. It recommended to the Board that a resolution for the reappointment of PricewaterhouseCoopers LLP for a further year as the Company’s auditor be proposed to shareholders at the AGM on 2 May 2024. The long-term incentive award vesting percentage relates to the proportion of the award that met performance conditions in the relevant Change of control: No person holds securities in the Company carrying special rights with regard to control of the Company. All of financial year. the Company’s share schemes contain provisions relating to a change of control. Outstanding awards and options would normally vest and become exercisable on a change of control, subject to the satisfaction of any performance conditions and proration for time Shareholder voting where appropriate. At the 2023 AGM, the majority of investors and mainstream proxy voting agencies were supportive of the Remuneration Report. The Committee recognises that a limited minority of shareholders opted to not support the Director’s Remuneration Report, and it is understood that this was Certain of the Group’s debt and derivative instruments have change of control clauses whereby the counterparty can require ITV to repay or driven by a mix of factors. Select shareholders continue to retain reservations regarding the remuneration policy, which was approved by 92% redeem the instruments in the event of a change of control (although in some cases only if it is accompanied by a credit rating downgrade to of shareholders in 2021, and is subject to renewal at the 2024 AGM. Voting in some cases was partially influenced by broader company factors sub investment grade). The Company is not aware of any other significant agreements to which it is a party that take effect, alter or terminate not directly related to our pay practices. An extensive shareholder consultation was undertaken by the Committee in 2023 in advance of the upon a change of control of the Company. Policy renewal, with shareholders given the opportunity to raise these concerns. The Board continues to maintain dialogue with investors, and the Remuneration Committee has engaged with investors on numerous occasions over recent years. In many cases remuneration proposals Other agreements: The Company does not have any agreements with any Director or employee that would provide compensation for loss of have been adapted in direct response to investor feedback. While there is a recognition that there are differing viewpoints amongst our major office or employment resulting from change of control following a takeover bid. investors on matters relating to pay, we will continue to constructively engage with investors on matters and take into account their feedback as we make key executive pay decisions.Dividends: The Board has proposed a final dividend of 3.3 pence for the year ended 31 December 2023 subject to shareholder approval at the AGM on 2 May 2024. The final dividend will be paid on 23 May 2024 to shareholders on the register on 12 April 2024 (the record date). The Votes cast by proxy and at the meeting by poll in respect of the Executive Directors’ remuneration were as follows:ex-dividend date is 11 April 2024. For more information please refer to page 5. ResolutionNumber of sharesVoting for %Number of sharesVoting against %Total votes castVotes withheldPolitical contributions: It is the Company’s policy not to make cash contributions to any political party. However, within the normal activities Remuneration Policy (2021 AGM)2,708,902,05992.23228,270,7677.772,937,172,826250,200,490of the Company’s national and regional news-gathering operations, there may be occasions when an activity might fall within the broader Annual Report on Remuneration (2023 AGM)2,467,727,85488.23329,265,77211.772,796,957,54852,988,620definition of ‘political expenditure’ contained within the Companies Act 2006. Shareholder authority for such expenditure was given at the 2023 AGM. During 2023 there were no payments made by the Group falling within this definition (2022: nil). The Directors will seek to renew this authority at the 2024 AGM. This Remuneration Report was approved by the Board on 7 March 2024 and has been signed on behalf of the Directors byBranches: Branches of the Group outside the United Kingdom are indicated in the Subsidiary undertakings and investments section on pages 238 to 242. SHARMILA NEBHRAJANI OBE CHAIR, REMUNERATION COMMITTEE 7 March 2024
144 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 145 DIRECTORS’ REPORT CONTINUED G O VE R NAN Directors Subsequent events C Appointments: A table showing Directors who served in the year and to the date of this report can be found on page 82. Biographies for For details on post balance sheet events see note 5.3 on page 226. E Directors currently in office can be found on pages 77 and 78 and on our website. Pensions www.itvplc.com/about/board‑of‑directors The Company operates a number of pension arrangements which provide retirement and death benefits for colleagues. The appointment and replacement of Directors is governed by the Articles of Association, the UK Corporate Governance Code, the Companies ITV Pension Scheme (the Scheme): The Scheme is predominantly a Defined Benefit (DB) scheme, which is closed to future accrual, but also Act 2006 and related legislation. The Directors may from time to time appoint one or more Directors. Any such Director shall hold office only includes a small Defined Contribution (DC) section closed to future contributions. until the next AGM and shall then be eligible for appointment by the Company’s shareholders in accordance with the Corporate Governance Code. Subject to annual shareholder approval, Non-executive Directors are appointed for an initial three year period and annually thereafter. ITV Pension Scheme Limited (a wholly owned subsidiary of ITV plc) is a corporate Trustee and manages the Scheme under a trust which is Each Director will retire and submit themselves for election or re-election at the forthcoming AGM. separate from the Company. Members of the Trustee board are formally appointed as directors of ITV Pension Scheme Limited. There are six Conflicts of interest: The Board has delegated the authorisation of any conflicts to the Nominations Committee and has adopted a directors including the Chair – four appointed by the Company and two nominated by the members. The Company appointed Trustee directors Conflicts of Interest Policy. The Board has considered in detail the current external appointments of the Directors that may give rise to a include the Chair and two professional independent Trustees. situational conflict and has authorised potential conflicts where appropriate. This authorisation can be reviewed at any time but will always Currently, the Trustee has one committee: Corporate Affairs. The Corporate Affairs Committee is convened as and when appropriate for be subject to annual review. dealing with any corporate activities that may arise. The Trustee board holds regular meetings throughout the year at which key issues and Powers including in relation to issuing or buying back shares: Subject to applicable law and the Company’s Articles of Association, more routine business matters are dealt with. A budget is agreed each year. The Trustee board manages risk through its meeting agendas the Directors may exercise all powers of the Company, including the power to authorise the issue and/or market purchase of the Company’s and has a conflicts of interest policy and maintains a register of interests for each Trustee director, which are reviewed regularly. It is the shares (subject to an appropriate authority being given to the Directors by shareholders in a general meeting and any conditions attaching responsibility of the Trustee to have in place appropriate training for its directors and effective committee structures. The Trustee directors to such authority). The Articles and a schedule of Matters Reserved for the Board can be found on our website (below). receive regular training throughout the year and also have the support of various professional advisers. The Group pensions department helps identify training opportunities. Training is delivered both by attendance at external courses and with targeted training to support www.itvplc.com/investors/governance specific agenda items at the start of the relevant Trustee board meeting. Where appropriate, longer training sessions are organised. Comprehensive records are kept of all training completed by each Trustee director. The Trustee board completes regular assessments At the 2023 AGM, the Directors were given the following authority: of its advisers. • To allot a maximum of 1.34 billion shares, representing approximately one-third of the Company’s issued share capital, extending The Chair confirms in an annual statement that the Trustee meets its legal duties in relation to the DC section as required under the Pensions to 2.68 billion if used for a rights issue Regulator’s Code of Practice 13. • To allot a maximum of 402.5 million shares, without first offering them to existing shareholders in proportion to their holdings, representing approximately 10% of the Company’s issued share capital Full valuations are carried out every three years. The latest actuarial valuation of the main DB scheme was due as at 1 January 2023 with the • To purchase in the market a maximum of 402.5 million shares, representing up to approximately 10% of the Company’s issued share capital exercises expected to be completed within the statutory deadline of 31 March 2024. Under these authorities 27 million shares were allotted and no shares were bought back during the 2023 financial year and up to the date of this ITV Defined Contribution Plan (the Plan): The trust based Plan was established to accept contributions from 1 March 2017 for ex-DB report. On 7 March 2024 ITV announced that it had commenced a programme to purchase the Company’s shares up to a maximum members and DC members who transferred from the Scheme. Eligible fixed term and permanent employees are invited to join the Plan after consideration of £235 million using the authority granted by shareholders at the 2023 AGM. The continuation of the programme after the 2024 completing the required time in the Company’s Auto-Enrolment (AE) arrangement – the AE Section of the Plan, which was set up on AGM is subject to shareholder authority being granted at the 2024 AGM and, following the expiry of such authority, the shareholder authority 1 April 2020. These individuals are given the opportunity to transfer funds from the AE plan and make backdated contributions within granted at the Company’s Annual General Meeting to be held in 2025. permitted levels. Insurance and indemnities: The Company maintains liability insurance for its Directors and officers that is renewed on an annual basis. The ITV DC Trustee Limited (a wholly owned subsidiary of ITV plc) is a corporate Trustee and manages the DC assets, which are held under trust Company has also entered into deeds of indemnity with its Directors and certain directors of associated companies. A copy of the indemnity separately from the Company. Members of the Trustee board are formally appointed as directors of ITV DC Trustee Limited. There are five can be found on our website. The indemnity, which constitutes a qualifying third-party indemnity as defined in Section 234 of the Companies directors including the Chair — three appointed by the Company and two nominated by the members. It is the responsibility of the Trustee Act 2006, was in force during the 2023 financial year. to have in place appropriate training for its directors. The governance framework for managing the Plan and developing the board is in line with that in place for the ITV Pension Scheme. Disclosures The Chair confirms in an annual statement that the Trustee meets its legal duties in relation to the DC Plan as required under the Pensions Listing Rule 9.8.4 disclosures: There are no disclosures to be made under Listing Rule 9.8.4, other than that the Trustee of the Employees’ Regulator’s Code of Practice 13. Benefit Trust (EBT) waived its rights to receive dividends on shares it holds which do not relate to restricted shares held under the ITV Deferred Share Award Plan. See note 4.8. Ulster Television Pension and Assurance Scheme (the UTV Scheme): The UTV Scheme provides DB benefits. It closed to future accrual with effect from 31 March 2019. Financial risk management: The Directors have carried out a robust assessment of the principal and emerging risks facing the Company, including in relation to its business model, future performance, solvency and liquidity. Details of our principal risks and associated mitigations, UTV Pension Scheme Limited (a wholly owned subsidiary of ITV plc) is a corporate Trustee and manages the DB assets, which are held together with details of our approach to risk management, are set out on pages 55 to 64. Note 4.2 to the financial statements gives details of under trust separately from the Company. Members of the Trustee board are formally appointed as directors of UTV Pension Scheme Limited. the Group’s financial risk management policies and related exposures. Note 4.2 is incorporated by reference and deemed to form part of this There are five directors including the Chair — three appointed by the Company (including a professional Trustee as chairman) and two report. nominated by the members. It is the responsibility of the Trustee to have in place appropriate training for its directors. The governance framework for managing the UTV Scheme and developing the board is in line with that in place for the ITV Pension Scheme. Going concern: The going concern statement is set out on page 162. The statement is incorporated by reference and deemed to form part of this report. Full valuations are carried out every three years. The latest actuarial valuation of the UTV scheme was due as at 1 July 2023. Data: As a part of our business activity, ITV processes large amounts of personal data. ITV recognises that to enable this use of personal data The People’s Pension: Since 2013, employers within the Group have been required to enrol all eligible individuals into a pension scheme to transform our business and to meet the expectations of our viewers, advertisers and colleagues, it is critical that we continue to build on our automatically (auto-enrolment). This applies to all eligible individuals who are contracted to work for us, regardless of their contract type or tax approach to applying privacy in a lawful and ethical way. A programme of work to support this has been led by our Global Data Protection status (i.e. it applies to workers and not simply employees). For freelancers and employees not eligible to join the DC Plan, the auto-enrolment Officer. The work includes making improvements to our data governance framework and delivering our data privacy function to protect rights, plan is provided by a company called The People’s Pension under a master trust which is run by an independent board of Trustee directors and engender trust and make data available for commercial purposes. ITV has a number of policies, procedures and tools in place to support this, eligible individuals are enrolled into this arrangement. including our Privacy and Data Protection Policy and an Information Security Policy that governs the processing and security of data. Compliance with these policies is mandatory and forms part of the Code of Ethics and Compliance. All colleagues undergo regular training to Pension Scheme indemnities: Qualifying pension scheme indemnity provisions, as defined in Section 235 of the Companies Act 2006, were in remind them of their responsibilities under these policies. Privacy and data protection is kept under review by the Audit and Risk Committee. force for the financial year ended 31 December 2023 and remain in force for the benefit of each of the directors of ITV Pension Scheme Limited, ITV DC Trustee Limited and UTV Pension Scheme Limited. These indemnity provisions cover, to the extent permitted by law, certain losses or liabilities incurred as a director or officer of ITV Pension Scheme Limited, ITV DC Trustee Limited and UTV Pension Scheme Limited.
144 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 145 DIRECTORS’ REPORT CONTINUED G O VE R NAN Directors Subsequent events C Appointments: A table showing Directors who served in the year and to the date of this report can be found on page 82. Biographies for For details on post balance sheet events see note 5.3 on page 226. E Directors currently in office can be found on pages 77 and 78 and on our website. Pensions www.itvplc.com/about/board‑of‑directorsThe Company operates a number of pension arrangements which provide retirement and death benefits for colleagues. The appointment and replacement of Directors is governed by the Articles of Association, the UK Corporate Governance Code, the Companies ITV Pension Scheme (the Scheme): The Scheme is predominantly a Defined Benefit (DB) scheme, which is closed to future accrual, but also Act 2006 and related legislation. The Directors may from time to time appoint one or more Directors. Any such Director shall hold office only includes a small Defined Contribution (DC) section closed to future contributions. until the next AGM and shall then be eligible for appointment by the Company’s shareholders in accordance with the Corporate Governance Code. Subject to annual shareholder approval, Non-executive Directors are appointed for an initial three year period and annually thereafter. ITV Pension Scheme Limited (a wholly owned subsidiary of ITV plc) is a corporate Trustee and manages the Scheme under a trust which is Each Director will retire and submit themselves for election or re-election at the forthcoming AGM. separate from the Company. Members of the Trustee board are formally appointed as directors of ITV Pension Scheme Limited. There are six Conflicts of interest: The Board has delegated the authorisation of any conflicts to the Nominations Committee and has adopted a directors including the Chair – four appointed by the Company and two nominated by the members. The Company appointed Trustee directors Conflicts of Interest Policy. The Board has considered in detail the current external appointments of the Directors that may give rise to a include the Chair and two professional independent Trustees. situational conflict and has authorised potential conflicts where appropriate. This authorisation can be reviewed at any time but will always Currently, the Trustee has one committee: Corporate Affairs. The Corporate Affairs Committee is convened as and when appropriate for be subject to annual review. dealing with any corporate activities that may arise. The Trustee board holds regular meetings throughout the year at which key issues and Powers including in relation to issuing or buying back shares: Subject to applicable law and the Company’s Articles of Association, more routine business matters are dealt with. A budget is agreed each year. The Trustee board manages risk through its meeting agendas the Directors may exercise all powers of the Company, including the power to authorise the issue and/or market purchase of the Company’s and has a conflicts of interest policy and maintains a register of interests for each Trustee director, which are reviewed regularly. It is the shares (subject to an appropriate authority being given to the Directors by shareholders in a general meeting and any conditions attaching responsibility of the Trustee to have in place appropriate training for its directors and effective committee structures. The Trustee directors to such authority). The Articles and a schedule of Matters Reserved for the Board can be found on our website (below).receive regular training throughout the year and also have the support of various professional advisers. The Group pensions department helps identify training opportunities. Training is delivered both by attendance at external courses and with targeted training to support www.itvplc.com/investors/governancespecific agenda items at the start of the relevant Trustee board meeting. Where appropriate, longer training sessions are organised. Comprehensive records are kept of all training completed by each Trustee director. The Trustee board completes regular assessments At the 2023 AGM, the Directors were given the following authority:of its advisers. • To allot a maximum of 1.34 billion shares, representing approximately one-third of the Company’s issued share capital, extending The Chair confirms in an annual statement that the Trustee meets its legal duties in relation to the DC section as required under the Pensions to 2.68 billion if used for a rights issueRegulator’s Code of Practice 13. • To allot a maximum of 402.5 million shares, without first offering them to existing shareholders in proportion to their holdings, representing approximately 10% of the Company’s issued share capitalFull valuations are carried out every three years. The latest actuarial valuation of the main DB scheme was due as at 1 January 2023 with the • To purchase in the market a maximum of 402.5 million shares, representing up to approximately 10% of the Company’s issued share capitalexercises expected to be completed within the statutory deadline of 31 March 2024. Under these authorities 27 million shares were allotted and no shares were bought back during the 2023 financial year and up to the date of this ITV Defined Contribution Plan (the Plan): The trust based Plan was established to accept contributions from 1 March 2017 for ex-DB report. On 7 March 2024 ITV announced that it had commenced a programme to purchase the Company’s shares up to a maximum members and DC members who transferred from the Scheme. Eligible fixed term and permanent employees are invited to join the Plan after consideration of £235 million using the authority granted by shareholders at the 2023 AGM. The continuation of the programme after the 2024 completing the required time in the Company’s Auto-Enrolment (AE) arrangement – the AE Section of the Plan, which was set up on AGM is subject to shareholder authority being granted at the 2024 AGM and, following the expiry of such authority, the shareholder authority 1 April 2020. These individuals are given the opportunity to transfer funds from the AE plan and make backdated contributions within granted at the Company’s Annual General Meeting to be held in 2025.permitted levels. Insurance and indemnities: The Company maintains liability insurance for its Directors and officers that is renewed on an annual basis. The ITV DC Trustee Limited (a wholly owned subsidiary of ITV plc) is a corporate Trustee and manages the DC assets, which are held under trust Company has also entered into deeds of indemnity with its Directors and certain directors of associated companies. A copy of the indemnity separately from the Company. Members of the Trustee board are formally appointed as directors of ITV DC Trustee Limited. There are five can be found on our website. The indemnity, which constitutes a qualifying third-party indemnity as defined in Section 234 of the Companies directors including the Chair — three appointed by the Company and two nominated by the members. It is the responsibility of the Trustee Act 2006, was in force during the 2023 financial year. to have in place appropriate training for its directors. The governance framework for managing the Plan and developing the board is in line with that in place for the ITV Pension Scheme. Disclosures The Chair confirms in an annual statement that the Trustee meets its legal duties in relation to the DC Plan as required under the Pensions Listing Rule 9.8.4 disclosures: There are no disclosures to be made under Listing Rule 9.8.4, other than that the Trustee of the Employees’ Regulator’s Code of Practice 13. Benefit Trust (EBT) waived its rights to receive dividends on shares it holds which do not relate to restricted shares held under the ITV Deferred Share Award Plan. See note 4.8.Ulster Television Pension and Assurance Scheme (the UTV Scheme): The UTV Scheme provides DB benefits. It closed to future accrual with effect from 31 March 2019. Financial risk management: The Directors have carried out a robust assessment of the principal and emerging risks facing the Company, including in relation to its business model, future performance, solvency and liquidity. Details of our principal risks and associated mitigations, UTV Pension Scheme Limited (a wholly owned subsidiary of ITV plc) is a corporate Trustee and manages the DB assets, which are held together with details of our approach to risk management, are set out on pages 55 to 64. Note 4.2 to the financial statements gives details of under trust separately from the Company. Members of the Trustee board are formally appointed as directors of UTV Pension Scheme Limited. the Group’s financial risk management policies and related exposures. Note 4.2 is incorporated by reference and deemed to form part of this There are five directors including the Chair — three appointed by the Company (including a professional Trustee as chairman) and two report. nominated by the members. It is the responsibility of the Trustee to have in place appropriate training for its directors. The governance framework for managing the UTV Scheme and developing the board is in line with that in place for the ITV Pension Scheme. Going concern: The going concern statement is set out on page 162. The statement is incorporated by reference and deemed to form part of this report. Full valuations are carried out every three years. The latest actuarial valuation of the UTV scheme was due as at 1 July 2023. Data: As a part of our business activity, ITV processes large amounts of personal data. ITV recognises that to enable this use of personal data The People’s Pension: Since 2013, employers within the Group have been required to enrol all eligible individuals into a pension scheme to transform our business and to meet the expectations of our viewers, advertisers and colleagues, it is critical that we continue to build on our automatically (auto-enrolment). This applies to all eligible individuals who are contracted to work for us, regardless of their contract type or tax approach to applying privacy in a lawful and ethical way. A programme of work to support this has been led by our Global Data Protection status (i.e. it applies to workers and not simply employees). For freelancers and employees not eligible to join the DC Plan, the auto-enrolment Officer. The work includes making improvements to our data governance framework and delivering our data privacy function to protect rights, plan is provided by a company called The People’s Pension under a master trust which is run by an independent board of Trustee directors and engender trust and make data available for commercial purposes. ITV has a number of policies, procedures and tools in place to support this, eligible individuals are enrolled into this arrangement. including our Privacy and Data Protection Policy and an Information Security Policy that governs the processing and security of data. Compliance with these policies is mandatory and forms part of the Code of Ethics and Compliance. All colleagues undergo regular training to Pension Scheme indemnities: Qualifying pension scheme indemnity provisions, as defined in Section 235 of the Companies Act 2006, were in remind them of their responsibilities under these policies. Privacy and data protection is kept under review by the Audit and Risk Committee.force for the financial year ended 31 December 2023 and remain in force for the benefit of each of the directors of ITV Pension Scheme Limited, ITV DC Trustee Limited and UTV Pension Scheme Limited. These indemnity provisions cover, to the extent permitted by law, certain losses or liabilities incurred as a director or officer of ITV Pension Scheme Limited, ITV DC Trustee Limited and UTV Pension Scheme Limited.
146 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 147 DIRECTORS’ REPORT CONTINUED G O VE R NAN Shares Statement of Directors’ Responsibilities C Issued share capital: At the date of this report, there were 4,052,409,194 ordinary shares of 10 pence each in issue, all of which are fully The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the E paid up and quoted on the London Stock Exchange. information necessary for shareholders to assess the Group’s and Company’s position and performance, business model and strategy. Rights: The rights attaching to the Company’s ordinary shares are set out in the Articles of Association. There are no securities carrying Each of the Directors, whose names and functions are listed in the Board of Directors section on pages 77 to 78 confirm that, to the best of their special rights. knowledge: Restrictions: There are no restrictions on the transfer of ordinary shares in the capital of the Company other than those which may be • The Group financial statements, which have been prepared in accordance with UK-adopted international accounting standards, give a true imposed by law from time to time. The Company is not aware of any agreements between shareholders that may result in restrictions on the and fair view of the assets, liabilities, financial position and profit of the Group transfer of securities and/or voting rights. With regard to the deadline for exercising voting rights, votes are exercisable at a general meeting of • The Company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS the Company in respect of which the business being voted upon is being heard. Votes may be exercised in person, by proxy or, in relation to 101, give a true and fair view of the assets, liabilities and financial position of the Company corporate members, by corporate representatives. The Articles provide a deadline for submission of proxy forms of not less than 48 hours • The Strategic Report contained on pages 1 to 74 includes a fair review of the development and performance of the business and the position before the time appointed for the holding of the meeting or adjourned meeting. However, when calculating the 48-hour period, the Directors of the Group and Company, together with a description of the principal risks and uncertainties that it faces can, and have, decided not to take account of any part of a day that is not a working day. In accordance with the Disclosure Guidance and Transparency Rules (DTRs), Persons Discharging Managerial Responsibility are required to seek approval to deal in ITV shares. The Company In the case of each Director in office at the date the Directors’ Report is approved: is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities and/or voting rights. • So far as the Director is aware, there is no relevant audit information of which the Group’s and Company’s auditors are unaware Share schemes: Details of employee share schemes are set out in note 4.8 of the financial statements. The Company has an Employees’ • They have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information Benefit Trust (EBT) funded by loans to acquire shares for the potential benefit of employees. Details of shares held by the EBT as at and to establish that the Group’s and Company’s auditors are aware of that information 31 December 2023 are set out in note 4.8. During the year, shares have been released from the EBT in respect of share schemes for employees. The Trustee of the EBT has the power to exercise all voting rights in relation to any investment (including ordinary shares) held within the EBT. The Directors are responsible for preparing the Annual Report and Accounts and the financial statements in accordance with applicable law From 2023, awards granted under the Company’s Save As You Earn Scheme and the Executive Share Plan are met by the issue of new shares and regulation. when the options are exercised. Awards under the Deferred Share Award Plan will continue to be met by market purchase shares. The Company will monitor the number of shares issued under these schemes and the impact on dilution limits. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group financial statements in accordance with UK-adopted international accounting standards and the Company financial statements in Substantial shareholders: Information regarding interests in voting rights provided to the Company pursuant to the DTRs is published on a accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 Regulatory Information Service and on the Company’s website. ‘Reduced Disclosure Framework’, and applicable law). As at 7 March 2024, the information in the table below had been received, in accordance with DTR5, from holders of notifiable interests (voting Under company law, Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the rights) in the Company’s issued share capital. However, these holdings are likely to have changed since notified to the Company; notification of state of affairs of the Group and Company and of the profit or loss of the Group for that period. In preparing the financial statements, the any change is not required until the next applicable threshold is crossed. Directors are required to: • Select suitable accounting policies and then apply them consistently The number of shares is based on announcements made by each relevant shareholder using the Company’s issued share capital at that date. • State whether applicable UK-adopted international accounting standards have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the Company financial statements, subject to any % of % of Total number material departures disclosed and explained in the financial statements direct interest indirect interest of shares in shares in shares Total % held as notified • Make judgements and accounting estimates that are reasonable and prudent Ameriprise Financial, Inc and its group 5.08 0.05 5.12 206,179,898 • Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue Artemis Investment Management LLP 5.14 – 5.14 206,764,435 in business Liberty Global Incorporated Limited 9.90 – 9.90 398,515,510 RWC Asset Management LLP 5.67 – 5.67 228,339,000 The Directors are responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention Schroders plc 5.22 0.01 5.23 210,615,274 and detection of fraud and other irregularities. Silchester International Investors LLT – 5.00 5.00 202,667,604 The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006. The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. By order of the Board CHRIS KENNEDY GROUP CFO & COO 7 March 2024 ITV plc Registered Number: 4967001
146 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 147 DIRECTORS’ REPORT CONTINUED G O VE R NAN Shares Statement of Directors’ Responsibilities C Issued share capital: At the date of this report, there were 4,052,409,194 ordinary shares of 10 pence each in issue, all of which are fully The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the E paid up and quoted on the London Stock Exchange.information necessary for shareholders to assess the Group’s and Company’s position and performance, business model and strategy. Rights: The rights attaching to the Company’s ordinary shares are set out in the Articles of Association. There are no securities carrying Each of the Directors, whose names and functions are listed in the Board of Directors section on pages 77 to 78 confirm that, to the best of their special rights. knowledge: Restrictions: There are no restrictions on the transfer of ordinary shares in the capital of the Company other than those which may be • The Group financial statements, which have been prepared in accordance with UK-adopted international accounting standards, give a true imposed by law from time to time. The Company is not aware of any agreements between shareholders that may result in restrictions on the and fair view of the assets, liabilities, financial position and profit of the Group transfer of securities and/or voting rights. With regard to the deadline for exercising voting rights, votes are exercisable at a general meeting of • The Company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS the Company in respect of which the business being voted upon is being heard. Votes may be exercised in person, by proxy or, in relation to 101, give a true and fair view of the assets, liabilities and financial position of the Company corporate members, by corporate representatives. The Articles provide a deadline for submission of proxy forms of not less than 48 hours • The Strategic Report contained on pages 1 to 74 includes a fair review of the development and performance of the business and the position before the time appointed for the holding of the meeting or adjourned meeting. However, when calculating the 48-hour period, the Directors of the Group and Company, together with a description of the principal risks and uncertainties that it faces can, and have, decided not to take account of any part of a day that is not a working day. In accordance with the Disclosure Guidance and Transparency Rules (DTRs), Persons Discharging Managerial Responsibility are required to seek approval to deal in ITV shares. The Company In the case of each Director in office at the date the Directors’ Report is approved: is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities and/or voting rights.• So far as the Director is aware, there is no relevant audit information of which the Group’s and Company’s auditors are unaware Share schemes: Details of employee share schemes are set out in note 4.8 of the financial statements. The Company has an Employees’ • They have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information Benefit Trust (EBT) funded by loans to acquire shares for the potential benefit of employees. Details of shares held by the EBT as at and to establish that the Group’s and Company’s auditors are aware of that information 31 December 2023 are set out in note 4.8. During the year, shares have been released from the EBT in respect of share schemes for employees. The Trustee of the EBT has the power to exercise all voting rights in relation to any investment (including ordinary shares) held within the EBT. The Directors are responsible for preparing the Annual Report and Accounts and the financial statements in accordance with applicable law From 2023, awards granted under the Company’s Save As You Earn Scheme and the Executive Share Plan are met by the issue of new shares and regulation. when the options are exercised. Awards under the Deferred Share Award Plan will continue to be met by market purchase shares. The Company will monitor the number of shares issued under these schemes and the impact on dilution limits.Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group financial statements in accordance with UK-adopted international accounting standards and the Company financial statements in Substantial shareholders: Information regarding interests in voting rights provided to the Company pursuant to the DTRs is published on a accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 Regulatory Information Service and on the Company’s website.‘Reduced Disclosure Framework’, and applicable law). As at 7 March 2024, the information in the table below had been received, in accordance with DTR5, from holders of notifiable interests (voting Under company law, Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the rights) in the Company’s issued share capital. However, these holdings are likely to have changed since notified to the Company; notification of state of affairs of the Group and Company and of the profit or loss of the Group for that period. In preparing the financial statements, the any change is not required until the next applicable threshold is crossed. Directors are required to: • Select suitable accounting policies and then apply them consistently The number of shares is based on announcements made by each relevant shareholder using the Company’s issued share capital at that date.• State whether applicable UK-adopted international accounting standards have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the Company financial statements, subject to any % of % of Total number material departures disclosed and explained in the financial statements direct interest indirect interest of shares in sharesin sharesTotal % heldas notified• Make judgements and accounting estimates that are reasonable and prudent Ameriprise Financial, Inc and its group5.080.055.12206,179,898• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue Artemis Investment Management LLP5.14–5.14206,764,435in business Liberty Global Incorporated Limited9.90–9.90398,515,510 RWC Asset Management LLP5.67–5.67228,339,000The Directors are responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention Schroders plc5.220.015.23210,615,274and detection of fraud and other irregularities. Silchester International Investors LLT–5.005.00202,667,604 The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006. The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. By order of the Board CHRIS KENNEDY GROUP CFO & COO 7 March 2024 ITV plc Registered Number: 4967001
148 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 149 F I FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ITV PLC NAN C I AL In this The financial statements have been presented in a style that attempts to make them less complex and REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS S T section more relevant to shareholders and other stakeholders. We have grouped the note disclosures into five A T sections: ‘Basis of Preparation’, ‘Results for the Year’, ‘Operating Assets and Liabilities’, ‘Capital Structure Opinion E In our opinion: M and Financing Costs’ and ‘Other Notes’. Each section sets out the accounting policies applied in producing E • ITV plc’s Group financial statements and Company financial statements (the ‘financial statements’) give a true and fair view of the state N the relevant notes, along with details of any key judgements and estimates used. The purpose of this T format is to provide readers with a clearer understanding of what drives financial performance of the Group. of the Group’s and of the Company’s affairs as at 31 December 2023 and of the Group’s profit and the Group’s cash flows for the year S The aim of the text in boxes is to provide commentary on each section or note, in plain English. then ended • the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards as applied in accordance with the provisions of the Companies Act 2006 Keeping Notes to the financial statements provide information required by statute, accounting standards or Listing • the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting it simple Rules to explain a particular feature of the financial statements. The notes are a part of the financial statements and will also provide explanations and additional disclosure to assist readers’ understanding Practice (United Kingdom Accounting Standards, including FRS 101 ″Reduced Disclosure Framework″, and applicable law) and interpretation of the Annual Report and the financial statements. • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 We have audited the financial statements, included within the Annual Report and Accounts 2023 (the ″Annual Report″), which comprise: the Contents Consolidated and Company Statements of Financial Position as at 31 December 2023; the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Changes in Equity; and the Independent Auditors’ Report to the members of ITV plc 149 Consolidated Statement of Cash Flows for the year then ended; and the notes to the financial statements, comprising material accounting Primary Statements 156 policy information and other explanatory information. Consolidated Income Statement 156 Consolidated Statement of Comprehensive Income 157 Our opinion is consistent with our reporting to the Audit and Risk Committee. Consolidated Statement of Financial Position 158 Consolidated Statement of Changes in Equity 159 Basis for opinion Consolidated Statement of Cash Flows 161 We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities Section 1: Basis of Preparation 162 under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Section 2: Results for the Year 166 2.1 Profit before tax 166 Independence 2.2 Exceptional items 172 We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial 2.3 Taxation 174 statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our 2.4 Earnings per share 178 other ethical responsibilities in accordance with these requirements. Section 3: Operating Assets and Liabilities 180 To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided. 3.1 Working capital 180 3.2 Property, plant and equipment 185 Other than those disclosed in Note 2.1 ‘Profit Before Tax’, we have provided no non-audit services to the Company or its controlled 3.3 Intangible assets 187 undertakings in the period under audit. 3.4 Assets classified as held for sale 192 3.5 Investments 193 Our audit approach 3.6 Provisions 194 Overview 3.7 Pensions 196 Audit scope Section 4: Capital Structure and Financing Costs 205 • We performed full scope audit procedures over eight components, covering components in the UK, the USA and the Netherlands 4.1 Net debt 205 • Additionally, we performed a financial statement line item audit over six large balances across four components 4.2 Borrowings 207 • Taken together, the entities over which audit work was performed accounted for 79% of the Group’s external revenue and 78% of the 4.3 Managing market risks: derivative financial instruments 209 Group’s absolute profit before tax and operating exceptional items 4.4 Net financing costs 218 Key audit matters 4.5 Fair value hierarchy 219 • Valuation of gross defined benefit pension scheme obligations (Group) 4.6 Lease liabilities 221 • Valuation of complex pension scheme assets (Group) 4.7 Equity 222 • Presentation of exceptional items, including valuation of the Box Clever provision (Group) 4.8 Share-based compensation 223 • Recoverability of investments (Company) Section 5: Other Notes 225 5.1 Related party transactions 225 Materiality 5.2 Contingent assets and liabilities 226 • Overall Group materiality: £23.5 million (2022: £28.2 million) based on 5% of the three-year average Group profit before tax adjusted to 5.3 Subsequent events 226 exclude operating exceptional items 5.4 Subsidiaries exempt from audit 227 • Overall Company materiality: £71.0 million (2022: £ 64.9 million) based on 1% of the Company’s total assets • Performance materiality: £17.5 million (2022: £ 21.1 million) (Group) and £53.3 million (2022: £48.6 million) (Company) ITV plc Company Financial Statements 229 Notes to the ITV plc Company Financial Statements 231 The scope of our audit nancial statements. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the fi
148 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 149 F I FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ITV PLC NAN C I AL In this The financial statements have been presented in a style that attempts to make them less complex and REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS S T section more relevant to shareholders and other stakeholders. We have grouped the note disclosures into five A T sections: ‘Basis of Preparation’, ‘Results for the Year’, ‘Operating Assets and Liabilities’, ‘Capital Structure Opinion E In our opinion: M and Financing Costs’ and ‘Other Notes’. Each section sets out the accounting policies applied in producing E • ITV plc’s Group financial statements and Company financial statements (the ‘financial statements’) give a true and fair view of the state N the relevant notes, along with details of any key judgements and estimates used. The purpose of this T format is to provide readers with a clearer understanding of what drives financial performance of the Group. of the Group’s and of the Company’s affairs as at 31 December 2023 and of the Group’s profit and the Group’s cash flows for the year S The aim of the text in boxes is to provide commentary on each section or note, in plain English. then ended • the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards as applied in accordance with the provisions of the Companies Act 2006 Keeping Notes to the financial statements provide information required by statute, accounting standards or Listing • the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting it simple Rules to explain a particular feature of the financial statements. The notes are a part of the financial statements and will also provide explanations and additional disclosure to assist readers’ understanding Practice (United Kingdom Accounting Standards, including FRS 101 ″Reduced Disclosure Framework″, and applicable law) and interpretation of the Annual Report and the financial statements. • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 We have audited the financial statements, included within the Annual Report and Accounts 2023 (the ″Annual Report″), which comprise: the Contents Consolidated and Company Statements of Financial Position as at 31 December 2023; the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Changes in Equity; and the Independent Auditors’ Report to the members of ITV plc 149 Consolidated Statement of Cash Flows for the year then ended; and the notes to the financial statements, comprising material accounting Primary Statements 156 policy information and other explanatory information. Consolidated Income Statement 156 Consolidated Statement of Comprehensive Income 157 Our opinion is consistent with our reporting to the Audit and Risk Committee. Consolidated Statement of Financial Position 158 Consolidated Statement of Changes in Equity 159 Basis for opinion Consolidated Statement of Cash Flows 161 We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities Section 1: Basis of Preparation 162 under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Section 2: Results for the Year 166 2.1 Profit before tax 166 Independence 2.2 Exceptional items 172 We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial 2.3 Taxation 174 statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our 2.4 Earnings per share 178 other ethical responsibilities in accordance with these requirements. Section 3: Operating Assets and Liabilities 180 To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided. 3.1 Working capital 180 3.2 Property, plant and equipment 185 Other than those disclosed in Note 2.1 ‘Profit Before Tax’, we have provided no non-audit services to the Company or its controlled 3.3 Intangible assets 187 undertakings in the period under audit. 3.4 Assets classified as held for sale 192 3.5 Investments 193 Our audit approach 3.6 Provisions 194 Overview 3.7 Pensions 196 Audit scope Section 4: Capital Structure and Financing Costs 205 • We performed full scope audit procedures over eight components, covering components in the UK, the USA and the Netherlands 4.1 Net debt 205 • Additionally, we performed a financial statement line item audit over six large balances across four components 4.2 Borrowings 207 • Taken together, the entities over which audit work was performed accounted for 79% of the Group’s external revenue and 78% of the 4.3 Managing market risks: derivative financial instruments 209 Group’s absolute profit before tax and operating exceptional items 4.4 Net financing costs 218 Key audit matters 4.5 Fair value hierarchy 219 • Valuation of gross defined benefit pension scheme obligations (Group) 4.6 Lease liabilities 221 • Valuation of complex pension scheme assets (Group) 4.7 Equity 222 • Presentation of exceptional items, including valuation of the Box Clever provision (Group) 4.8 Share-based compensation 223 • Recoverability of investments (Company) Section 5: Other Notes 225 5.1 Related party transactions 225 Materiality 5.2 Contingent assets and liabilities 226 • Overall Group materiality: £23.5 million (2022: £28.2 million) based on 5% of the three-year average Group profit before tax adjusted to 5.3 Subsequent events 226 exclude operating exceptional items 5.4 Subsidiaries exempt from audit 227 • Overall Company materiality: £71.0 million (2022: £ 64.9 million) based on 1% of the Company’s total assets • Performance materiality: £17.5 million (2022: £ 21.1 million) (Group) and £53.3 million (2022: £48.6 million) (Company) ITV plc Company Financial Statements 229 Notes to the ITV plc Company Financial Statements 231 The scope of our audit nancial statements. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the fi
150 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 151 F I INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ITV PLC NAN CONTINUED C I AL Key audit matters Key audit matter How our audit addressed the key audit matter S T Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial A Presentation of exceptional items, including valuation of the Box Clever provision (Group) T statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) E M identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; Refer to notes 2.2 and 3.6 in the financial statements. The Group We substantiated a sample of exceptional items to corroborating E N and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, recorded significant exceptional items of £77 million (2022: evidence. We assessed management’s rationale for the designation T were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide £65 million) which were included on the face of the Consolidated of certain items as exceptional against the Group’s policy, S a separate opinion on these matters. Income Statement and disclosed within the Annual Report. considering the nature and impact of these items. We assessed the The presentation of items as exceptional can be judgemental appropriateness and completeness of the disclosures included in This is not a complete list of all risks identified by our audit. and have a significant impact on the readers of the financial the Group financial statements and the levels of equal prominence Recoverability of investments is a new key audit matter this year for the Company. Recoverability of amounts owed by subsidiary statements. Due to the quantum and number of exceptional of GAAP and non-GAAP measures within the Annual Report. undertakings, which was a key audit matter last year, is no longer included because of the increased focus on the impairment assessment items in the year, we focused on the presentation of these Specifically, with respect to the Box Clever provision, we enquired associated with the investment carrying value as a result of the performance in the year. Otherwise, the key audit matters below are items to ensure they were treated consistently with the Group’s of management and their external legal counsel on the latest consistent with last year. accounting policy. The Group had recorded a provision of status of the dispute and their views as to the most likely outcome, £52 million (2022: £52 million) for the liability that might arise including the form and quantum of any potential settlement. Key audit matter How our audit addressed the key audit matter as a result of the Box Clever Financial Support Directions issued by We assessed the basis for management’s estimate of the provision, the Pensions Regulator, which is unchanged since the prior year. and utilised our in-house actuarial experts to evaluate whether the Valuation of gross defined benefit pension scheme obligations (Group) There is continued uncertainty as to the quantum of the amount for which ITV may be liable. assumptions and methodology used in estimating the deficit Refer to note 3.7 in the financial statements. The Group had gross We utilised our in-house actuarial experts to evaluate whether the amounts were reasonable. defined benefit scheme obligations of £2,194 million (2022: £2,292 assumptions and methodology used in calculating the defined million) recognised at 31 December 2023, which are significant in the benefit obligations were reasonable by: We noted that consistent assumptions were used for the ITV context of the overall Consolidated Statement of Financial Position. pension arrangements, all of which were in our acceptable ranges. The valuation of defined benefit pension scheme obligations involves • Assessing whether the mortality rate and other demographic We noted that there remains a significant amount of uncertainty the exercise of judgement and technical expertise in choosing assumptions were reasonable based on the consideration of the related to this matter including the timing, amount and form of appropriate actuarial assumptions such as the discount rate, inflation, specifics of each plan and industry benchmarks settlement. We therefore reviewed the disclosures to ensure they and mortality rates. Management engaged external actuarial experts • Evaluating the appropriateness of the discount and inflation rate provide appropriate details on the developments and the range of to assist in selecting appropriate assumptions and to calculate the assumptions by assessing the methodology used to set them possible outcomes. schemes’ liabilities. and comparing the assumptions against our internal acceptable ranges set based on market data Based on our procedures, we were satisfied that the treatment and • Reviewing the methodology and actuarial models used by external classification of exceptional items is consistent with the Group’s actuaries to assess their appropriateness and testing the policy, and the Annual Report disclosures, including the Box Clever Consolidated Statement of Financial Position liability and matter, are appropriate. movements over the year Recoverability of investments (Company) Based on our procedures, we concluded that the key assumptions utilised lay within acceptable ranges, the methodology used to Refer to Note iii in the Company financial statements. At 31 December We performed the following procedures: calculate the liability was appropriate, and that the liability 2023 the Company held investments in subsidiaries with a carrying • Understood the basis of preparation of the forecasts calculation had not been materially misstated. We assessed the value of £3,224 million (2022: £3,224 million). The fall in market • Ensured the model used is consistent with the forecast and related disclosures included in the Group financial statements capitalisation below the carrying value of the investments at assumptions used elsewhere in the business (including the and consider them to be appropriate. 31 December 2023 is considered to be an impairment indicator and, goodwill impairment assessment and going concern) as a result, management performed an impairment assessment. • Supported by PwC valuations experts, we reviewed and challenged Valuation of complex pension scheme assets (Group) Management prepared a Value in Use (‘VIU’) model which includes judgements regarding the future cash flows of the Group. management’s independent discount rate and terminal growth Refer to note 3.7 in the financial statements. The Group had gross We obtained independent confirmations from the investment The model is based on the first three years of the Board approved rate for appropriateness defined benefit scheme assets of £2,355 million (2022: £2,437 million) managers to confirm the valuation of the scheme assets at the five year plan and incorporates a terminal growth rate into • Completed mathematical accuracy checks over the model recognised at 31 December 2023, which are significant in the Consolidated Statement of Financial Position date. perpetuity. Through this assessment, management identified that • Based on our procedures we are satisfied that the carrying value context of the overall Consolidated Statement of Financial Position. We understood management’s processes and controls for the VIU of the trading entities exceeded the carrying value of the of the investments is supportable The valuations of complex pension scheme assets such as Pooled monitoring and review of complex asset valuations. We specifically Company’s investments, therefore concluding that no impairment We also evaluated the disclosures in Note iii Investments in Investment Vehicles (‘PIVs’), property investments and longevity instructed our in-house valuations experts to consider whether the was required. subsidiary undertakings, which we consider to be appropriate. swaps are inherently subjective. As such, there is judgement in assumptions and methodology used in valuing the assets were determining the fair value of the assets including the selection reasonable in relation to the longevity swap contract. of appropriate valuation methodologies and other assumptions. How we tailored the audit scope Given the judgement and the quantum of these assets, this is a For complex PIVs, we also requested and reviewed third party We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a heightened area of audit risk. investment manager controls reports, details of any transactions whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which close to the year end, and details of the latest audited financial they operate. statements, to determine whether there were any inconsistencies with the year end values being attributed. The Group is organised and managed across three divisions: Media & Entertainment (M&E), ITV Studios and Central Services. Within the M&E and Studios divisions, given the shared systems and controls environment in the UK, we identified each individual UK business as Based on the procedures performed, we noted no material issues a component. Outside of this, we identified each component at an individual entity level. arising from our work. Based on our risk and materiality assessments, we determined which components required an audit of their complete financial information having consideration to the relative significance of each component to the Group, and the overall coverage obtained over each material line item in the consolidated financial statements. Due to their high concentration of the Group’s overall profit before tax and operating exceptional items, we identified two financially significant components, M&E and UK Studios, which, in our view, required an audit of their complete financial information. We identified an additional six components (inclusive of the Company) as requiring a complete audit in order to achieve the required coverage in respect of each material line item in the financial statements. To further supplement this coverage, an audit over specific line items was performed over six large balances across four components, due to their overall size and in order to achieve the required coverage over these specific financial statement line items. Audit work over the UK components and the large balances were performed by the UK Group engagement team in addition to central procedures over tax, treasury, legal claims, defined benefit pension schemes, pension assets, impairment assessments, going concern and consolidation adjustments. Audit procedures over three components were performed by other PwC network firms in the Netherlands and the USA.
150 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 151 F I INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ITV PLC NAN CONTINUED C I AL Key audit matters Key audit matter How our audit addressed the key audit matter S T Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial A Presentation of exceptional items, including valuation of the Box Clever provision (Group) T statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) E M identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; Refer to notes 2.2 and 3.6 in the financial statements. The Group We substantiated a sample of exceptional items to corroborating E N and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, recorded significant exceptional items of £77 million (2022: evidence. We assessed management’s rationale for the designation T were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide £65 million) which were included on the face of the Consolidated of certain items as exceptional against the Group’s policy, S a separate opinion on these matters. Income Statement and disclosed within the Annual Report. considering the nature and impact of these items. We assessed the The presentation of items as exceptional can be judgemental appropriateness and completeness of the disclosures included in This is not a complete list of all risks identified by our audit. and have a significant impact on the readers of the financial the Group financial statements and the levels of equal prominence Recoverability of investments is a new key audit matter this year for the Company. Recoverability of amounts owed by subsidiary statements. Due to the quantum and number of exceptional of GAAP and non-GAAP measures within the Annual Report. undertakings, which was a key audit matter last year, is no longer included because of the increased focus on the impairment assessment items in the year, we focused on the presentation of these Specifically, with respect to the Box Clever provision, we enquired associated with the investment carrying value as a result of the performance in the year. Otherwise, the key audit matters below are items to ensure they were treated consistently with the Group’s of management and their external legal counsel on the latest consistent with last year. accounting policy. The Group had recorded a provision of status of the dispute and their views as to the most likely outcome, £52 million (2022: £52 million) for the liability that might arise including the form and quantum of any potential settlement. Key audit matter How our audit addressed the key audit matter as a result of the Box Clever Financial Support Directions issued by We assessed the basis for management’s estimate of the provision, the Pensions Regulator, which is unchanged since the prior year. and utilised our in-house actuarial experts to evaluate whether the Valuation of gross defined benefit pension scheme obligations (Group) There is continued uncertainty as to the quantum of the amount for which ITV may be liable. assumptions and methodology used in estimating the deficit Refer to note 3.7 in the financial statements. The Group had gross We utilised our in-house actuarial experts to evaluate whether the amounts were reasonable. defined benefit scheme obligations of £2,194 million (2022: £2,292 assumptions and methodology used in calculating the defined million) recognised at 31 December 2023, which are significant in the benefit obligations were reasonable by: We noted that consistent assumptions were used for the ITV context of the overall Consolidated Statement of Financial Position. pension arrangements, all of which were in our acceptable ranges. The valuation of defined benefit pension scheme obligations involves • Assessing whether the mortality rate and other demographic We noted that there remains a significant amount of uncertainty the exercise of judgement and technical expertise in choosing assumptions were reasonable based on the consideration of the related to this matter including the timing, amount and form of appropriate actuarial assumptions such as the discount rate, inflation, specifics of each plan and industry benchmarks settlement. We therefore reviewed the disclosures to ensure they and mortality rates. Management engaged external actuarial experts • Evaluating the appropriateness of the discount and inflation rate provide appropriate details on the developments and the range of to assist in selecting appropriate assumptions and to calculate the assumptions by assessing the methodology used to set them possible outcomes. schemes’ liabilities. and comparing the assumptions against our internal acceptable ranges set based on market data Based on our procedures, we were satisfied that the treatment and • Reviewing the methodology and actuarial models used by external classification of exceptional items is consistent with the Group’s actuaries to assess their appropriateness and testing the policy, and the Annual Report disclosures, including the Box Clever Consolidated Statement of Financial Position liability and matter, are appropriate. movements over the year Recoverability of investments (Company) Based on our procedures, we concluded that the key assumptions utilised lay within acceptable ranges, the methodology used to Refer to Note iii in the Company financial statements. At 31 December We performed the following procedures: calculate the liability was appropriate, and that the liability 2023 the Company held investments in subsidiaries with a carrying • Understood the basis of preparation of the forecasts calculation had not been materially misstated. We assessed the value of £3,224 million (2022: £3,224 million). The fall in market • Ensured the model used is consistent with the forecast and related disclosures included in the Group financial statements capitalisation below the carrying value of the investments at assumptions used elsewhere in the business (including the and consider them to be appropriate. 31 December 2023 is considered to be an impairment indicator and, goodwill impairment assessment and going concern) as a result, management performed an impairment assessment. • Supported by PwC valuations experts, we reviewed and challenged Valuation of complex pension scheme assets (Group) Management prepared a Value in Use (‘VIU’) model which includes judgements regarding the future cash flows of the Group. management’s independent discount rate and terminal growth Refer to note 3.7 in the financial statements. The Group had gross We obtained independent confirmations from the investment The model is based on the first three years of the Board approved rate for appropriateness defined benefit scheme assets of £2,355 million (2022: £2,437 million) managers to confirm the valuation of the scheme assets at the five year plan and incorporates a terminal growth rate into • Completed mathematical accuracy checks over the model recognised at 31 December 2023, which are significant in the Consolidated Statement of Financial Position date. perpetuity. Through this assessment, management identified that • Based on our procedures we are satisfied that the carrying value context of the overall Consolidated Statement of Financial Position. We understood management’s processes and controls for the VIU of the trading entities exceeded the carrying value of the of the investments is supportable The valuations of complex pension scheme assets such as Pooled monitoring and review of complex asset valuations. We specifically Company’s investments, therefore concluding that no impairment We also evaluated the disclosures in Note iii Investments in Investment Vehicles (‘PIVs’), property investments and longevity instructed our in-house valuations experts to consider whether the was required. subsidiary undertakings, which we consider to be appropriate. swaps are inherently subjective. As such, there is judgement in assumptions and methodology used in valuing the assets were determining the fair value of the assets including the selection reasonable in relation to the longevity swap contract. of appropriate valuation methodologies and other assumptions. How we tailored the audit scope Given the judgement and the quantum of these assets, this is a For complex PIVs, we also requested and reviewed third party We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a heightened area of audit risk. investment manager controls reports, details of any transactions whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which close to the year end, and details of the latest audited financial they operate. statements, to determine whether there were any inconsistencies with the year end values being attributed. The Group is organised and managed across three divisions: Media & Entertainment (M&E), ITV Studios and Central Services. Within the M&E and Studios divisions, given the shared systems and controls environment in the UK, we identified each individual UK business as Based on the procedures performed, we noted no material issues a component. Outside of this, we identified each component at an individual entity level. arising from our work. Based on our risk and materiality assessments, we determined which components required an audit of their complete financial information having consideration to the relative significance of each component to the Group, and the overall coverage obtained over each material line item in the consolidated financial statements. Due to their high concentration of the Group’s overall profit before tax and operating exceptional items, we identified two financially significant components, M&E and UK Studios, which, in our view, required an audit of their complete financial information. We identified an additional six components (inclusive of the Company) as requiring a complete audit in order to achieve the required coverage in respect of each material line item in the financial statements. To further supplement this coverage, an audit over specific line items was performed over six large balances across four components, due to their overall size and in order to achieve the required coverage over these specific financial statement line items. Audit work over the UK components and the large balances were performed by the UK Group engagement team in addition to central procedures over tax, treasury, legal claims, defined benefit pension schemes, pension assets, impairment assessments, going concern and consolidation adjustments. Audit procedures over three components were performed by other PwC network firms in the Netherlands and the USA.
152 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 153 F I INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ITV PLC NAN CONTINUED C I AL Where the work was performed by component audit teams, we determined the level of involvement we needed to have in the audit work at Conclusions relating to going concern S T those components to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Our evaluation of the Directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of A T Group financial statements as a whole. Our oversight procedures included the issuance of formal, written instructions to component auditors E accounting included: M setting out the work to be performed and regular communication throughout the audit cycle including regular component calls and a site visit • A critical assessment of management’s base case and downside scenarios, challenging and obtaining corroborating evidence for the E N to the component team in the Netherlands, review of component auditor work papers and participation in audit clearance meetings. key assumptions, and verifying that the forecasts have been subject to board review and approval T • Examining the Group’s available financing, including related covenants, and maturity profile to assess liquidity through the assessment S Taken together, the components where we performed our audit work accounted for 79% of the Group’s external revenue, and 78% of the period Group’s absolute profit before tax and operating exceptional items. This was before considering the contribution to our audit evidence from • Reviewing the key inputs into the model management used to develop their scenarios to ensure that these were consistent with our performing audit work at the Group level, including disaggregated analytical review procedures, which covers a significant portion of the understanding and the inputs used in other key accounting judgements in the financial statements such as impairment Group’s smaller and lower risk components that were not directly included in our Group audit scope. • Assessing the historical reliability of management forecasting by comparing budgeted results to actual performance Our audit of the Company financial statements included substantive procedures over all material balances and transactions. • Performing our own independent sensitivity analysis to assess appropriate downside scenarios The impact of climate risk on our audit Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually As part of our audit, we made enquiries of management to understand the process to assess the extent of the potential impact of climate or collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern for a period of at least change risks on the Group and its financial statements. The Group explains the impact of climate change on its business within the ‘Climate twelve months from when the financial statements are authorised for issue. Related Financial Disclosures’ section of the Strategic Report. Management’s assessment considered the climate-related risks disclosed in In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation the Annual Report including the impact of changes in the advertising sector, increased costs in the transition to a low carbon world and the of the financial statements is appropriate. resilience of productions to extreme weather events. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the As disclosed within the basis of preparation section of the financial statements, management considered that the impact of climate change Company’s ability to continue as a going concern. does not give rise to a material financial statement impact. In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw In response, we used our understanding of the Group to evaluate management’s assessment; in particular, we considered how climate attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to change risks, both physical and transitional, would impact the assumptions made in the forecasts prepared by management used in the adopt the going concern basis of accounting. impairment analysis and in the going concern and viability assessments. We did not identify any matters as part of this work which were inconsistent with the disclosures in the Annual Report or led to any material adjustments to the accounts. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. We also read the disclosures made in relation to climate change in the other information within the Annual Report, and considered their consistency with the financial statements and our knowledge from our audit. Our responsibility over other information is further described Reporting on other information in the ‘Reporting on other information’ section of our report. The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report Materiality thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other materiality. These, information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit of assurance thereon. procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether and in aggregate on the financial statements as a whole. the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. Financial statements – Group Financial statements – Company If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to Overall materiality £23.5 million (2022: £28.2 million) £71.0 million (2022: £ 64.9 million) report that fact. We have nothing to report based on these responsibilities. How we determined it 5% of the three-year average Group profit 1% of the Company’s total assets With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies before tax adjusted to exclude operating Act 2006 have been included. exceptional items Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters Rationale for benchmark applied We consider the most appropriate benchmark Balances and transactions that eliminate as described below. on which to calculate materiality is the Group’s upon consolidation were audited to a higher adjusted profit before tax adjusted to exclude materiality. We considered a total asset Strategic Report and Directors’ Report operating exceptional items as it is one of the measure to reflect the nature of the In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report key indicators of financial performance of the Company, which primarily acts as a holding for the year ended 31 December 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal Group. We use a three year average due to the Company for the Group’s investments. requirements. volatility of earnings. In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of identify any material misstatements in the Strategic Report and Directors’ Report. materiality allocated across components was between £4.3 million and £20.0 million. Directors’ Remuneration We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected In our opinion, the part of the Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the Corporate Governance Statement nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to £17.5 million (2022: £ 21.1 million) for the Group The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that part of the financial statements and £53.3 million (2022: £48.6 million) for the Company financial statements. Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the Corporate Governance Statement as other information are In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and described in the Reporting on other information section of this report. aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above £1.1 million (Group and Company audit) (2022: £1.4 million) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
152 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 153 F I INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ITV PLC NAN CONTINUED C I AL Where the work was performed by component audit teams, we determined the level of involvement we needed to have in the audit work at Conclusions relating to going concern S T those components to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Our evaluation of the Directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of A T Group financial statements as a whole. Our oversight procedures included the issuance of formal, written instructions to component auditors E accounting included: M setting out the work to be performed and regular communication throughout the audit cycle including regular component calls and a site visit • A critical assessment of management’s base case and downside scenarios, challenging and obtaining corroborating evidence for the E N to the component team in the Netherlands, review of component auditor work papers and participation in audit clearance meetings. key assumptions, and verifying that the forecasts have been subject to board review and approval T • Examining the Group’s available financing, including related covenants, and maturity profile to assess liquidity through the assessment S Taken together, the components where we performed our audit work accounted for 79% of the Group’s external revenue, and 78% of the period Group’s absolute profit before tax and operating exceptional items. This was before considering the contribution to our audit evidence from • Reviewing the key inputs into the model management used to develop their scenarios to ensure that these were consistent with our performing audit work at the Group level, including disaggregated analytical review procedures, which covers a significant portion of the understanding and the inputs used in other key accounting judgements in the financial statements such as impairment Group’s smaller and lower risk components that were not directly included in our Group audit scope. • Assessing the historical reliability of management forecasting by comparing budgeted results to actual performance Our audit of the Company financial statements included substantive procedures over all material balances and transactions. • Performing our own independent sensitivity analysis to assess appropriate downside scenarios The impact of climate risk on our audit Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually As part of our audit, we made enquiries of management to understand the process to assess the extent of the potential impact of climate or collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern for a period of at least change risks on the Group and its financial statements. The Group explains the impact of climate change on its business within the ‘Climate twelve months from when the financial statements are authorised for issue. Related Financial Disclosures’ section of the Strategic Report. Management’s assessment considered the climate-related risks disclosed in In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation the Annual Report including the impact of changes in the advertising sector, increased costs in the transition to a low carbon world and the of the financial statements is appropriate. resilience of productions to extreme weather events. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the As disclosed within the basis of preparation section of the financial statements, management considered that the impact of climate change Company’s ability to continue as a going concern. does not give rise to a material financial statement impact. In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw In response, we used our understanding of the Group to evaluate management’s assessment; in particular, we considered how climate attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to change risks, both physical and transitional, would impact the assumptions made in the forecasts prepared by management used in the adopt the going concern basis of accounting. impairment analysis and in the going concern and viability assessments. We did not identify any matters as part of this work which were inconsistent with the disclosures in the Annual Report or led to any material adjustments to the accounts. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. We also read the disclosures made in relation to climate change in the other information within the Annual Report, and considered their consistency with the financial statements and our knowledge from our audit. Our responsibility over other information is further described Reporting on other information in the ‘Reporting on other information’ section of our report. The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report Materiality thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other materiality. These, information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit of assurance thereon. procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether and in aggregate on the financial statements as a whole. the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. Financial statements – Group Financial statements – Company If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to Overall materiality £23.5 million (2022: £28.2 million) £71.0 million (2022: £ 64.9 million) report that fact. We have nothing to report based on these responsibilities. How we determined it 5% of the three-year average Group profit 1% of the Company’s total assets With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies before tax adjusted to exclude operating Act 2006 have been included. exceptional items Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters Rationale for benchmark applied We consider the most appropriate benchmark Balances and transactions that eliminate as described below. on which to calculate materiality is the Group’s upon consolidation were audited to a higher adjusted profit before tax adjusted to exclude materiality. We considered a total asset Strategic Report and Directors’ Report operating exceptional items as it is one of the measure to reflect the nature of the In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report key indicators of financial performance of the Company, which primarily acts as a holding for the year ended 31 December 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal Group. We use a three year average due to the Company for the Group’s investments. requirements. volatility of earnings. In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of identify any material misstatements in the Strategic Report and Directors’ Report. materiality allocated across components was between £4.3 million and £20.0 million. Directors’ Remuneration We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected In our opinion, the part of the Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the Corporate Governance Statement nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to £17.5 million (2022: £ 21.1 million) for the Group The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that part of the financial statements and £53.3 million (2022: £48.6 million) for the Company financial statements. Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the Corporate Governance Statement as other information are In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and described in the Reporting on other information section of this report. aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above £1.1 million (Group and Company audit) (2022: £1.4 million) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
154 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 155 F I INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ITV PLC NAN CONTINUED C I AL Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance S T Statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not A T to add or draw attention to in relation to: detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve E M deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. E N • The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks T • The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. S explanation of how these are being managed or mitigated However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to • The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a accounting in preparing them, and their identification of any material uncertainties to the Group’s and Company’s ability to continue to do conclusion about the population from which the sample is selected. so over a period of at least twelve months from the date of approval of the financial statements • The Directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment covers and why A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: the period is appropriate www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors’ Report. • The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and Use of this report meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of qualifications or assumptions Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any Our review of the Directors’ statement regarding the longer-term viability of the Group and Company was substantially less in scope than an 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 audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the statement prior consent in writing. is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the Group and Company and their environment obtained in the course of OTHER REQUIRED REPORTING the audit. Companies Act 2006 exception reporting we have concluded that each of the following elements of the corporate Under the Companies Act 2006 we are required to report to you if, in our opinion: In addition, based on the work undertaken as part of our audit, governance statement is materially consistent with the financial statements and our knowledge obtained during the audit: • we have not obtained all the information and explanations we require for our audit or • The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from information necessary for the members to assess the Group’s and Company’s position, performance, business model and strategy branches not visited by us or • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems • certain disclosures of Directors’ remuneration specified by law are not made or • The section of the Annual Report describing the work of the Audit and Risk Committee • the Company financial statements and the part of the Remuneration Report to be audited are not in agreement with the accounting records and returns We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by We have no exceptions to report arising from this responsibility. the auditors. Appointment Responsibilities for the financial statements and the audit Following the recommendation of the Audit and Risk Committee, we were appointed by the members on 29 April 2021 to audit the Responsibilities of the Directors for the financial statements financial statements for the year ended 31 December 2021 and subsequent financial periods. The period of total uninterrupted engagement As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial is three years, covering the years ended 31 December 2021 to 31 December 2023. statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also OTHER MATTER responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the the annual financial report will be prepared using the single electronic format specified in the ESEF RTS. Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, Jonathan Lambert (Senior Statutory Auditor) whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, for and on behalf of PricewaterhouseCoopers LLP but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Chartered Accountants and Statutory Auditors Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be London expected to influence the economic decisions of users taken on the basis of these financial statements. 7 March 2024 Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to competition law, data privacy, broadcasting and media regulations and UK Listing Rules, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and tax legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate the financial performance of the Group and management bias in accounting estimates. The Group engagement team shared this risk assessment with the component auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the Group engagement team and/or component auditors included: • Enquiry of management, those charged with governance and the Group’s internal and external legal counsel around actual and potential fraud and non-compliance with laws and regulations • Discussion with external lawyers regarding significant legal matters • Enquiry of tax and compliance functions to identify any instances of non-compliance with laws and regulations • Challenging assumptions made by management in determining their significant judgements and accounting estimates (refer to key audit matters) • Identifying and testing journal entries, in particular journal entries posted with unusual account combinations • Reviewing financial statement disclosures and testing to supporting documentation
154 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 155 F I INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ITV PLC NAN CONTINUED C I AL Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance S T Statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not A T to add or draw attention to in relation to: detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve E M deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. E N • The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks T • The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. S explanation of how these are being managed or mitigated However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to • The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a accounting in preparing them, and their identification of any material uncertainties to the Group’s and Company’s ability to continue to do conclusion about the population from which the sample is selected. so over a period of at least twelve months from the date of approval of the financial statements • The Directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment covers and why A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: the period is appropriate www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors’ Report. • The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and Use of this report meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of qualifications or assumptions Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any Our review of the Directors’ statement regarding the longer-term viability of the Group and Company was substantially less in scope than an 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 audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the statement prior consent in writing. is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the Group and Company and their environment obtained in the course of OTHER REQUIRED REPORTING the audit. Companies Act 2006 exception reporting we have concluded that each of the following elements of the corporate Under the Companies Act 2006 we are required to report to you if, in our opinion: In addition, based on the work undertaken as part of our audit, governance statement is materially consistent with the financial statements and our knowledge obtained during the audit: • we have not obtained all the information and explanations we require for our audit or • The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from information necessary for the members to assess the Group’s and Company’s position, performance, business model and strategy branches not visited by us or • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems • certain disclosures of Directors’ remuneration specified by law are not made or • The section of the Annual Report describing the work of the Audit and Risk Committee • the Company financial statements and the part of the Remuneration Report to be audited are not in agreement with the accounting records and returns We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by We have no exceptions to report arising from this responsibility. the auditors. Appointment Responsibilities for the financial statements and the audit Following the recommendation of the Audit and Risk Committee, we were appointed by the members on 29 April 2021 to audit the Responsibilities of the Directors for the financial statements financial statements for the year ended 31 December 2021 and subsequent financial periods. The period of total uninterrupted engagement As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial is three years, covering the years ended 31 December 2021 to 31 December 2023. statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also OTHER MATTER responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the the annual financial report will be prepared using the single electronic format specified in the ESEF RTS. Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, Jonathan Lambert (Senior Statutory Auditor) whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, for and on behalf of PricewaterhouseCoopers LLP but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Chartered Accountants and Statutory Auditors Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be London expected to influence the economic decisions of users taken on the basis of these financial statements. 7 March 2024 Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to competition law, data privacy, broadcasting and media regulations and UK Listing Rules, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and tax legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate the financial performance of the Group and management bias in accounting estimates. The Group engagement team shared this risk assessment with the component auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the Group engagement team and/or component auditors included: • Enquiry of management, those charged with governance and the Group’s internal and external legal counsel around actual and potential fraud and non-compliance with laws and regulations • Discussion with external lawyers regarding significant legal matters • Enquiry of tax and compliance functions to identify any instances of non-compliance with laws and regulations • Challenging assumptions made by management in determining their significant judgements and accounting estimates (refer to key audit matters) • Identifying and testing journal entries, in particular journal entries posted with unusual account combinations • Reviewing financial statement disclosures and testing to supporting documentation
156 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 157 F I CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME NAN C I AL 2023 2022 2023 2022 S For the year ended 31 December Note £m £m For the year ended 31 December Note £m £m T A T Revenue 2.1 3,624 3,728 Profit for the year 209 435 E M Operating costs 2.1 (3,386) (3,209) E N Operating profit 238 519 Other comprehensive (expense)/income: T Items that are or may be reclassified to profit or loss S Presented as: Revaluation of financial assets 4.7.4 (1) (19) Earnings before interest, tax and amortisation (EBITA) before exceptional items 2.1 404 668 Net gain/(loss) on cash flow hedges and costs of hedging 4.7.3 12 (2) Operating exceptional items 2.2 (77) (65) Exchange differences on translation of foreign operations 4.7.3 (42) 75 Amortisation and impairment 3.3, 3.5 (89) (84) Income tax (charge)/credit on items that may be reclassified to profit or loss 2.3 (3) 6 Operating profit 238 519 Items that will never be reclassified to profit or loss Remeasurement (losses)/gains on defined benefit pension schemes 3.7 (35) 80 Financing income 4.4 25 13 Income tax credit/(charge) on items that will never be reclassified to profit or loss 2.3 9 (23) Financing costs 4.4 (70) (39) Other comprehensive (expense)/income for the year, net of income tax (60) 117 Net financing costs (45) (26) Total comprehensive income for the year 149 552 Share of profits after tax of joint ventures and associated undertakings 3.5 – 8 Profit before tax 193 501 Total comprehensive income/(expense) attributable to: Taxation 2.3 16 (66) Owners of the Company 154 537 Profit for the year 209 435 Non-controlling interests 4.7.6 (5) 15 Total comprehensive income for the year 149 552 Profit/(loss) attributable to: Owners of the Company 210 428 Non-controlling interests 4.7.6 (1) 7 Profit for the year 209 435 Earnings per share Basic earnings per share 2.4 5.2p 10.7p Diluted earnings per share 2.4 5.2p 10.6p
156 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 157 F I CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME NAN C I AL 2023 2022 2023 2022 S For the year ended 31 December Note £m £m For the year ended 31 December Note £m £m T A T Revenue 2.1 3,624 3,728 Profit for the year 209 435 E M Operating costs 2.1 (3,386) (3,209) E N Operating profit 238 519 Other comprehensive (expense)/income: T Items that are or may be reclassified to profit or loss S Presented as: Revaluation of financial assets 4.7.4 (1) (19) Earnings before interest, tax and amortisation (EBITA) before exceptional items 2.1 404 668 Net gain/(loss) on cash flow hedges and costs of hedging 4.7.3 12 (2) Operating exceptional items 2.2 (77) (65) Exchange differences on translation of foreign operations 4.7.3 (42) 75 Amortisation and impairment 3.3, 3.5 (89) (84) Income tax (charge)/credit on items that may be reclassified to profit or loss 2.3 (3) 6 Operating profit 238 519 Items that will never be reclassified to profit or loss Remeasurement (losses)/gains on defined benefit pension schemes 3.7 (35) 80 Financing income 4.4 25 13 Income tax credit/(charge) on items that will never be reclassified to profit or loss 2.3 9 (23) Financing costs 4.4 (70) (39) Other comprehensive (expense)/income for the year, net of income tax (60) 117 Net financing costs (45) (26) Total comprehensive income for the year 149 552 Share of profits after tax of joint ventures and associated undertakings 3.5 – 8 Profit before tax 193 501 Total comprehensive income/(expense) attributable to: Taxation 2.3 16 (66) Owners of the Company 154 537 Profit for the year 209 435 Non-controlling interests 4.7.6 (5) 15 Total comprehensive income for the year 149 552 Profit/(loss) attributable to: Owners of the Company 210 428 Non-controlling interests 4.7.6 (1) 7 Profit for the year 209 435 Earnings per share Basic earnings per share 2.4 5.2p 10.7p Diluted earnings per share 2.4 5.2p 10.6p
158 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 159 F I CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NAN C I AL 31 December 2023 31 December 2022 Attributable to equity shareholders of the parent company S Note £m £m T Merger Non- A Share Share and other Translation Fair value Retained controlling Total T Non-current assets E capital premium reserves reserve* reserve earnings Total interests equity M Property, plant and equipment 3.2 263 286 Note £m £m £m £m £m £m £m £m £m E N Intangible assets 3.3 1,542 1,609 Balance at 1 January 2023 4.7 403 174 211 107 (1) 928 1,822 54 1,876 T Investments in joint ventures, associates and equity investments 3.5 68 130 S Total comprehensive Derivative financial instruments 4.3 1 2 income/(expense) Distribution rights 3.1.2 14 17 for the year Contract assets 3.1.6 13 – Profit/(loss) for the year – – – – – 210 210 (1) 209 Defined benefit pension surplus 3.7 187 172 Other comprehensive Other pension asset 3.7 48 47 (expense)/income Deferred tax asset 2.3 6 19 Revaluation of financial assets 4.7.4 – – – – (1) – (1) – (1) 2,142 2,282 Net gain on cash flow hedges and costs Current assets of hedging 4.7.3 – – – 12 – – 12 – 12 Programme rights and other inventory 3.1.1 413 377 Exchange differences on translation of foreign operations 4.7.3 – – – (38) – – (38) (4) (42) Trade and other receivables due within one year 3.1.3 630 692 Remeasurement loss on defined Trade and other receivables due after more than one year 3.1.3 62 44 benefit pension schemes 3.7 – – – – – (35) (35) – (35) Trade and other receivables 692 736 Income tax (charge)/credit on other Contract assets 3.1.6 189 185 comprehensive income/(expense) 2.3 – – – (3) – 9 6 – 6 Production inventories 3.1.7 234 493 Total other comprehensive expense – – – (29) (1) (26) (56) (4) (60) Current tax receivable 2.3 111 52 Total comprehensive Derivative financial instruments 4.3 4 2 (expense)/income for the year – – – (29) (1) 184 154 (5) 149 Assets classified as held for sale 3.4 66 – Transactions with owners, recorded Cash and cash equivalents 4.1 340 348 directly in equity 2,049 2,193 Contributions by and distributions Current liabilities to owners Borrowings 4.1, 4.2 (5) (289) Issue of shares 4.7.1 3 – – – – (2) 1 – 1 Lease liabilities 4.6 (18) (21) Equity dividends – – – – – (201) (201) (1) (202) Derivative financial instruments 4.3 (1) (7) Movements due to share-based Trade and other payables due within one year 3.1.4 (950) (901) compensation 4.8 – – – – – 16 16 – 16 Trade payables due after more than one year 3.1.5 (25) (17) Movements in the employee benefit Trade and other payables (975) (918) trust – – – – – (5) (5) – (5) Contract liabilities 3.1.6 (187) (372) Tax on items taken directly to equity 2.3 – – – – – (2) (2) – (2) Current tax liabilities 2.3 – (7) Total transactions with owners 3 – – – – (194) (191) (1) (192) Provisions 3.6 (137) (139) Changes in non-controlling interests 4.7.6 – – – – – 1 1 (6) (5) (1,323) (1,753) Balance at 31 December 2023 4.7 406 174 211 78 (2) 919 1,786 42 1,828 Net current assets 726 440 * See note 4.3 for further breakdown of Translation Reserve, including Hedging Reserve and Cost of Hedging Reserve Non-current liabilities Borrowings 4.1, 4.2 (758) (541) Lease liabilities 4.6 (97) (111) Derivative financial instruments 4.3 (16) (8) Defined benefit pension deficit 3.7 (26) (27) Deferred tax liabilities 2.3 (59) (57) Other payables 3.1.5 (67) (72) Provisions 3.6 (17) (30) (1,040) (846) Net assets 1,828 1,876 Attributable to equity shareholders of the parent company Share capital 4.7.1 406 403 Share premium 4.7.1 174 174 Merger and other reserves 4.7.2 211 211 Translation reserve 4.7.3 78 107 Fair value reserve 4.7.4 (2) (1) Retained earnings 4.7.5 919 928 Total equity attributable to equity shareholders of the parent company 1,786 1,822 Non-controlling interests 4.7.6 42 54 Total equity 1,828 1,876 The financial statements on pages 156 to 242 were approved by the Board of Directors on 7 March 2024 and were signed on its behalf by: Chris Kennedy Group CFO and COO
158 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 159 F I CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NAN C I AL 31 December 2023 31 December 2022 Attributable to equity shareholders of the parent company S Note £m £m T Merger Non- A Share Share and other Translation Fair value Retained controlling Total T Non-current assets E capital premium reserves reserve* reserve earnings Total interests equity M Property, plant and equipment 3.2 263 286 Note £m £m £m £m £m £m £m £m £m E N Intangible assets 3.3 1,542 1,609 Balance at 1 January 2023 4.7 403 174 211 107 (1) 928 1,822 54 1,876 T Investments in joint ventures, associates and equity investments 3.5 68 130 S Total comprehensive Derivative financial instruments 4.3 1 2 income/(expense) Distribution rights 3.1.2 14 17 for the year Contract assets 3.1.6 13 – Profit/(loss) for the year – – – – – 210 210 (1) 209 Defined benefit pension surplus 3.7 187 172 Other comprehensive Other pension asset 3.7 48 47 (expense)/income Deferred tax asset 2.3 6 19 Revaluation of financial assets 4.7.4 – – – – (1) – (1) – (1) 2,142 2,282 Net gain on cash flow hedges and costs Current assets of hedging 4.7.3 – – – 12 – – 12 – 12 Programme rights and other inventory 3.1.1 413 377 Exchange differences on translation of foreign operations 4.7.3 – – – (38) – – (38) (4) (42) Trade and other receivables due within one year 3.1.3 630 692 Remeasurement loss on defined Trade and other receivables due after more than one year 3.1.3 62 44 benefit pension schemes 3.7 – – – – – (35) (35) – (35) Trade and other receivables 692 736 Income tax (charge)/credit on other Contract assets 3.1.6 189 185 comprehensive income/(expense) 2.3 – – – (3) – 9 6 – 6 Production inventories 3.1.7 234 493 Total other comprehensive expense – – – (29) (1) (26) (56) (4) (60) Current tax receivable 2.3 111 52 Total comprehensive Derivative financial instruments 4.3 4 2 (expense)/income for the year – – – (29) (1) 184 154 (5) 149 Assets classified as held for sale 3.4 66 – Transactions with owners, recorded Cash and cash equivalents 4.1 340 348 directly in equity 2,049 2,193 Contributions by and distributions Current liabilities to owners Borrowings 4.1, 4.2 (5) (289) Issue of shares 4.7.1 3 – – – – (2) 1 – 1 Lease liabilities 4.6 (18) (21) Equity dividends – – – – – (201) (201) (1) (202) Derivative financial instruments 4.3 (1) (7) Movements due to share-based Trade and other payables due within one year 3.1.4 (950) (901) compensation 4.8 – – – – – 16 16 – 16 Trade payables due after more than one year 3.1.5 (25) (17) Movements in the employee benefit Trade and other payables (975) (918) trust – – – – – (5) (5) – (5) Contract liabilities 3.1.6 (187) (372) Tax on items taken directly to equity 2.3 – – – – – (2) (2) – (2) Current tax liabilities 2.3 – (7) Total transactions with owners 3 – – – – (194) (191) (1) (192) Provisions 3.6 (137) (139) Changes in non-controlling interests 4.7.6 – – – – – 1 1 (6) (5) (1,323) (1,753) Balance at 31 December 2023 4.7 406 174 211 78 (2) 919 1,786 42 1,828 Net current assets 726 440 * See note 4.3 for further breakdown of Translation Reserve, including Hedging Reserve and Cost of Hedging Reserve Non-current liabilities Borrowings 4.1, 4.2 (758) (541) Lease liabilities 4.6 (97) (111) Derivative financial instruments 4.3 (16) (8) Defined benefit pension deficit 3.7 (26) (27) Deferred tax liabilities 2.3 (59) (57) Other payables 3.1.5 (67) (72) Provisions 3.6 (17) (30) (1,040) (846) Net assets 1,828 1,876 Attributable to equity shareholders of the parent company Share capital 4.7.1 406 403 Share premium 4.7.1 174 174 Merger and other reserves 4.7.2 211 211 Translation reserve 4.7.3 78 107 Fair value reserve 4.7.4 (2) (1) Retained earnings 4.7.5 919 928 Total equity attributable to equity shareholders of the parent company 1,786 1,822 Non-controlling interests 4.7.6 42 54 Total equity 1,828 1,876 The financial statements on pages 156 to 242 were approved by the Board of Directors on 7 March 2024 and were signed on its behalf by: Chris Kennedy Group CFO and COO
160 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 161 F I CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONTINUED CONSOLIDATED STATEMENT OF CASH FLOWS NAN C I AL Attributable to equity shareholders of the parent company 2023 2022 S For the year ended 31 December Note £m £m £m £m T Merger Non– A Share Share and other Translation Fair value Retained controlling Total T E Cash flows from operating activities capital premium reserves reserve* reserve earnings Total interests equity M Note £m £m £m £m £m £m £m £m £m Cash generated from operations before exceptional items 2.1 556 590 E N T Balance at 1 January 2022 4.7 403 174 215 41 13 634 1,480 38 1,518 Cash flow relating to operating exceptional items: Operating exceptional items 2.2 (77) (65) S Total comprehensive income for the year Increase in exceptional payables 9 12 Profit for the year – – – – – 428 428 7 435 Cash outflow from exceptional items (68) (53) Other comprehensive Cash generated from operations 488 537 (expense)/income Defined benefit pension deficit funding (40) (137) Revaluation of financial assets 4.7.4 – – – – (19) – (19) – (19) Interest received 20 15 Net loss on cash flow hedges and costs Interest paid* (51) (56) of hedging 4.7.3 – – – (2) – – (2) – (2) Net taxation paid (32) (55) Exchange differences on translation of (103) (233) foreign operations 4.7.3 – – – 67 – – 67 8 75 Remeasurement gain on defined Net cash inflow from operating activities 385 304 benefit pension schemes 3.7 – – – – – 80 80 – 80 Income tax credit/(charge) on other Cash flows from investing activities comprehensive income/(expense) 2.3 – – – 1 5 (23) (17) – (17) Acquisition of property, plant and equipment (31) (34) Total other comprehensive Acquisition of intangible assets (39) (44) income/(expense) – – – 66 (14) 57 109 8 117 Acquisition of subsidiary undertakings, net of cash acquired (1) (96) Total comprehensive Acquisition of investments (19) (13) income/(expense) for the year – – – 66 (14) 485 537 15 552 Dividends received from investments 3 – Transactions with owners, recorded Loans granted to associates and joint ventures (13) (13) directly in equity Loans repaid by associates and joint ventures 3 4 Contributions by and distributions Net cash outflow from investing activities (97) (196) to owners Equity dividends – – – – – (201) (201) (3) (204) Cash flows from financing activities Movements due to share-based Bank and other loans – amounts repaid (401) (539) compensation 4.8 – – – – – 19 19 – 19 Settlement of derivatives*** (10) – Movements in the employee benefit Bank and other loans – amounts raised 351 282 trust – – – – – (2) (2) – (2) Release of restricted cash – 50 Tax on items taken directly to equity 2.3 – – – – – (7) (7) – (7) Payment of lease liabilities** (22) (22) Total transactions with owners – – – – – (191) (191) (3) (194) Issue of share capital 1 – Changes in non-controlling interests 4.7.6 – – (4) – – – (4) 4 – Acquisition of non-controlling interests (4) (25) Balance at 31 December 2022 4.7 403 174 211 107 (1) 928 1,822 54 1,876 Dividends paid to non-controlling interests (1) (3) * See note 4.3 for further breakdown of Translation Reserve, including Hedging Reserve and Cost of Hedging Reserve Equity dividends paid (201) (201) Net cash outflow from financing activities (287) (458) Net increase/(decrease) in cash and cash equivalents 1 (350) Cash and cash equivalents at 1 January 4.1 348 686 Effects of exchange rate changes and fair value movements (9) 12 Cash and cash equivalents at 31 December 4.1 340 348 * Interest paid includes interest on bank, other loans, derivative financial instruments and lease liabilities ** Net cash flow on lease liabilities in note 4.1 of £26 million (2022: £26 million) includes interest on lease liabilities included in interest paid of £4 million (2022: £4 million) *** Net cash flow from forwards and swaps held against the euro denominated bond repaid in the year
160 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 161 F I CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONTINUED CONSOLIDATED STATEMENT OF CASH FLOWS NAN C I AL Attributable to equity shareholders of the parent company 2023 2022 S For the year ended 31 December Note £m £m £m £m T Merger Non– A Share Share and other Translation Fair value Retained controlling Total T E Cash flows from operating activities capital premium reserves reserve* reserve earnings Total interests equity M Note £m £m £m £m £m £m £m £m £m Cash generated from operations before exceptional items 2.1 556 590 E N T Balance at 1 January 2022 4.7 403 174 215 41 13 634 1,480 38 1,518 Cash flow relating to operating exceptional items: Operating exceptional items 2.2 (77) (65) S Total comprehensive income for the year Increase in exceptional payables 9 12 Profit for the year – – – – – 428 428 7 435 Cash outflow from exceptional items (68) (53) Other comprehensive Cash generated from operations 488 537 (expense)/income Defined benefit pension deficit funding (40) (137) Revaluation of financial assets 4.7.4 – – – – (19) – (19) – (19) Interest received 20 15 Net loss on cash flow hedges and costs Interest paid* (51) (56) of hedging 4.7.3 – – – (2) – – (2) – (2) Net taxation paid (32) (55) Exchange differences on translation of (103) (233) foreign operations 4.7.3 – – – 67 – – 67 8 75 Remeasurement gain on defined Net cash inflow from operating activities 385 304 benefit pension schemes 3.7 – – – – – 80 80 – 80 Income tax credit/(charge) on other Cash flows from investing activities comprehensive income/(expense) 2.3 – – – 1 5 (23) (17) – (17) Acquisition of property, plant and equipment (31) (34) Total other comprehensive Acquisition of intangible assets (39) (44) income/(expense) – – – 66 (14) 57 109 8 117 Acquisition of subsidiary undertakings, net of cash acquired (1) (96) Total comprehensive Acquisition of investments (19) (13) income/(expense) for the year – – – 66 (14) 485 537 15 552 Dividends received from investments 3 – Transactions with owners, recorded Loans granted to associates and joint ventures (13) (13) directly in equity Loans repaid by associates and joint ventures 3 4 Contributions by and distributions Net cash outflow from investing activities (97) (196) to owners Equity dividends – – – – – (201) (201) (3) (204) Cash flows from financing activities Movements due to share-based Bank and other loans – amounts repaid (401) (539) compensation 4.8 – – – – – 19 19 – 19 Settlement of derivatives*** (10) – Movements in the employee benefit Bank and other loans – amounts raised 351 282 trust – – – – – (2) (2) – (2) Release of restricted cash – 50 Tax on items taken directly to equity 2.3 – – – – – (7) (7) – (7) Payment of lease liabilities** (22) (22) Total transactions with owners – – – – – (191) (191) (3) (194) Issue of share capital 1 – Changes in non-controlling interests 4.7.6 – – (4) – – – (4) 4 – Acquisition of non-controlling interests (4) (25) Balance at 31 December 2022 4.7 403 174 211 107 (1) 928 1,822 54 1,876 Dividends paid to non-controlling interests (1) (3) * See note 4.3 for further breakdown of Translation Reserve, including Hedging Reserve and Cost of Hedging Reserve Equity dividends paid (201) (201) Net cash outflow from financing activities (287) (458) Net increase/(decrease) in cash and cash equivalents 1 (350) Cash and cash equivalents at 1 January 4.1 348 686 Effects of exchange rate changes and fair value movements (9) 12 Cash and cash equivalents at 31 December 4.1 340 348 * Interest paid includes interest on bank, other loans, derivative financial instruments and lease liabilities ** Net cash flow on lease liabilities in note 4.1 of £26 million (2022: £26 million) includes interest on lease liabilities included in interest paid of £4 million (2022: £4 million) *** Net cash flow from forwards and swaps held against the euro denominated bond repaid in the year
162 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 163 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 1: BASIS OF PREPARATION C I AL In this This section sets out the Group’s accounting policies that relate to the financial After considering the severe but plausible scenarios, the Group remains able to operate within its financial S T section statements as a whole. Where an accounting policy is specific to one note, the covenants and will have sufficient liquidity during the going concern period to 30 June 2025. A T policy is described in the note to which it relates. This section also shows new UK- E The Directors propose a final dividend of 3.3 pence per share (2022: 3.3 pence), which equates to a full year dividend M adopted accounting standards, amendments and interpretations, and whether they E N are effective in 2023 or later years. We explain how these changes are expected to of 5.0 pence per share, subject to approval by shareholders at the AGM on 2 May 2024. The Directors intend to at T impact the financial position and performance of the Group. least maintain this dividend over the medium term (this was included in all scenarios modelled). The Directors will S continue to balance shareholder returns with a commitment to maintain investment grade credit metrics over the medium term and to continue to invest in the Group’s strategy. The financial statements consolidate those of ITV plc (‘the Company’) and its subsidiaries (together referred to as the ‘Group’) and the Group’s interests in associates and jointly controlled entities. The Company is registered in Consequently, the Directors are confident that the Group will have sufficient funds to continue to meet its liabilities England and Wales. as they fall due for at least 12 months from the date of approval of these consolidated financial statements and therefore have prepared the consolidated financial statements on a going concern basis. These Group financial statements were prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. Subsidiaries, joint ventures, associates and investments The accounting policies have been applied consistently in the financial years presented, other than where new Subsidiaries are entities that are directly or indirectly controlled by the Group. Control exists where the Group is policies have been adopted. exposed, or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. In assessing control, potential voting rights that are currently exercisable The financial statements are principally prepared on the basis of historical cost. Where other bases are applied, or convertible are taken into account. these are identified in the relevant accounting policy. A joint venture is a joint arrangement in which the Group holds an interest under a contractual arrangement where The parent company financial statements have been prepared in accordance with Financial Reporting Standard 101 the Group and one or more other parties undertake an economic activity that is subject to joint control. The Group ‘Reduced Disclosure Framework’ (‘FRS 101’). accounts for its interests in joint ventures using the equity method. Under the equity method, the investment in the entity is stated as one line item at cost plus the investor’s share of retained post-acquisition profits or losses, less The notes form part of the financial statements. any dividends received and other changes in net assets. Going concern An associate is an entity, other than a subsidiary or joint venture, over which the Group has significant influence. As at 31 December 2023, the Group was in a net debt position of £553 million (2022: £623 million), including gross Significant influence is the power to participate in, but not control or jointly control, the financial and operating borrowings of £893 million (2022: £971 million) offset by cash and cash equivalents of £340 million (2022: £348 million). decisions of an entity. These investments are also accounted for using the equity method. In addition to £340 million of cash and cash equivalents (2022: £348 million), the Group has a syndicated £500 million Investments are entities where the Group concludes it does not have significant influence and are held at fair value Revolving Credit Facility (RCF) entered into during 2022 which was undrawn at 31 December 2023 (31 December 2022: unless the investment is a start-up business, in which case it is valued initially at cost as a proxy for fair value. £50 million drawn). £83 million of this facility expires in January 2028 and the remaining £417 million expires in January 2029. In December 2023, the Group entered into an additional £100 million bilateral RCF which matures in December 2028, Current/non-current distinction and which is undrawn at 31 December 2023. The Group also has a £300 million committed and undrawn bilateral facility Current assets include assets held primarily for trading purposes, cash and cash equivalents, and assets expected to expiring in June 2026 (31 December 2022: undrawn). This provides £1,240 million (2022: £1,098 million) of liquidity. be realised in, or intended for sale or use in, the course of the Group’s operating cycle. All other assets are classified as non-current assets. The €259 million Eurobond matured in December 2023 and was repaid through cash proceeds drawn in full from a £230 million term loan facility entered into in August 2023. The term loan matures in July 2027 and interest on Current liabilities include liabilities held primarily for trading purposes, liabilities expected to be settled in the course the loan is determined as an aggregate of compounded Sterling Overnight Index Average (SONIA) plus a margin. of the Group’s operating cycle and those liabilities due within one year from the reporting date. All other liabilities are The term loan has the same financial covenants as the Group’s RCF facility. classified as non-current liabilities. The two RCFs are subject to leverage and interest cover semi-annual covenant tests that require the Group to maintain Classification of financial instruments nto the following financial statement captions in the a leverage ratio of below 3.5x and interest cover above 3.0x (measures as defined in the RCF documentation). In The financial assets and liabilities of the Group are classified i addition, the £500 million RCF is subject to ESG targets linked to the delivery of ITV’s science-based carbon emissions Consolidated Statement of Financial Position in accordance with IFRS 9 ‘Financial Instruments’: targets. As at 31 December 2023, the Group had covenant net debt of £415 million (2022: £461 million) and its financial • Financial assets/liabilities at fair value through OCI – measured at fair value through other comprehensive income position was well within its covenants. The leverage and interest cover tests will be tested again on 30 June 2024. – separately disclosed as financial assets/liabilities in current and non-current assets and liabilities or equity investments in non-current assets The £500 million RCF contains Scope 1, 2 and 3 greenhouse gas emissions targets which align to ITV's stated • Financial assets/liabilities at fair value through profit or loss – separately disclosed as derivative financial objective to have Net Zero carbon emissions by 2030. These targets are measured at the end of each financial year instruments in current and non-current assets and liabilities and included in other payables (put option liabilities and independently verified in July following the relevant December year end. Scope 1 and 2 emissions are measured and contingent consideration) or convertible loan receivable within other receivables separately to Scope 3 emissions. The margin on the facility reduces by 2.5bps if Scope 1, 2 and 3 targets are met, by • Financial assets measured at amortised cost – separately disclosed as cash and cash equivalents and trade and 1.25bps if either Scope 1 and 2 targets are met or Scope 3 targets are met, and increases by 2.5bps if neither target is other receivables met. Failing to meet targets does not impact the availability of the RCF. The Group met Scope 1, 2 and 3 targets for • Financial liabilities measured at amortised cost – separately disclosed as borrowings and trade and other payables 2022, however 2023 emissions will not be verified until July 2024. Over the life of the facility, it may be necessary to recalibrate the baseline emissions level set in 2019, particularly in relation to Scope 3 emissions and there is a Judgement is required when determining the appropriate classification of the Group’s financial instruments, mechanism in the RCF documentation that allows for this. requiring assessment of contractual provisions that do or may change the timing or amount of contractual cash flows. Details of the accounting policies for measurement of the above instruments are set out in the relevant note. The Directors have prepared forecasts for three cash flow scenarios (mid, high and low cases), for the period of three Where unconditional rights to set off financial instruments exist, and the Group intends to either settle on a net basis years from 1 January 2024 (in line with the viability assessment period). The mid case scenario is based on the 2024 or realise the asset and settle the liability simultaneously, the Group presents the relevant instruments net in the Board approved budget and 2024 to 2026 strategic plan, also approved by the Board. The key assumptions in the Consolidated Statement of Financial Position. scenarios relate to fluctuations in the advertising market due to audience and/or market decline and the evolving demand in the content market, specifically relating to content pipeline. All scenarios have embedded inflationary Recognition and derecognition of financial assets and liabilities impacts with increased production costs in the short to medium term as well as continued structural changes in the The Group recognises a financial asset or liability when it becomes a party to the contract. Financial instruments are advertising market and viewing habits with increased focus on streaming. The Directors have also considered a no longer recognised in the Consolidated Statement of Financial Position when the contractual cash flows expire or number of sensitivities to the mid case scenario to arrive at a severe but plausible downside scenario that has been when the Group no longer retains control of substantially all the risks and rewards under the instrument. used to assess the appropriateness of preparing these consolidated financial statements using the going concern basis. These sensitivities include settlements in respect of ongoing litigation, lost and/or delayed Studios Cash and cash equivalents productions, a failure to deliver the expected consumption hours or subscriber growth for Streaming and a decline Cash and cash equivalents comprise cash balances and call deposits with a maturity of less than or equal to three months in advertising revenue in comparison to 2023. The severe but plausible scenarios do not assume the adoption of a from the date of acquisition. The carrying value of cash and cash equivalents is considered to approximate fair value. range of mitigations available to the Board.
162 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 163 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 1: BASIS OF PREPARATION C I AL In this This section sets out the Group’s accounting policies that relate to the financial After considering the severe but plausible scenarios, the Group remains able to operate within its financial S T section statements as a whole. Where an accounting policy is specific to one note, the covenants and will have sufficient liquidity during the going concern period to 30 June 2025. A T policy is described in the note to which it relates. This section also shows new UK- E The Directors propose a final dividend of 3.3 pence per share (2022: 3.3 pence), which equates to a full year dividend M adopted accounting standards, amendments and interpretations, and whether they E N are effective in 2023 or later years. We explain how these changes are expected to of 5.0 pence per share, subject to approval by shareholders at the AGM on 2 May 2024. The Directors intend to at T impact the financial position and performance of the Group. least maintain this dividend over the medium term (this was included in all scenarios modelled). The Directors will S continue to balance shareholder returns with a commitment to maintain investment grade credit metrics over the medium term and to continue to invest in the Group’s strategy. The financial statements consolidate those of ITV plc (‘the Company’) and its subsidiaries (together referred to as the ‘Group’) and the Group’s interests in associates and jointly controlled entities. The Company is registered in Consequently, the Directors are confident that the Group will have sufficient funds to continue to meet its liabilities England and Wales. as they fall due for at least 12 months from the date of approval of these consolidated financial statements and therefore have prepared the consolidated financial statements on a going concern basis. These Group financial statements were prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. Subsidiaries, joint ventures, associates and investments The accounting policies have been applied consistently in the financial years presented, other than where new Subsidiaries are entities that are directly or indirectly controlled by the Group. Control exists where the Group is policies have been adopted. exposed, or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. In assessing control, potential voting rights that are currently exercisable The financial statements are principally prepared on the basis of historical cost. Where other bases are applied, or convertible are taken into account. these are identified in the relevant accounting policy. A joint venture is a joint arrangement in which the Group holds an interest under a contractual arrangement where The parent company financial statements have been prepared in accordance with Financial Reporting Standard 101 the Group and one or more other parties undertake an economic activity that is subject to joint control. The Group ‘Reduced Disclosure Framework’ (‘FRS 101’). accounts for its interests in joint ventures using the equity method. Under the equity method, the investment in the entity is stated as one line item at cost plus the investor’s share of retained post-acquisition profits or losses, less The notes form part of the financial statements. any dividends received and other changes in net assets. Going concern An associate is an entity, other than a subsidiary or joint venture, over which the Group has significant influence. As at 31 December 2023, the Group was in a net debt position of £553 million (2022: £623 million), including gross Significant influence is the power to participate in, but not control or jointly control, the financial and operating borrowings of £893 million (2022: £971 million) offset by cash and cash equivalents of £340 million (2022: £348 million). decisions of an entity. These investments are also accounted for using the equity method. In addition to £340 million of cash and cash equivalents (2022: £348 million), the Group has a syndicated £500 million Investments are entities where the Group concludes it does not have significant influence and are held at fair value Revolving Credit Facility (RCF) entered into during 2022 which was undrawn at 31 December 2023 (31 December 2022: unless the investment is a start-up business, in which case it is valued initially at cost as a proxy for fair value. £50 million drawn). £83 million of this facility expires in January 2028 and the remaining £417 million expires in January 2029. In December 2023, the Group entered into an additional £100 million bilateral RCF which matures in December 2028, Current/non-current distinction and which is undrawn at 31 December 2023. The Group also has a £300 million committed and undrawn bilateral facility Current assets include assets held primarily for trading purposes, cash and cash equivalents, and assets expected to expiring in June 2026 (31 December 2022: undrawn). This provides £1,240 million (2022: £1,098 million) of liquidity. be realised in, or intended for sale or use in, the course of the Group’s operating cycle. All other assets are classified as non-current assets. The €259 million Eurobond matured in December 2023 and was repaid through cash proceeds drawn in full from a £230 million term loan facility entered into in August 2023. The term loan matures in July 2027 and interest on Current liabilities include liabilities held primarily for trading purposes, liabilities expected to be settled in the course the loan is determined as an aggregate of compounded Sterling Overnight Index Average (SONIA) plus a margin. of the Group’s operating cycle and those liabilities due within one year from the reporting date. All other liabilities are The term loan has the same financial covenants as the Group’s RCF facility. classified as non-current liabilities. The two RCFs are subject to leverage and interest cover semi-annual covenant tests that require the Group to maintain Classification of financial instruments nto the following financial statement captions in the a leverage ratio of below 3.5x and interest cover above 3.0x (measures as defined in the RCF documentation). In The financial assets and liabilities of the Group are classified i addition, the £500 million RCF is subject to ESG targets linked to the delivery of ITV’s science-based carbon emissions Consolidated Statement of Financial Position in accordance with IFRS 9 ‘Financial Instruments’: targets. As at 31 December 2023, the Group had covenant net debt of £415 million (2022: £461 million) and its financial • Financial assets/liabilities at fair value through OCI – measured at fair value through other comprehensive income position was well within its covenants. The leverage and interest cover tests will be tested again on 30 June 2024. – separately disclosed as financial assets/liabilities in current and non-current assets and liabilities or equity investments in non-current assets The £500 million RCF contains Scope 1, 2 and 3 greenhouse gas emissions targets which align to ITV's stated • Financial assets/liabilities at fair value through profit or loss – separately disclosed as derivative financial objective to have Net Zero carbon emissions by 2030. These targets are measured at the end of each financial year instruments in current and non-current assets and liabilities and included in other payables (put option liabilities and independently verified in July following the relevant December year end. Scope 1 and 2 emissions are measured and contingent consideration) or convertible loan receivable within other receivables separately to Scope 3 emissions. The margin on the facility reduces by 2.5bps if Scope 1, 2 and 3 targets are met, by • Financial assets measured at amortised cost – separately disclosed as cash and cash equivalents and trade and 1.25bps if either Scope 1 and 2 targets are met or Scope 3 targets are met, and increases by 2.5bps if neither target is other receivables met. Failing to meet targets does not impact the availability of the RCF. The Group met Scope 1, 2 and 3 targets for • Financial liabilities measured at amortised cost – separately disclosed as borrowings and trade and other payables 2022, however 2023 emissions will not be verified until July 2024. Over the life of the facility, it may be necessary to recalibrate the baseline emissions level set in 2019, particularly in relation to Scope 3 emissions and there is a Judgement is required when determining the appropriate classification of the Group’s financial instruments, mechanism in the RCF documentation that allows for this. requiring assessment of contractual provisions that do or may change the timing or amount of contractual cash flows. Details of the accounting policies for measurement of the above instruments are set out in the relevant note. The Directors have prepared forecasts for three cash flow scenarios (mid, high and low cases), for the period of three Where unconditional rights to set off financial instruments exist, and the Group intends to either settle on a net basis years from 1 January 2024 (in line with the viability assessment period). The mid case scenario is based on the 2024 or realise the asset and settle the liability simultaneously, the Group presents the relevant instruments net in the Board approved budget and 2024 to 2026 strategic plan, also approved by the Board. The key assumptions in the Consolidated Statement of Financial Position. scenarios relate to fluctuations in the advertising market due to audience and/or market decline and the evolving demand in the content market, specifically relating to content pipeline. All scenarios have embedded inflationary Recognition and derecognition of financial assets and liabilities impacts with increased production costs in the short to medium term as well as continued structural changes in the The Group recognises a financial asset or liability when it becomes a party to the contract. Financial instruments are advertising market and viewing habits with increased focus on streaming. The Directors have also considered a no longer recognised in the Consolidated Statement of Financial Position when the contractual cash flows expire or number of sensitivities to the mid case scenario to arrive at a severe but plausible downside scenario that has been when the Group no longer retains control of substantially all the risks and rewards under the instrument. used to assess the appropriateness of preparing these consolidated financial statements using the going concern basis. These sensitivities include settlements in respect of ongoing litigation, lost and/or delayed Studios Cash and cash equivalents productions, a failure to deliver the expected consumption hours or subscriber growth for Streaming and a decline Cash and cash equivalents comprise cash balances and call deposits with a maturity of less than or equal to three months in advertising revenue in comparison to 2023. The severe but plausible scenarios do not assume the adoption of a from the date of acquisition. The carrying value of cash and cash equivalents is considered to approximate fair value. range of mitigations available to the Board.
164 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 165 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 1: BASIS OF PREPARATION CONTINUED C I AL Foreign currencies The Directors recognise the climate crisis and the potential impact it may have on both the wider world and the S T The primary economic environment in which the Group operates is the UK and therefore the consolidated financial success of ITV. The threat continues to evolve and businesses globally have a responsibility to take meaningful A T action to mitigate and prevent further climate change. The Directors are committed to reducing the impact of ITV E statements are presented in pounds sterling (‘£’). M on the environment. Climate-related risks have been identified as an emerging business risk; however, the Directors E N Where Group companies based in the UK transact in foreign currencies, these transactions are translated into do not view them as a source of material estimation uncertainty for the Group. For further detail, see the Risks and T pounds sterling at the exchange rate on the transaction date. Foreign currency monetary assets and liabilities are Uncertainties section of the Strategic Report. S translated into pounds sterling at the year end exchange rate. Where there is a movement in the exchange rate between the date of the transaction and the year end, a foreign exchange gain or loss is recognised in the income New or amended accounting standards statement. Non-monetary assets and liabilities measured at historical cost are translated into pounds sterling at the The following new standards and/or amendments were effective 1 January 2023, but have not had a significant exchange rate on the date of the transaction. impact on the Group’s results or Consolidated Statement of Financial Position. The assets and liabilities of Group companies outside of the UK are translated into pounds sterling at the year end Accounting standard Requirement Impact on financial statements exchange rate. The revenue, expenses and other comprehensive income of these companies are translated into IFRS 17 ‘Insurance IFRS 17 ‘Insurance Contracts’ is a comprehensive new No material change to the pounds sterling at the average monthly exchange rate during the year. Where differences arise between these rates, Contracts’ and related accounting standard covering recognition, measurement, Group’s financial position they are recognised in the translation reserve within other comprehensive income. amendments presentation and disclosures. This standard replaces IFRS or performance. 4 ‘Insurance Contracts’. The Group’s net investments in companies outside the UK may be hedged where the currency exposure is considered to be material. Hedge accounting is implemented on certain foreign currency firm commitments, for Amendments to IAS 1 The amendments aim to help entities provide accounting No material change to the which the effective portion of any foreign exchange gains or losses is recognised in other comprehensive income ‘Presentation of Financial policy disclosures that are more useful by replacing the Group’s financial position (note 4.3). Statements’ and IFRS requirement for entities to disclose their ‘significant’ or performance. Practice Statement 2 accounting policies with a requirement to disclose their Exchange differences arising on the translation of the Group’s interests in joint ventures and associates are ‘Making Materiality ‘material’ accounting policies. The IFRS Practice Statement 2 recognised in the translation reserve within other comprehensive income. Judgements’ has been amended by adding guidance and examples to On disposal of a foreign subsidiary, an interest in a joint venture or an associate, the related translation reserve is explain and demonstrate the application of the ‘four-step released to the income statement as part of the gain or loss on disposal. materiality process’ in making decisions about accounting policy disclosures. Where a forward currency contract is used to manage foreign exchange risk and hedge accounting is not applied, any Amendments to IAS 8 The amendments introduce a new definition of accounting No material change to the impact of movements in currency for both the forward currency contracts and the assets and liabilities is taken to ‘Accounting Policies, estimates and clarify how entities use measurement Group’s financial position the income statement. Changes in Accounting techniques and inputs to develop accounting estimates. or performance. Accounting judgements and estimates Estimates and Errors’ The preparation of financial statements requires management to exercise judgement in applying the Group’s Amendments to IAS 12 The amendments aim to narrow the scope of the initial No material change to the accounting policies. It also requires the use of estimates and assumptions that affect the reported amounts of ‘Income taxes’ – Initial recognition exception under IAS 12 so that it no longer Group’s financial position assets, liabilities, income and expenses. Actual results may differ from these estimates. The current macroeconomic recognition exception applies to transactions that give rise to equal taxable and or performance. environment has caused greater estimation and judgement to be applied, particularly in respect of pension deductible temporary differences. obligations and discount rates used for impairment reviews. Amendments to IAS 12 The amendments provide a temporary exception from The Group has applied the Estimates and underlying assumptions are reviewed on an ongoing basis, with revisions recognised in the period in ‘Income Taxes’- Pillar Two the requirement to recognise and disclose deferred taxes exception under IAS 12 to which the estimates are revised and in any future periods affected. income taxes arising from enacted or substantively enacted tax law recognising and disclosing that implements the Pillar Two model rules published by information about The areas involving material judgement or complexity and therefore may have a material impact on the financial the OECD, including tax law that implements qualified deferred tax assets and statements in the next 12 months are set out below. Additional detail on the judgements and sources of estimation domestic minimum top-up taxes described in those rules. liabilities related to top-up uncertainty applied by management are set out in the accounting policies section of the relevant notes: income taxes. Area Key judgements Key sources of estimation uncertainty Finance (No 2) Bill and Pillar Two impact on financial statements Exceptional items The classification of income or On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK, introducing a global minimum (See note 2.2) expenses as exceptional items effective tax rate of 15% for large groups and for financial years beginning on or after 31 December 2023. Taxation Defined benefit pension Estimates of the assumptions for valuing the balances are adjusted for a change in tax law if the change has been substantively enacted by the balance sheet (See note 3.7) defined benefit obligation date, however the amendments to IAS 12 ‘Income Taxes’ Pillar Two income taxes provides an exemption from the Provisions related to The basis for calculating Estimates of the amount required to settle the requirement to recognise and disclose deferred taxes arising from enacted or substantively enacted tax law that Box Clever the provision potential liability implements the Pillar Two model rules. (see note 3.6) Based on an initial analysis of the current year financial data, most territories in which the Group operates are Employee-related The individuals who are included in Estimates of the amounts required to settle expected to qualify for one of the safe harbour exemptions such that top-up taxes should not apply. In territories provisions (See note 3.6) the calculation the liability where this is not the case there is the potential for Pillar Two taxes to apply, but these are not expected to be Acquisition-related Whether future amounts payable Estimates of cash-flow forecasts to support the material. The Group continues to refine this assessment and analyse the future consequences of these rules. liabilities are linked to employment calculation of the future liabilities Accounting standards effective in future periods (See note 3.1.4 and 3.1.5) The Directors have considered the impact on the Group of new and revised accounting standards, interpretations Transmission Whether the transponder contracts or amendments that are not yet effective and do not expect them to have a significant impact on the Group’s results commitments should be classified as leases in and Consolidated Statement of Financial Position. (See note 3.1.1) accordance with IFRS 16 In addition to the above, there are a number of areas which involve a high degree of estimation and are significant to the financial statements but are not expected to have a material impact on them in the next 12 months. The key areas underlying estimation uncertainty include the estimation of net realisable values for programme rights, allocation of programme rights between linear and ITVX, impairment of intangible assets and taxation. More detail on each of these items is given in the relevant notes.
164 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 165 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 1: BASIS OF PREPARATION CONTINUED C I AL Foreign currencies The Directors recognise the climate crisis and the potential impact it may have on both the wider world and the S T The primary economic environment in which the Group operates is the UK and therefore the consolidated financial success of ITV. The threat continues to evolve and businesses globally have a responsibility to take meaningful A T action to mitigate and prevent further climate change. The Directors are committed to reducing the impact of ITV E statements are presented in pounds sterling (‘£’). M on the environment. Climate-related risks have been identified as an emerging business risk; however, the Directors E N Where Group companies based in the UK transact in foreign currencies, these transactions are translated into do not view them as a source of material estimation uncertainty for the Group. For further detail, see the Risks and T pounds sterling at the exchange rate on the transaction date. Foreign currency monetary assets and liabilities are Uncertainties section of the Strategic Report. S translated into pounds sterling at the year end exchange rate. Where there is a movement in the exchange rate between the date of the transaction and the year end, a foreign exchange gain or loss is recognised in the income New or amended accounting standards statement. Non-monetary assets and liabilities measured at historical cost are translated into pounds sterling at the The following new standards and/or amendments were effective 1 January 2023, but have not had a significant exchange rate on the date of the transaction. impact on the Group’s results or Consolidated Statement of Financial Position. The assets and liabilities of Group companies outside of the UK are translated into pounds sterling at the year end Accounting standard Requirement Impact on financial statements exchange rate. The revenue, expenses and other comprehensive income of these companies are translated into IFRS 17 ‘Insurance IFRS 17 ‘Insurance Contracts’ is a comprehensive new No material change to the pounds sterling at the average monthly exchange rate during the year. Where differences arise between these rates, Contracts’ and related accounting standard covering recognition, measurement, Group’s financial position they are recognised in the translation reserve within other comprehensive income. amendments presentation and disclosures. This standard replaces IFRS or performance. 4 ‘Insurance Contracts’. The Group’s net investments in companies outside the UK may be hedged where the currency exposure is considered to be material. Hedge accounting is implemented on certain foreign currency firm commitments, for Amendments to IAS 1 The amendments aim to help entities provide accounting No material change to the which the effective portion of any foreign exchange gains or losses is recognised in other comprehensive income ‘Presentation of Financial policy disclosures that are more useful by replacing the Group’s financial position (note 4.3). Statements’ and IFRS requirement for entities to disclose their ‘significant’ or performance. Practice Statement 2 accounting policies with a requirement to disclose their Exchange differences arising on the translation of the Group’s interests in joint ventures and associates are ‘Making Materiality ‘material’ accounting policies. The IFRS Practice Statement 2 recognised in the translation reserve within other comprehensive income. Judgements’ has been amended by adding guidance and examples to On disposal of a foreign subsidiary, an interest in a joint venture or an associate, the related translation reserve is explain and demonstrate the application of the ‘four-step released to the income statement as part of the gain or loss on disposal. materiality process’ in making decisions about accounting policy disclosures. Where a forward currency contract is used to manage foreign exchange risk and hedge accounting is not applied, any Amendments to IAS 8 The amendments introduce a new definition of accounting No material change to the impact of movements in currency for both the forward currency contracts and the assets and liabilities is taken to ‘Accounting Policies, estimates and clarify how entities use measurement Group’s financial position the income statement. Changes in Accounting techniques and inputs to develop accounting estimates. or performance. Accounting judgements and estimates Estimates and Errors’ The preparation of financial statements requires management to exercise judgement in applying the Group’s Amendments to IAS 12 The amendments aim to narrow the scope of the initial No material change to the accounting policies. It also requires the use of estimates and assumptions that affect the reported amounts of ‘Income taxes’ – Initial recognition exception under IAS 12 so that it no longer Group’s financial position assets, liabilities, income and expenses. Actual results may differ from these estimates. The current macroeconomic recognition exception applies to transactions that give rise to equal taxable and or performance. environment has caused greater estimation and judgement to be applied, particularly in respect of pension deductible temporary differences. obligations and discount rates used for impairment reviews. Amendments to IAS 12 The amendments provide a temporary exception from The Group has applied the Estimates and underlying assumptions are reviewed on an ongoing basis, with revisions recognised in the period in ‘Income Taxes’- Pillar Two the requirement to recognise and disclose deferred taxes exception under IAS 12 to which the estimates are revised and in any future periods affected. income taxes arising from enacted or substantively enacted tax law recognising and disclosing that implements the Pillar Two model rules published by information about The areas involving material judgement or complexity and therefore may have a material impact on the financial the OECD, including tax law that implements qualified deferred tax assets and statements in the next 12 months are set out below. Additional detail on the judgements and sources of estimation domestic minimum top-up taxes described in those rules. liabilities related to top-up uncertainty applied by management are set out in the accounting policies section of the relevant notes: income taxes. Area Key judgements Key sources of estimation uncertainty Finance (No 2) Bill and Pillar Two impact on financial statements Exceptional items The classification of income or On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK, introducing a global minimum (See note 2.2) expenses as exceptional items effective tax rate of 15% for large groups and for financial years beginning on or after 31 December 2023. Taxation Defined benefit pension Estimates of the assumptions for valuing the balances are adjusted for a change in tax law if the change has been substantively enacted by the balance sheet (See note 3.7) defined benefit obligation date, however the amendments to IAS 12 ‘Income Taxes’ Pillar Two income taxes provides an exemption from the Provisions related to The basis for calculating Estimates of the amount required to settle the requirement to recognise and disclose deferred taxes arising from enacted or substantively enacted tax law that Box Clever the provision potential liability implements the Pillar Two model rules. (see note 3.6) Based on an initial analysis of the current year financial data, most territories in which the Group operates are Employee-related The individuals who are included in Estimates of the amounts required to settle expected to qualify for one of the safe harbour exemptions such that top-up taxes should not apply. In territories provisions (See note 3.6) the calculation the liability where this is not the case there is the potential for Pillar Two taxes to apply, but these are not expected to be Acquisition-related Whether future amounts payable Estimates of cash-flow forecasts to support the material. The Group continues to refine this assessment and analyse the future consequences of these rules. liabilities are linked to employment calculation of the future liabilities Accounting standards effective in future periods (See note 3.1.4 and 3.1.5) The Directors have considered the impact on the Group of new and revised accounting standards, interpretations Transmission Whether the transponder contracts or amendments that are not yet effective and do not expect them to have a significant impact on the Group’s results commitments should be classified as leases in and Consolidated Statement of Financial Position. (See note 3.1.1) accordance with IFRS 16 In addition to the above, there are a number of areas which involve a high degree of estimation and are significant to the financial statements but are not expected to have a material impact on them in the next 12 months. The key areas underlying estimation uncertainty include the estimation of net realisable values for programme rights, allocation of programme rights between linear and ITVX, impairment of intangible assets and taxation. More detail on each of these items is given in the relevant notes.
166 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 167 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR C I AL In this This section focuses on the results and performance of the Group. On the following The transaction price, being the amount to which the Group expects to be entitled and has rights to under the S T section pages, you will find disclosures explaining the Group’s results for the year, contract is allocated to the identified performance obligations. The transaction price will also include an estimate of A T segmental information, exceptional items, taxation and earnings per share. any variable consideration where the Group’s performance may result in additional revenues. Variable consideration E M is estimated based on the achievement of agreed targets, such as audience targets. Variable consideration is E N recognised only to the extent that it is highly probable that a significant reversal of revenue recognised will not occur T 2.1 Profit Keeping This section analyses the Group’s profit before tax by reference to the activities when the uncertainty associated with the variable consideration is subsequently resolved. S before tax it simple performed by the Group and an analysis of key operating costs. Total revenue and adjusted earnings before interest, tax and amortisation (adjusted Revenue is stated exclusive of VAT and equivalent sales taxes. EBITA) (both as defined in the APMs section of the Annual Report) are the Group’s Complexity in advertising revenue measurement and recognition is driven by a combination of automated and key performance and profit indicators. They reflect the way the business is managed manual processes involved in measuring the value delivered to the customer and therefore the value of variable and how the Directors assess the performance of the Group. This section therefore consideration due. also shows each division’s contribution to total revenue and adjusted EBITA. In assessing the transaction price, any non-cash consideration received from a customer is included. Non-cash The Group is a vertically integrated producer broadcaster and streamer, consisting of ITV Studios and Media & consideration is measured at fair value. It takes into account the value of what the Group is receiving rather than the Entertainment (M&E). value of what the Group is giving up. ITV Studios Complex one-off contracts in all classes of revenue are assessed individually and judgement is exercised in ITV Studios is a scaled and global creator, owner and distributor of high-quality TV content. ITV Studios is the largest identifying performance obligations and allocating price to them. Timing of revenue recognition is another area of producer in the UK, one of the largest unscripted producers in the US and one of the top three producers in the judgement particularly in respect of contracts in the ITV Studios division to assess whether revenue should be majority of the international markets in which it operates. ITV Studios has established relationships with key content recognised at a point in time or over time. buyers and leading creative talent in those markets; and with a combined content library of over 90,000 hours, it is Revenue recognition criteria for the key classes of revenue are as follows: also one of the pre-eminent global distributors. Segment Major classes of revenue and revenue recognition policy Payment terms ITV Studios UK, the largest producer in the UK, produces programming for the Group’s own channels, accounting ITV Studios for 70% of ITV main channel spend on commissioned programming (2022: 65%). Programming is also sold to other UK broadcasters, networks and streaming platforms. Programme • Revenue generated from the programmes produced for broadcasters • Payment term is production and streaming platforms in the UK, US and internationally is over the term of ITV Studios US is one of the largest unscripted producers in the US and continues to grow its scripted presence by recognised at the point of delivery of an episode and acceptance by the contract investing in high-profile dramas. the customer. Revenue from producer for hire contracts, where in an event of cancellation, cost is recovered plus a margin, is recognised ITV Studios also operates in ten other international locations, together called ITV Studios International, being over time, over the term of the contract Australia, Germany, France, Italy, Spain, the Netherlands, Sweden, Norway, Finland and Denmark where content is • A licence is granted for the exploitation of a format in a stated territory, Format licences • Payment term is produced for local and international broadcasters, networks and streaming platforms. This content is either locally media and period. Licence revenue is recognised when the licence over the term of created IP or formats that have been created elsewhere by ITV, primarily in the UK, the Netherlands and in Israel. period has commenced (point in time) the contract ITV Studios Global Partnerships license ITV’s finished programmes, formats and third-party content internationally. Programme • A licence is granted for the transmission of a programme in a stated • Payment term is Within this business, the Group also finances productions both on and off ITV to acquire global distribution rights. distribution territory, media and period and revenue is recognised at the point over the term of rights when the contract is signed, the content is available for download and the contract Media & Entertainment the licence period has started (point in time) ITV is the largest commercial broadcaster and streamer in the UK, delivering unrivalled audience scale and reach. Segment Major classes of revenue and revenue recognition policy Payment terms Media & Entertainment (M&E) includes Streaming and Broadcast through which we distribute content via ITVX, our free advertiser-funded streaming service, and via our free-to-air linear TV channels. Our content is also distributed Media & Entertainment • Net advertising revenue is generated from selling spot airtime on linear on third-party partner platforms such as Sky and Virgin. Total advertising • Received in the revenue TV and is recognised at the point of transmission month after ITVX also includes a subscription tier, ITVX Premium, which provides subscribers with all of ITVX’s programming • Online advertising revenue from video on demand is generated from transmission ad-free along with other exclusive content. selling advertising on ITVX (ITV Hub before the launch of ITVX in • Received in the December 2022) and is recognised at the point of delivery month after ITV offers advertisers a unique combination of mass simultaneous reach, targeted advertising, and commercial and • Revenue from the sponsorship of programmes across ITV linear campaign is delivered creative partnerships, in a brand-safe environment across ITVX and our linear TV channels. channels and online is recognised over the period of transmission • Received prior to transmission Digital revenue is predominantly made up of digital advertising revenues, subscription revenue and digital Subscriptions • Revenue from subscription services is recognised over the • Payment term is sponsorship and commercial partnerships. subscription period over the term of Non-digital advertising revenue is predominantly made up of advertising, sponsorship and commercial partnership the contract or revenue from our linear television channels. subscription period SDN • Revenue is generated from the carriage fee or capacity of the digital • Payment term is Other revenue is predominantly made up of competitions around our linear television programming and third party multiplex and is recognised over the term of the contract over the term of licensing revenue. the contract Partnerships and • Revenue from platforms such as Sky and Virgin Media O2, and • Payment term is Accounting policies other revenue third-party commissions. Revenue related to performance obligations over the term of Revenue measurement and recognition delivered over time (e.g. provision of HD and SD channels and updated the contract The Group derives revenue from the transfer of goods and services. Revenue recognition is based on the delivery of library content) are recognised over the term of the contract while performance obligations and an assessment of when control is transferred to the customer. Revenue is recognised revenues related to one-time provision of content are recognised on either when the performance obligation in the contract has been performed (‘point in time’ recognition) or ‘over time’ delivery of the content (point in time) as control of the performance obligation is transferred to the customer. • Interactive revenue is earned from entries to competitions and is • Payment term is recognised as the event occurs (point in time) within two months Customer contracts can have a wide variety of performance obligations, from production contracts to format • Minorities revenues is the revenue received from Channel 3 licencees of the competition licences and distribution activities. For these contracts, each performance obligation is identified and evaluated. that are not part of the ITV Group. The performance obligations are being aired Under IFRS 15 the Group needs to evaluate if a format or licence represents a right to access the content (revenue delivered as programming is delivered to the licensee and revenue is • Payment term is recognised over time) or represents a right to use the content (revenue recognised at a point in time). The Group has recognised over the term of the contract (over time) over the term of determined that most format and licence revenues are satisfied at a point in time due to there being limited ongoing • Other categories of revenues within ‘Partnerships and other revenue’ the contract involvement in the use of the licence following its transfer to the customer. are individually immaterial
166 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 167 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR C I AL In this This section focuses on the results and performance of the Group. On the following The transaction price, being the amount to which the Group expects to be entitled and has rights to under the S T section pages, you will find disclosures explaining the Group’s results for the year, contract is allocated to the identified performance obligations. The transaction price will also include an estimate of A T segmental information, exceptional items, taxation and earnings per share. any variable consideration where the Group’s performance may result in additional revenues. Variable consideration E M is estimated based on the achievement of agreed targets, such as audience targets. Variable consideration is E N recognised only to the extent that it is highly probable that a significant reversal of revenue recognised will not occur T 2.1 Profit Keeping This section analyses the Group’s profit before tax by reference to the activities when the uncertainty associated with the variable consideration is subsequently resolved. S before tax it simple performed by the Group and an analysis of key operating costs. Total revenue and adjusted earnings before interest, tax and amortisation (adjusted Revenue is stated exclusive of VAT and equivalent sales taxes. EBITA) (both as defined in the APMs section of the Annual Report) are the Group’s Complexity in advertising revenue measurement and recognition is driven by a combination of automated and key performance and profit indicators. They reflect the way the business is managed manual processes involved in measuring the value delivered to the customer and therefore the value of variable and how the Directors assess the performance of the Group. This section therefore consideration due. also shows each division’s contribution to total revenue and adjusted EBITA. In assessing the transaction price, any non-cash consideration received from a customer is included. Non-cash The Group is a vertically integrated producer broadcaster and streamer, consisting of ITV Studios and Media & consideration is measured at fair value. It takes into account the value of what the Group is receiving rather than the Entertainment (M&E). value of what the Group is giving up. ITV Studios Complex one-off contracts in all classes of revenue are assessed individually and judgement is exercised in ITV Studios is a scaled and global creator, owner and distributor of high-quality TV content. ITV Studios is the largest identifying performance obligations and allocating price to them. Timing of revenue recognition is another area of producer in the UK, one of the largest unscripted producers in the US and one of the top three producers in the judgement particularly in respect of contracts in the ITV Studios division to assess whether revenue should be majority of the international markets in which it operates. ITV Studios has established relationships with key content recognised at a point in time or over time. buyers and leading creative talent in those markets; and with a combined content library of over 90,000 hours, it is Revenue recognition criteria for the key classes of revenue are as follows: also one of the pre-eminent global distributors. Segment Major classes of revenue and revenue recognition policy Payment terms ITV Studios UK, the largest producer in the UK, produces programming for the Group’s own channels, accounting ITV Studios for 70% of ITV main channel spend on commissioned programming (2022: 65%). Programming is also sold to other UK broadcasters, networks and streaming platforms. Programme • Revenue generated from the programmes produced for broadcasters • Payment term is production and streaming platforms in the UK, US and internationally is over the term of ITV Studios US is one of the largest unscripted producers in the US and continues to grow its scripted presence by recognised at the point of delivery of an episode and acceptance by the contract investing in high-profile dramas. the customer. Revenue from producer for hire contracts, where in an event of cancellation, cost is recovered plus a margin, is recognised ITV Studios also operates in ten other international locations, together called ITV Studios International, being over time, over the term of the contract Australia, Germany, France, Italy, Spain, the Netherlands, Sweden, Norway, Finland and Denmark where content is • A licence is granted for the exploitation of a format in a stated territory, Format licences • Payment term is produced for local and international broadcasters, networks and streaming platforms. This content is either locally media and period. Licence revenue is recognised when the licence over the term of created IP or formats that have been created elsewhere by ITV, primarily in the UK, the Netherlands and in Israel. period has commenced (point in time) the contract ITV Studios Global Partnerships license ITV’s finished programmes, formats and third-party content internationally. Programme • A licence is granted for the transmission of a programme in a stated • Payment term is Within this business, the Group also finances productions both on and off ITV to acquire global distribution rights. distribution territory, media and period and revenue is recognised at the point over the term of rights when the contract is signed, the content is available for download and the contract Media & Entertainment the licence period has started (point in time) ITV is the largest commercial broadcaster and streamer in the UK, delivering unrivalled audience scale and reach. Segment Major classes of revenue and revenue recognition policy Payment terms Media & Entertainment (M&E) includes Streaming and Broadcast through which we distribute content via ITVX, our free advertiser-funded streaming service, and via our free-to-air linear TV channels. Our content is also distributed Media & Entertainment • Net advertising revenue is generated from selling spot airtime on linear on third-party partner platforms such as Sky and Virgin. Total advertising • Received in the revenue TV and is recognised at the point of transmission month after ITVX also includes a subscription tier, ITVX Premium, which provides subscribers with all of ITVX’s programming • Online advertising revenue from video on demand is generated from transmission ad-free along with other exclusive content. selling advertising on ITVX (ITV Hub before the launch of ITVX in • Received in the December 2022) and is recognised at the point of delivery month after ITV offers advertisers a unique combination of mass simultaneous reach, targeted advertising, and commercial and • Revenue from the sponsorship of programmes across ITV linear campaign is delivered creative partnerships, in a brand-safe environment across ITVX and our linear TV channels. channels and online is recognised over the period of transmission • Received prior to transmission Digital revenue is predominantly made up of digital advertising revenues, subscription revenue and digital Subscriptions • Revenue from subscription services is recognised over the • Payment term is sponsorship and commercial partnerships. subscription period over the term of Non-digital advertising revenue is predominantly made up of advertising, sponsorship and commercial partnership the contract or revenue from our linear television channels. subscription period SDN • Revenue is generated from the carriage fee or capacity of the digital • Payment term is Other revenue is predominantly made up of competitions around our linear television programming and third party multiplex and is recognised over the term of the contract over the term of licensing revenue. the contract Partnerships and • Revenue from platforms such as Sky and Virgin Media O2, and • Payment term is Accounting policies other revenue third-party commissions. Revenue related to performance obligations over the term of Revenue measurement and recognition delivered over time (e.g. provision of HD and SD channels and updated the contract The Group derives revenue from the transfer of goods and services. Revenue recognition is based on the delivery of library content) are recognised over the term of the contract while performance obligations and an assessment of when control is transferred to the customer. Revenue is recognised revenues related to one-time provision of content are recognised on either when the performance obligation in the contract has been performed (‘point in time’ recognition) or ‘over time’ delivery of the content (point in time) as control of the performance obligation is transferred to the customer. • Interactive revenue is earned from entries to competitions and is • Payment term is recognised as the event occurs (point in time) within two months Customer contracts can have a wide variety of performance obligations, from production contracts to format • Minorities revenues is the revenue received from Channel 3 licencees of the competition licences and distribution activities. For these contracts, each performance obligation is identified and evaluated. that are not part of the ITV Group. The performance obligations are being aired Under IFRS 15 the Group needs to evaluate if a format or licence represents a right to access the content (revenue delivered as programming is delivered to the licensee and revenue is • Payment term is recognised over time) or represents a right to use the content (revenue recognised at a point in time). The Group has recognised over the term of the contract (over time) over the term of determined that most format and licence revenues are satisfied at a point in time due to there being limited ongoing • Other categories of revenues within ‘Partnerships and other revenue’ the contract involvement in the use of the licence following its transfer to the customer. are individually immaterial
168 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 169 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL The results for the year aggregate these classes of revenue into the following categories: Intersegment revenue, which is earned on arm’s length terms, is mainly generated from the supply of ITV Studios S T programmes to Media & Entertainment for transmission primarily on the ITV network. This revenue stream is a A T 2023 2023 2022 2022 measure that informs the Group’s strategic priority of building a strong international content business, as producing E £m % of total £m % of total M and retaining rights to the shows broadcast on the ITV network benefits the Group further from subsequent E ITV Studios UK 962 822 N international content and format sales. T ITV Studios US 395 467 S ITV Studios International 445 465 In preparing the segmental information, centrally managed costs have been allocated between reportable segments * on a methodology driven principally by revenue, headcount or building occupancy of each segment. This is Global Partnerships 368 342 Total ITV Studios** 2,170 51% 2,096 48% consistent with the basis of reporting to the Board of Directors. There is one media buying agency (2022: two) acting on behalf of a number of advertisers that represent the Group’s Total advertising revenue (TAR) 1,778 42% 1,931 44% major customers. This agency is the only customer that individually represents over 10% of the Group’s revenue. Subscriptions 59 54 Revenue of approximately £478 million was derived from this customer in 2023. In 2022, there were two media SDN 48 55 buying agencies that represented over 10% of the Group’s revenue with £548 million and £355 million respectively. Partnerships and other revenue 205 209 This revenue is attributable to the Media & Entertainment segment. Media & Entertainment 2,090 49% 2,249 52% The following table shows the total of non-current assets other than financial instruments, deferred tax assets, and *** pension assets broken down by location of the assets: Total revenue 4,260 4,345 * Global Formats and Distribution was rebranded as Global Partnerships in the year 2023 2022 ** ITV Studios UK, ITV Studios US and Studios International revenues are mainly programme production. Global Partnerships revenue is from programme £m £m distribution rights, format licences and gaming, live events and merchandising. *** Includes internal supply as discussed in the APMs (page 43). UK 1,372 1,415 Digital revenues of £490 million (2022: £411 million) include digital advertising revenue and subscription revenue, US 391 472 digital sponsorship and partnership revenue, ITV Win and other revenues from digital business ventures. Rest of the world 137 155 Total non-current assets 1,900 2,042 Segmental information Operating segments, which have not been aggregated, are determined in a manner that is consistent with how the Timing of revenue recognition business is managed and reported to the Management Board. The Management Board is regarded as the chief The following table includes classes of revenue from contracts disaggregated by the timing of recognition: operating decision-maker and considers the business, primarily from an operating activity perspective. 2023 2022 2023 2022 The Groups' segments are Media & Entertainment and ITV Studios, the results of which are outlined in the following tables: £m £m £m £m Products and services Products and services Media & transferred at a point in time transferred over time ITV Studios* Entertainment Consolidated Total advertising revenue, subscriptions, SDN and other M&E 1,755 1,902 328 341 2023 2023 2023 £m £m £m Programme production, programme distribution rights 1,187 1,169 266 236 Total segment revenue 2,170 2,090 4,260 Format licences 82 76 6 4 Intersegment revenue (629) (7) (636) Total external revenue 3,024 3,147 600 581 Revenue from external customers 1,541 2,083 3,624 Forward bookings Adjusted EBITA** 286 205 491 The following table includes revenue from contracts signed before the reporting date that is to be recognised in periods Unrealised profit in stock adjustment (2) after the reporting date (i.e. the performance obligations remain unsatisfied or partially unsatisfied at the reporting date): Group adjusted EBITA*** 489 2024 2025 2026 Beyond £m £m £m £m Media & Media & Entertainment 92 73 53 29 ITV Studios* Entertainment Consolidated ITV Studios 151 180 39 12 2022 2022 2022 £m £m £m Total revenue 243 253 92 41 Total segment revenue 2,096 2,249 4,345 Internal supply (43) (52) – – Intersegment revenue (611) (6) (617) Total external revenue 200 201 92 41 Revenue from external customers 1,485 2,243 3,728 The Group applies the practical expedients in IFRS 15 and, therefore, does not disclose information about remaining performance obligations that have original expected durations of less than one year or where the price is not yet Adjusted EBITA** 259 464 723 known (e.g. net advertising revenue (NAR)). Unrealised profit in stock adjustment (6) Group adjusted EBITA*** 717 Group adjusted EBITA The Directors assess the performance of the reportable segments based on a measure of adjusted EBITA. The Directors * Intersegment revenue originates mainly in the UK. use this non-IFRS measurement basis as it excludes the effect of transactions that could distort the understanding ** Adjusted EBITA is EBITA adjusted to exclude exceptional items and includes the benefit of production tax credits. It is stated after the elimination of intersegment revenue and costs. of the Group’s performance for the year and comparability between periods. See the Operating and Financial *** Group adjusted EBITA removes the profit recorded in the ITV Studios business related to content sold to the Media & Entertainment business but Performance Review on pages 18 to 31 for the detailed explanation of the Group’s use of adjusted performance unutilised and held on the balance sheet at the year end. A reconciliation of Group adjusted EBITA to statutory profit before tax is provided on page 43. measures. A reconciliation of Group adjusted EBITA to statutory profit before tax is provided as follows: The Group’s principal operations are in the United Kingdom. Revenue from external customers in the United Kingdom is £2,272 million (2022: £2,376 million) and revenue from external customers in other countries is £1,352 million Note 2023 2022 £m £m (2022: £1,352 million), of which revenue of £641 million (2022: £655 million) was generated in the US during the year. Group adjusted EBITA 489 717 The Operating and Financial Performance Review provides further detail on ITV’s international revenues. Production tax credits (85) (49) EBITA before exceptional items 404 668 Operating exceptional items 2.2 (77) (65) Amortisation and impairment (89) (84) Net financing costs 4.4 (45) (26) Share of profits of joint ventures and associated undertakings – 8 Statutory profit before tax 193 501
168 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 169 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL The results for the year aggregate these classes of revenue into the following categories: Intersegment revenue, which is earned on arm’s length terms, is mainly generated from the supply of ITV Studios S T programmes to Media & Entertainment for transmission primarily on the ITV network. This revenue stream is a A T 2023 2023 2022 2022 measure that informs the Group’s strategic priority of building a strong international content business, as producing E £m % of total £m % of total M and retaining rights to the shows broadcast on the ITV network benefits the Group further from subsequent E ITV Studios UK 962 822 N international content and format sales. T ITV Studios US 395 467 S ITV Studios International 445 465 In preparing the segmental information, centrally managed costs have been allocated between reportable segments * on a methodology driven principally by revenue, headcount or building occupancy of each segment. This is Global Partnerships 368 342 Total ITV Studios** 2,170 51% 2,096 48% consistent with the basis of reporting to the Board of Directors. There is one media buying agency (2022: two) acting on behalf of a number of advertisers that represent the Group’s Total advertising revenue (TAR) 1,778 42% 1,931 44% major customers. This agency is the only customer that individually represents over 10% of the Group’s revenue. Subscriptions 59 54 Revenue of approximately £478 million was derived from this customer in 2023. In 2022, there were two media SDN 48 55 buying agencies that represented over 10% of the Group’s revenue with £548 million and £355 million respectively. Partnerships and other revenue 205 209 This revenue is attributable to the Media & Entertainment segment. Media & Entertainment 2,090 49% 2,249 52% The following table shows the total of non-current assets other than financial instruments, deferred tax assets, and *** pension assets broken down by location of the assets: Total revenue 4,260 4,345 * Global Formats and Distribution was rebranded as Global Partnerships in the year 2023 2022 ** ITV Studios UK, ITV Studios US and Studios International revenues are mainly programme production. Global Partnerships revenue is from programme £m £m distribution rights, format licences and gaming, live events and merchandising. *** Includes internal supply as discussed in the APMs (page 43). UK 1,372 1,415 Digital revenues of £490 million (2022: £411 million) include digital advertising revenue and subscription revenue, US 391 472 digital sponsorship and partnership revenue, ITV Win and other revenues from digital business ventures. Rest of the world 137 155 Total non-current assets 1,900 2,042 Segmental information Operating segments, which have not been aggregated, are determined in a manner that is consistent with how the Timing of revenue recognition business is managed and reported to the Management Board. The Management Board is regarded as the chief The following table includes classes of revenue from contracts disaggregated by the timing of recognition: operating decision-maker and considers the business, primarily from an operating activity perspective. 2023 2022 2023 2022 The Groups' segments are Media & Entertainment and ITV Studios, the results of which are outlined in the following tables: £m £m £m £m Products and services Products and services Media & transferred at a point in time transferred over time ITV Studios* Entertainment Consolidated Total advertising revenue, subscriptions, SDN and other M&E 1,755 1,902 328 341 2023 2023 2023 £m £m £m Programme production, programme distribution rights 1,187 1,169 266 236 Total segment revenue 2,170 2,090 4,260 Format licences 82 76 6 4 Intersegment revenue (629) (7) (636) Total external revenue 3,024 3,147 600 581 Revenue from external customers 1,541 2,083 3,624 Forward bookings Adjusted EBITA** 286 205 491 The following table includes revenue from contracts signed before the reporting date that is to be recognised in periods Unrealised profit in stock adjustment (2) after the reporting date (i.e. the performance obligations remain unsatisfied or partially unsatisfied at the reporting date): *** 2024 2025 2026 Beyond Group adjusted EBITA 489 £m £m £m £m Media & Media & Entertainment 92 73 53 29 ITV Studios* Entertainment Consolidated ITV Studios 151 180 39 12 2022 2022 2022 £m £m £m Total revenue 243 253 92 41 Total segment revenue 2,096 2,249 4,345 Internal supply (43) (52) – – Intersegment revenue (611) (6) (617) Total external revenue 200 201 92 41 Revenue from external customers 1,485 2,243 3,728 The Group applies the practical expedients in IFRS 15 and, therefore, does not disclose information about remaining performance obligations that have original expected durations of less than one year or where the price is not yet Adjusted EBITA** 259 464 723 known (e.g. net advertising revenue (NAR)). Unrealised profit in stock adjustment (6) Group adjusted EBITA*** 717 Group adjusted EBITA The Directors assess the performance of the reportable segments based on a measure of adjusted EBITA. The Directors * Intersegment revenue originates mainly in the UK. use this non-IFRS measurement basis as it excludes the effect of transactions that could distort the understanding ** Adjusted EBITA is EBITA adjusted to exclude exceptional items and includes the benefit of production tax credits. It is stated after the elimination of intersegment revenue and costs. of the Group’s performance for the year and comparability between periods. See the Operating and Financial *** Group adjusted EBITA removes the profit recorded in the ITV Studios business related to content sold to the Media & Entertainment business but Performance Review on pages 18 to 31 for the detailed explanation of the Group’s use of adjusted performance unutilised and held on the balance sheet at the year end. A reconciliation of Group adjusted EBITA to statutory profit before tax is provided on page 43. measures. A reconciliation of Group adjusted EBITA to statutory profit before tax is provided as follows: The Group’s principal operations are in the United Kingdom. Revenue from external customers in the United Kingdom is £2,272 million (2022: £2,376 million) and revenue from external customers in other countries is £1,352 million Note 2023 2022 £m £m (2022: £1,352 million), of which revenue of £641 million (2022: £655 million) was generated in the US during the year. Group adjusted EBITA 489 717 The Operating and Financial Performance Review provides further detail on ITV’s international revenues. Production tax credits (85) (49) EBITA before exceptional items 404 668 Operating exceptional items 2.2 (77) (65) Amortisation and impairment (89) (84) Net financing costs 4.4 (45) (26) Share of profits of joint ventures and associated undertakings – 8 Statutory profit before tax 193 501
170 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 171 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL Cash generated from operations Depreciation S T A reconciliation of profit before tax to cash generated from operations before exceptional items is as follows: Depreciation in the year was £46 million (2022: £53 million), of which £28 million (2022: £33 million) relates to ITV A T Studios and £18 million (2022: £20 million) to Media & Entertainment. A further £6 million (2022: £8 million) in E M Note 2023 2022 respect of accelerated depreciation following a change in useful life of the related assets in relation to the move to a E £m £m N new London site has been included in exceptional items. See notes 2.2 and 3.2 for further details. T Cash flows from operating activities S Statutory profit before tax 193 501 Audit fees Add back: The Group’s auditors are PricewaterhouseCoopers LLP. The Group may engage PricewaterhouseCoopers LLP on Share of profits of joint ventures and associated undertakings – (8) assignments additional to its statutory audit duties where its expertise and experience with the Group are important and are in line with the Group’s policy on auditor independence. In 2023, non-audit fees of £1.3 million (2022: £nil) Net financing costs 4.4 45 26 were paid to PricewaterhouseCoopers LLP for services related to a proposed acquisition. Fees for audit-related Operating exceptional items 2.2 77 65 assurance services of £0.2 million (2022: £0.2 million), being the review of the interim results for the six months to Depreciation of property, plant and equipment (net of exceptional items) 3.2 46 53 30 June 2023 were also incurred. Fees paid to PricewaterhouseCoopers LLP and its associates during the year are Amortisation and impairment 89 84 set out below: Share-based compensation 4.8 16 19 PwC PwC Increase in programme rights and distribution rights (33) (70) 2023 2022 Decrease/(increase) in receivables, contract assets and production inventories 274 (133) £m £m (Decrease)/increase in payables and contract liabilities (151) 53 For the audit of the Group’s annual financial statements 2.1 1.8 Movement in working capital 90 (150) For the audit of subsidiaries of the Group 1.7 1.3 Cash generated from operations before exceptional items 556 590 Audit-related assurance services 0.2 0.2 Total audit and audit-related assurance services 4.0 3.3 Operating costs The major components of operating costs of £3,386 million (2022: £3,209 million) are content costs of £1,293 million Other assurance services 1.3 – (2022: £1,216 million), other net costs of production of £1,496 million (2022: £1,444 million), staff costs of Total non-audit services* 1.3 – £385 million (2022: £347 million), depreciation, amortisation and impairment of £135 million (2022: £137 million) and operating exceptional items of £77 million (2022: £65 million). Total fees paid to auditors 5.3 3.3 Staff costs * See details of non-audit services policy in the Audit and Risk Committee Report on page 116. Staff costs can be analysed as follows: Other than noted above, there were no fees payable in 2023 or 2022 to PricewaterhouseCoopers LLP or their associates 2023 2022 for the audit of financial statements of any associate or pension scheme of the Group, or internal audit activities. £m £m Wages and salaries 548 497 Social security and other costs 98 80 Share-based compensation (see note 4.8) 16 19 Pension costs 31 35 * Total staff costs 693 631 Less: staff costs allocated to productions, exceptional items or capitalised (308) (284) Net staff costs 385 347 * Staff costs includes the management board including two executive directors but excludes the non-executives and the Chairman. Full-time equivalent employees (FTEE) include those FTEEs that are allocated to the cost of productions during the year; however, they exclude short-term contractors and freelancers who are engaged on productions. The weighted average FTEE over the year is: 2023 2022 ITV Studios 4,017 4,042 Media & Entertainment 2,852 2,635 6,869 6,677 The monthly average number of people employed over the year is: 2023 2022 ITV Studios 4,248 4,144 Media & Entertainment 2,939 2,681 7,187 6,825 The increase in headcount is due to a continued investment in digital and technical expertise to drive our digital revenue primarily on ITVX.
170 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 171 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL Cash generated from operations Depreciation S T A reconciliation of profit before tax to cash generated from operations before exceptional items is as follows: Depreciation in the year was £46 million (2022: £53 million), of which £28 million (2022: £33 million) relates to ITV A T Studios and £18 million (2022: £20 million) to Media & Entertainment. A further £6 million (2022: £8 million) in E M Note 2023 2022 respect of accelerated depreciation following a change in useful life of the related assets in relation to the move to a E £m £m N new London site has been included in exceptional items. See notes 2.2 and 3.2 for further details. T Cash flows from operating activities S Statutory profit before tax 193 501 Audit fees Add back: The Group’s auditors are PricewaterhouseCoopers LLP. The Group may engage PricewaterhouseCoopers LLP on Share of profits of joint ventures and associated undertakings – (8) assignments additional to its statutory audit duties where its expertise and experience with the Group are important and are in line with the Group’s policy on auditor independence. In 2023, non-audit fees of £1.3 million (2022: £nil) Net financing costs 4.4 45 26 were paid to PricewaterhouseCoopers LLP for services related to a proposed acquisition. Fees for audit-related Operating exceptional items 2.2 77 65 assurance services of £0.2 million (2022: £0.2 million), being the review of the interim results for the six months to Depreciation of property, plant and equipment (net of exceptional items) 3.2 46 53 30 June 2023 were also incurred. Fees paid to PricewaterhouseCoopers LLP and its associates during the year are Amortisation and impairment 89 84 set out below: Share-based compensation 4.8 16 19 PwC PwC Increase in programme rights and distribution rights (33) (70) 2023 2022 Decrease/(increase) in receivables, contract assets and production inventories 274 (133) £m £m (Decrease)/increase in payables and contract liabilities (151) 53 For the audit of the Group’s annual financial statements 2.1 1.8 Movement in working capital 90 (150) For the audit of subsidiaries of the Group 1.7 1.3 Cash generated from operations before exceptional items 556 590 Audit-related assurance services 0.2 0.2 Total audit and audit-related assurance services 4.0 3.3 Operating costs The major components of operating costs of £3,386 million (2022: £3,209 million) are content costs of £1,293 million Other assurance services 1.3 – (2022: £1,216 million), other net costs of production of £1,496 million (2022: £1,444 million), staff costs of Total non-audit services* 1.3 – £385 million (2022: £347 million), depreciation, amortisation and impairment of £135 million (2022: £137 million) and operating exceptional items of £77 million (2022: £65 million). Total fees paid to auditors 5.3 3.3 Staff costs * See details of non-audit services policy in the Audit and Risk Committee Report on page 116. Staff costs can be analysed as follows: Other than noted above, there were no fees payable in 2023 or 2022 to PricewaterhouseCoopers LLP or their associates 2023 2022 for the audit of financial statements of any associate or pension scheme of the Group, or internal audit activities. £m £m Wages and salaries 548 497 Social security and other costs 98 80 Share-based compensation (see note 4.8) 16 19 Pension costs 31 35 * Total staff costs 693 631 Less: staff costs allocated to productions, exceptional items or capitalised (308) (284) Net staff costs 385 347 * Staff costs includes the management board including two executive directors but excludes the non-executives and the Chairman. Full-time equivalent employees (FTEE) include those FTEEs that are allocated to the cost of productions during the year; however, they exclude short-term contractors and freelancers who are engaged on productions. The weighted average FTEE over the year is: 2023 2022 ITV Studios 4,017 4,042 Media & Entertainment 2,852 2,635 6,869 6,677 The monthly average number of people employed over the year is: 2023 2022 ITV Studios 4,248 4,144 Media & Entertainment 2,939 2,681 7,187 6,825 The increase in headcount is due to a continued investment in digital and technical expertise to drive our digital revenue primarily on ITVX.
172 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 173 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL 2.2 Exceptional Keeping Exceptional items are excluded from management’s assessment of profit because G. Employee-related tax provisions S T it simple by their size or nature they could distort the Group’s underlying quality of earnings. From April 2021 the responsibility for undertaking IR35 employment status assessments, and where necessary A items T They are typically gains or losses arising from events that are not considered withholding PAYE and paying NICs, passed to the employer, rather than remaining with individuals and their personal E M part of the core operations of the business. These items are excluded to reflect service companies. HMRC have issued assessments on the Group for several individuals engaged by the Group E N performance in a consistent manner and are in line with how the business is during the tax years 2016/17 to 2018/19 as employed for tax purposes. This is a complex area and the Group has T managed and measured on a day-to-day basis. been in continuous discussion with HMRC on this matter throughout 2023. S In 2023, HMRC advised that certain individuals were no longer of interest to them and the related provision Accounting policies previously classified as exceptional was released. Exceptional items as described above are highlighted on the face of the Consolidated Income Statement. See the Operating and Financial Performance Review on pages 18 to 31 for the detailed explanation of the Group’s use of Due to ongoing reviews by HMRC and court cases in this matter, the final amount payable could be significantly adjusted performance measures. Gains or losses on disposal of non-core assets are also considered exceptional due different to amounts currently provided. to their nature and impact on the Group’s underlying quality of earnings. H. Insured trade receivable provision Exceptional items In 2017, the Group recorded a bad debt provision of US$41 million related to trade receivables for The Voice of China. Operating exceptional items are analysed as follows: Subsequently, US$34 million of cash was received from the licensee and the corresponding bad debt provision was released. The Directors anticipated recovering the remainder of the trade receivable from the trade credit insurance. 2023 2022 (Charge)/credit Ref. £m £m In 2023, a settlement of the claim was agreed with the insurers resulting in an exceptional credit of US$5 million Operating exceptional items: (£3 million). No further recovery of the remaining trade receivable is expected. Acquisition-related expenses A (24) (4) Restructuring and transformation costs B (25) (28) I. Legal settlements Legal settlements of £13 million (2022: £nil) relate to settlements or proposed settlements on a number of Property costs C (10) (24) significant legal cases which are considered outside the normal course of business. Pension related costs D – (4) Costs related to the passing of Her Majesty Queen Elizabeth II E – (16) J. Legal and other costs Sports rights F – 5 Legal and other costs of £11 million (2022: £7 million) relates primarily to legal costs for matters considered to be Employee-related tax provision G 3 (10) outside the normal course of business, including Box Clever, The Voice of Holland, the UK Competition and Markets Insured trade receivable provision H 3 23 Authority (CMA) investigations and the Phillip Schofield KC Review. Legal settlements I (13) – Legal and other costs J (11) (7) Total operating exceptional items (77) (65) Tax on operating exceptional items 12 8 Total operating exceptional items net of tax (65) (57) A. Acquisition-related expenses Acquisition-related expenses of £24 million (2022: £4 million) are predominantly performance-based, employment- linked consideration to former owners and professional fees related to acquisitions and potential acquisitions. B. Restructuring and transformation costs Restructuring and transformation costs of £25 million (2022: £28 million) relate to one-off significant restructuring and transformation programmes of the business. Significant projects include a business transformation programme which commenced in 2021. This programme includes the implementation of a new cloud-based ERP solution, a software as a service (SaaS) solution where the implementation costs are expensed as incurred. The implementation commenced in 2021 and is expected to continue into 2024. Other significant projects include a rationalisation of the Studios operational structures outside the UK. Costs relating to this review will continue throughout 2024. C. Property costs llion) of property costs Following the decision to move to Broadcast Centre in early 2022, £10 million (2022: £17 mi and move related costs have been recognised as exceptional, including accelerated depreciation following a change in useful life of the related assets. No further exceptional costs are expected related to the move to Broadcast Centre. In 2022, an additional £7 million impairment on leasehold improvements and right of use asset was provided following the decision to vacate our New York office and reduce our property footprint in the US. D. Pension related costs The 2022 charge relates to the risk premium paid in relation to the buy-out of Section C of the ITV Pension Scheme. E. Costs related to the passing of Her Majesty Queen Elizabeth II Following the passing of Her Majesty Queen Elizabeth II in September 2022, the M&E business incurred significant additional costs related to news coverage associated with the reporting of the death of the Queen, the funeral and programmes featuring the character of the Queen that will unlikely ever be screened. £16 million of costs were recognised in 2022. F. Sports rights In 2021, certain sporting events were cancelled by the relevant governing body. The Group had previously recognised an impairment provision for these events. £5 million was released in 2022 as a refund of earlier payments made was expected.
172 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 173 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL 2.2 Exceptional Keeping Exceptional items are excluded from management’s assessment of profit because G. Employee-related tax provisions S T it simple by their size or nature they could distort the Group’s underlying quality of earnings. From April 2021 the responsibility for undertaking IR35 employment status assessments, and where necessary A items T They are typically gains or losses arising from events that are not considered withholding PAYE and paying NICs, passed to the employer, rather than remaining with individuals and their personal E M part of the core operations of the business. These items are excluded to reflect service companies. HMRC have issued assessments on the Group for several individuals engaged by the Group E N performance in a consistent manner and are in line with how the business is during the tax years 2016/17 to 2018/19 as employed for tax purposes. This is a complex area and the Group has T managed and measured on a day-to-day basis. been in continuous discussion with HMRC on this matter throughout 2023. S In 2023, HMRC advised that certain individuals were no longer of interest to them and the related provision Accounting policies previously classified as exceptional was released. Exceptional items as described above are highlighted on the face of the Consolidated Income Statement. See the Operating and Financial Performance Review on pages 18 to 31 for the detailed explanation of the Group’s use of Due to ongoing reviews by HMRC and court cases in this matter, the final amount payable could be significantly adjusted performance measures. Gains or losses on disposal of non-core assets are also considered exceptional due different to amounts currently provided. to their nature and impact on the Group’s underlying quality of earnings. H. Insured trade receivable provision Exceptional items In 2017, the Group recorded a bad debt provision of US$41 million related to trade receivables for The Voice of China. Operating exceptional items are analysed as follows: Subsequently, US$34 million of cash was received from the licensee and the corresponding bad debt provision was released. The Directors anticipated recovering the remainder of the trade receivable from the trade credit insurance. 2023 2022 (Charge)/credit Ref. £m £m In 2023, a settlement of the claim was agreed with the insurers resulting in an exceptional credit of US$5 million Operating exceptional items: (£3 million). No further recovery of the remaining trade receivable is expected. Acquisition-related expenses A (24) (4) Restructuring and transformation costs B (25) (28) I. Legal settlements Legal settlements of £13 million (2022: £nil) relate to settlements or proposed settlements on a number of Property costs C (10) (24) significant legal cases which are considered outside the normal course of business. Pension related costs D – (4) Costs related to the passing of Her Majesty Queen Elizabeth II E – (16) J. Legal and other costs Sports rights F – 5 Legal and other costs of £11 million (2022: £7 million) relates primarily to legal costs for matters considered to be Employee-related tax provision G 3 (10) outside the normal course of business, including Box Clever, The Voice of Holland, the UK Competition and Markets Insured trade receivable provision H 3 23 Authority (CMA) investigations and the Phillip Schofield KC Review. Legal settlements I (13) – Legal and other costs J (11) (7) Total operating exceptional items (77) (65) Tax on operating exceptional items 12 8 Total operating exceptional items net of tax (65) (57) A. Acquisition-related expenses Acquisition-related expenses of £24 million (2022: £4 million) are predominantly performance-based, employment- linked consideration to former owners and professional fees related to acquisitions and potential acquisitions. B. Restructuring and transformation costs Restructuring and transformation costs of £25 million (2022: £28 million) relate to one-off significant restructuring and transformation programmes of the business. Significant projects include a business transformation programme which commenced in 2021. This programme includes the implementation of a new cloud-based ERP solution, a software as a service (SaaS) solution where the implementation costs are expensed as incurred. The implementation commenced in 2021 and is expected to continue into 2024. Other significant projects include a rationalisation of the Studios operational structures outside the UK. Costs relating to this review will continue throughout 2024. C. Property costs llion) of property costs Following the decision to move to Broadcast Centre in early 2022, £10 million (2022: £17 mi and move related costs have been recognised as exceptional, including accelerated depreciation following a change in useful life of the related assets. No further exceptional costs are expected related to the move to Broadcast Centre. In 2022, an additional £7 million impairment on leasehold improvements and right of use asset was provided following the decision to vacate our New York office and reduce our property footprint in the US. D. Pension related costs The 2022 charge relates to the risk premium paid in relation to the buy-out of Section C of the ITV Pension Scheme. E. Costs related to the passing of Her Majesty Queen Elizabeth II Following the passing of Her Majesty Queen Elizabeth II in September 2022, the M&E business incurred significant additional costs related to news coverage associated with the reporting of the death of the Queen, the funeral and programmes featuring the character of the Queen that will unlikely ever be screened. £16 million of costs were recognised in 2022. F. Sports rights In 2021, certain sporting events were cancelled by the relevant governing body. The Group had previously recognised an impairment provision for these events. £5 million was released in 2022 as a refund of earlier payments made was expected.
174 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 175 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL 2.3 Keeping This section sets out the Group’s tax accounting policies, the current and deferred tax In order to understand how, in the Consolidated Income Statement, a tax credit of £16 million (2022: £66 million S T it simple charges or credits in the year (which together make up the total tax charge or credit in charge) arises on a profit before tax of £193 million (2022: £501 million), the taxation charge that would arise at the A Taxation T the Consolidated Income Statement), a reconciliation of profit before tax to the tax standard rate of UK corporation tax is reconciled to the actual tax credit as follows: E M charge for the year and the movements in deferred tax assets and liabilities. E 2023 2022 N T £m £m S Accounting policies Profit before tax 193 501 The tax charge for the year is recognised in the Consolidated Income Statement, the Consolidated Statement of Notional taxation charge at UK corporation tax rate of 23.5% (2022: 19%) on profit Comprehensive Income and directly in equity, according to the accounting treatment of the related transactions. before tax (45) (95) The tax charge comprises both current and deferred tax. The calculation of the Group’s tax charge involves Non-taxable income/non-deductible expenses (10) (15) estimation and judgement in respect of certain items whose tax treatment cannot be fully determined until a Prior year adjustments (14) 4 resolution has been reached by the relevant tax authority. Other taxes (8) (8) Current tax Previously unrecognised deferred tax assets 6 – Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any adjustment Current year losses not recognised (17) (8) in respect of previous years. Impact of overseas tax rates 2 (1) The Group recognises liabilities for anticipated tax issues based on estimates and judgement of the additional taxes Impact of changes in tax rates 1 (6) that are likely to become due. Amounts are accrued based on management’s interpretation of specific tax law and Movement on tax provisions (1) (1) the likelihood of settlement. Where the final tax outcome of these matters is different from the amounts that were Production tax credits 102 64 initially recorded, such differences will impact the current tax and deferred tax provisions in the period in which such Statutory taxation credit/(charge) in the Consolidated Income Statement 16 (66) determination is made. Non-deductible expenses are expenses that are not expected to be allowable for tax purposes. Similarly, non- Deferred tax taxable income is income that is not expected to be taxable. Deferred tax arises due to certain temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and those for taxation purposes. Adjustments to prior periods primarily arise where an outcome is obtained on certain tax matters, which differs from expectations held when the related provision was made. Where the outcome is more favourable than the provision The following temporary differences are not provided for: made, the difference is released, lowering the current year tax charge. Where the outcome is less favourable than our • The initial recognition of goodwill provision, an additional charge to current year tax will occur. The total current tax credit of £23 million (2022: £22 • The initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a million charge) includes a £12 million charge (2022: £9 million credit) relating to prior years, and the deferred tax business combination charge of £7 million (2022: £44 million charge) includes a £2 million charge (2022: £5 million charge) relating to prior • Differences relating to investments in subsidiaries to the extent that they will probably not reverse in the years. This adjustment has arisen following changes in estimates of taxes that have already become due, or will foreseeable future become due in the future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying Other taxes of £8 million charge (2022: £8 million charge) includes state taxes of £3 million in the US, local taxes of amount of assets and liabilities. Deferred tax is calculated using tax rates that are enacted or substantively enacted £1 million in Italy and France plus £4 million of irrecoverable withholding tax in the UK. at the balance sheet date. A previously unrecognised deferred tax asset of £6 million relating to historical capital losses, has been recognised A deferred tax asset is recognised only to the extent that it is probable that sufficient taxable profit will be available in 2023, as they will be utilised against the capital profits realised on the sale of BritBox International, announced to utilise the temporary difference. Recognition of deferred tax assets, therefore, involves judgement regarding the on 1 March 2024. timing and level of future taxable income. The tax impact of current year losses not recognised is £17 million (2022: £8 million), this relates to £2 million in Deferred tax assets and liabilities are disclosed net to the extent that they relate to taxes levied by the same Australia, £1 million in France, £13 million in Italy and £1 million in other overseas jurisdictions. No deferred tax on authority and the Group has the right of set-off. these losses has been recognised as we do not have certainty over future taxable profits in those jurisdictions nor are they suitable taxable temporary differences against which the losses can unwind. Taxation – Consolidated Income Statement The total taxation charge in the Consolidated Income Statement is analysed as follows: The impact of overseas tax rates reflects the fact that some of our profits are earned in territories other than the UK and taxed at rates different from the UK corporation tax rate. In 2023, the total impact is £2 million credit 2023 2022 (2022: £1 million charge) due to profits arising in lower tax jurisdictions. £m £m Current tax: The UK corporation tax rate increased from 19% to 25%, effective from 1 April 2023. The current year movement Current tax credit/(charge) on profit before exceptional items 24 (38) through the Consolidated Income Statement, on the deferred tax liability created in respect of the change in the tax Current tax credit on exceptional items 11 7 rate, is a £1 million credit (2022: £6 million charge). 35 (31) In line with our accounting policy on current tax, provisions are held on the balance sheet within current tax liabilities Adjustments related to prior periods (12) 9 in respect of uncertain tax positions where management believes that it is probable that future payments of tax will 23 (22) be required. Deferred tax: Origination and reversal of temporary differences (7) (34) The production tax credits included within the reconciliation above are UK High-End Television (HETV) tax credits and Children’s Television tax credits, which are part of a group of incentives provided to support the creative Deferred tax credit on exceptional items 1 1 industries in the UK. The ability to access these tax credits is fundamental when assessing the viability of investment Impact of changes to statutory tax rates 1 (6) decisions in the production of high-end drama and children’s programmes. Under IFRS, these production tax credits (5) (39) are reported within the total taxation charge in the Consolidated Income Statement. However, ITV considers them to Adjustments related to prior periods (2) (5) be a contribution to production costs, and therefore working capital in nature, and excludes them from its adjusted (7) (44) tax charge, including them instead within Adjusted EBITA. Total taxation credit/(charge) in the Consolidated Income Statement 16 (66) The effective tax rate is (8.3)% (2022: 13.2%), and is the statutory tax charge on the face of the Consolidated Income Statement expressed as a percentage of the statutory profit before tax. The tax rate is lower than in 2022 primarily due to significantly higher HETV tax credits compared to the profits. As explained in the Finance Review, the Group uses an adjusted tax rate to show how tax impacts total adjusted earnings in a way that is more aligned with the Group’s cash tax position. The adjusted tax rate is 21.5% (2022: 20.1%). In 2023, the current year movement recognised in the Consolidated Income Statement on origination and reversal of temporary differences (excluding exceptional items) is a charge of £7 million, compared with a charge of £34 million in 2022.
174 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 175 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL 2.3 Keeping This section sets out the Group’s tax accounting policies, the current and deferred tax In order to understand how, in the Consolidated Income Statement, a tax credit of £16 million (2022: £66 million S T it simple charges or credits in the year (which together make up the total tax charge or credit in charge) arises on a profit before tax of £193 million (2022: £501 million), the taxation charge that would arise at the A Taxation T the Consolidated Income Statement), a reconciliation of profit before tax to the tax standard rate of UK corporation tax is reconciled to the actual tax credit as follows: E M charge for the year and the movements in deferred tax assets and liabilities. E 2023 2022 N T £m £m S Accounting policies Profit before tax 193 501 The tax charge for the year is recognised in the Consolidated Income Statement, the Consolidated Statement of Notional taxation charge at UK corporation tax rate of 23.5% (2022: 19%) on profit Comprehensive Income and directly in equity, according to the accounting treatment of the related transactions. before tax (45) (95) The tax charge comprises both current and deferred tax. The calculation of the Group’s tax charge involves Non-taxable income/non-deductible expenses (10) (15) estimation and judgement in respect of certain items whose tax treatment cannot be fully determined until a Prior year adjustments (14) 4 resolution has been reached by the relevant tax authority. Other taxes (8) (8) Current tax Previously unrecognised deferred tax assets 6 – Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any adjustment Current year losses not recognised (17) (8) in respect of previous years. Impact of overseas tax rates 2 (1) The Group recognises liabilities for anticipated tax issues based on estimates and judgement of the additional taxes Impact of changes in tax rates 1 (6) that are likely to become due. Amounts are accrued based on management’s interpretation of specific tax law and Movement on tax provisions (1) (1) the likelihood of settlement. Where the final tax outcome of these matters is different from the amounts that were Production tax credits 102 64 initially recorded, such differences will impact the current tax and deferred tax provisions in the period in which such Statutory taxation credit/(charge) in the Consolidated Income Statement 16 (66) determination is made. Non-deductible expenses are expenses that are not expected to be allowable for tax purposes. Similarly, non- Deferred tax taxable income is income that is not expected to be taxable. Deferred tax arises due to certain temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and those for taxation purposes. Adjustments to prior periods primarily arise where an outcome is obtained on certain tax matters, which differs from expectations held when the related provision was made. Where the outcome is more favourable than the provision The following temporary differences are not provided for: made, the difference is released, lowering the current year tax charge. Where the outcome is less favourable than our • The initial recognition of goodwill provision, an additional charge to current year tax will occur. The total current tax credit of £23 million (2022: £22 • The initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a million charge) includes a £12 million charge (2022: £9 million credit) relating to prior years, and the deferred tax business combination charge of £7 million (2022: £44 million charge) includes a £2 million charge (2022: £5 million charge) relating to prior • Differences relating to investments in subsidiaries to the extent that they will probably not reverse in the years. This adjustment has arisen following changes in estimates of taxes that have already become due, or will foreseeable future become due in the future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying Other taxes of £8 million charge (2022: £8 million charge) includes state taxes of £3 million in the US, local taxes of amount of assets and liabilities. Deferred tax is calculated using tax rates that are enacted or substantively enacted £1 million in Italy and France plus £4 million of irrecoverable withholding tax in the UK. at the balance sheet date. A previously unrecognised deferred tax asset of £6 million relating to historical capital losses, has been recognised A deferred tax asset is recognised only to the extent that it is probable that sufficient taxable profit will be available in 2023, as they will be utilised against the capital profits realised on the sale of BritBox International, announced to utilise the temporary difference. Recognition of deferred tax assets, therefore, involves judgement regarding the on 1 March 2024. timing and level of future taxable income. The tax impact of current year losses not recognised is £17 million (2022: £8 million), this relates to £2 million in Deferred tax assets and liabilities are disclosed net to the extent that they relate to taxes levied by the same Australia, £1 million in France, £13 million in Italy and £1 million in other overseas jurisdictions. No deferred tax on authority and the Group has the right of set-off. these losses has been recognised as we do not have certainty over future taxable profits in those jurisdictions nor are they suitable taxable temporary differences against which the losses can unwind. Taxation – Consolidated Income Statement The total taxation charge in the Consolidated Income Statement is analysed as follows: The impact of overseas tax rates reflects the fact that some of our profits are earned in territories other than the UK and taxed at rates different from the UK corporation tax rate. In 2023, the total impact is £2 million credit 2023 2022 (2022: £1 million charge) due to profits arising in lower tax jurisdictions. £m £m Current tax: The UK corporation tax rate increased from 19% to 25%, effective from 1 April 2023. The current year movement Current tax credit/(charge) on profit before exceptional items 24 (38) through the Consolidated Income Statement, on the deferred tax liability created in respect of the change in the tax Current tax credit on exceptional items 11 7 rate, is a £1 million credit (2022: £6 million charge). 35 (31) In line with our accounting policy on current tax, provisions are held on the balance sheet within current tax liabilities Adjustments related to prior periods (12) 9 in respect of uncertain tax positions where management believes that it is probable that future payments of tax will 23 (22) be required. Deferred tax: Origination and reversal of temporary differences (7) (34) The production tax credits included within the reconciliation above are UK High-End Television (HETV) tax credits and Children’s Television tax credits, which are part of a group of incentives provided to support the creative Deferred tax credit on exceptional items 1 1 industries in the UK. The ability to access these tax credits is fundamental when assessing the viability of investment Impact of changes to statutory tax rates 1 (6) decisions in the production of high-end drama and children’s programmes. Under IFRS, these production tax credits (5) (39) are reported within the total taxation charge in the Consolidated Income Statement. However, ITV considers them to Adjustments related to prior periods (2) (5) be a contribution to production costs, and therefore working capital in nature, and excludes them from its adjusted (7) (44) tax charge, including them instead within Adjusted EBITA. Total taxation credit/(charge) in the Consolidated Income Statement 16 (66) The effective tax rate is (8.3)% (2022: 13.2%), and is the statutory tax charge on the face of the Consolidated Income Statement expressed as a percentage of the statutory profit before tax. The tax rate is lower than in 2022 primarily due to significantly higher HETV tax credits compared to the profits. As explained in the Finance Review, the Group uses an adjusted tax rate to show how tax impacts total adjusted earnings in a way that is more aligned with the Group’s cash tax position. The adjusted tax rate is 21.5% (2022: 20.1%). In 2023, the current year movement recognised in the Consolidated Income Statement on origination and reversal of temporary differences (excluding exceptional items) is a charge of £7 million, compared with a charge of £34 million in 2022.
176 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 177 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL Taxation – Other comprehensive income (OCI) and equity Subsidiaries of ITV plc Group have undistributed earnings of £42 million (2022: £26 million) which, if paid out as S T As analysed in the table below a deferred tax charge of £2 million (2022: £23 million charge) has been recognised on dividends, would be subject to tax in the hands of the recipient. An assessable temporary difference exists, but no A T deferred tax liability has been recognised as ITV plc Group is able to control the timing of the distributions from E actuarial movements on pensions. Other temporary differences recognised in other comprehensive income include, M no deferred tax (2022: credit of £5 million) on gilts, £1 million deferred tax charge on derivatives (2022: £1 million these subsidiaries and is not expected to distribute these profits in the foreseeable future. E N credit) and £2 million deferred tax charge on the cost of hedging (2022: £nil). A deferred tax charge of £3 million T (2022: £7 million charge) has been recognised in equity in respect of share-based payments. Finance (No 2) Bill and Pillar Two impact on financial statements S the UK, introducing a global minimum On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in There has been £11 million current tax credit recognised in other comprehensive income in the current year on pensions. effective tax rate of 15% for large groups and for financial years beginning on or after 31 December 2023. Taxation There has been no current tax on foreign exchange movements net of hedging (2022: £nil). There has been £1 million balances are adjusted for a change in tax law if the change has been substantively enacted by the balance sheet date current tax credit recognised in equity in the current year in relation to share-based compensation (2022: £nil). however the amendments to IAS 12 ‘Income Taxes’ Pillar Two income taxes provides an exemption from the requirement to recognise and disclose deferred taxes arising from enacted or substantively enacted tax law that Taxation – Consolidated Statement of Financial Position implements the Pillar Two model rules. Statement of The table below outlines the deferred tax assets/(liabilities) that are recognised in the Consolidated Financial Position, together with their movements in the year: Based on an initial analysis of the current year financial data, most territories in which the Group operates are expected to qualify for one of the safe harbour exemptions such that top-up taxes should not apply. In territories At Recognised in Recognised At where this is not the case there is the potential for Pillar Two taxes to apply, but these are not expected to be 1 January the income in OCI Foreign 31 December material. The Group continues to refine this assessment and analyse the future consequences of these rules. 2023 statement and equity Other exchange 2023 £m £m £m £m £m £m Changes to the current UK system of Audio-visual tax credits Tangible assets 1 (6) – – – (5) the current system of Audio-Visual On 29 November 2023, the UK government issued final legislation to reform Intangible assets (49) (1) – – 1 (49) Expenditure Credit (AVEC) tax credits to merge the four existing AVEC schemes (Film, High-End Television (HETV), Pension scheme (56) (1) (2) – – (59) Children’s Television and Animation) into a single scheme and has reviewed the qualifying criteria. The AVEC legislation Tax losses 27 7 – – (2) 32 was substantively enacted on 5 February 2024 and can be claimed on expenditure incurred from 1 January 2024. Share-based compensation 9 (1) (3) – – 5 The new scheme is one of expenditure credits as opposed to corporate tax relief, requiring a change to the accounting Other temporary differences 30 (5) (3) 1 – 23 treatment to include them within statutory operating profit rather than within the consolidated tax charge. The effect (38) (7) (8) 1 (1) (53) of this change in legislation will therefore be to increase our EBITA, adjusted EBITA, adjusted EBITA margin, profit before tax and tax expense but will leave our profit after tax unchanged, compared to the previous HETV tax credit accounting treatment. We continue to assess the impact on the Group and do not anticipate there to be a material change in their At Recognised in Recognised At net economic value. 1 January the income in OCI Foreign 31 December 2022 statement and equity Other exchange 2022 £m £m £m £m £m £m Tangible assets 4 (3) – – – 1 Intangible assets (45) 1 – (3) (2) (49) Pension scheme (6) (27) (23) – – (56) Tax losses 32 (8) – – 3 27 Share-based compensation 11 5 (7) – – 9 Other temporary differences 29 (12) 6 4 3 30 25 (44) (24) 1 4 (38) At 31 December 2023, the net deferred tax liability position is £53 million (2022: £38 million liability), consisting of total deferred tax assets of £106 million (2022: £133 million) and total deferred tax liabilities of £159 million (2022: £171 million). The Consolidated Statement of Financial Position presents deferred tax after netting off balances within countries – a deferred tax asset of £6 million and a deferred tax liability of £59 million (2022: deferred tax asset of £19 million and a deferred tax liability of £57 million). The deferred tax balances relate to: • Property, plant and equipment temporary differences arising on assets qualifying for tax depreciation • Temporary differences on intangible assets, including those arising on business combinations • Programme rights – temporary differences on intercompany profits on stock • Pension scheme temporary differences on the IAS 19 pension surplus and SDN and LTVC pension funding partnerships • Temporary differences arising from the timing of the use of tax losses • Share-based compensation temporary differences on share schemes • Other temporary differences on provisions and financial instruments The deferred tax balance associated with the pension surplus is partially driven by the employer contributions to the Group’s defined benefit pension scheme made during the year. The adjustment in other comprehensive income to the deferred tax balances relates to the actuarial loss recognised in the year. A deferred tax asset of £32 million (2022: £27 million) has been recognised for tax losses where a full recovery is expected based on forecasted taxable profits. A deferred tax asset of £371 million (2022: £558 million) in respect of capital losses of £1,483 million (2022: £2,231 million) has not been recognised due to uncertainties as to whether capital gains will arise in the appropriate form and relevant territories against which such losses could be utilised. The decrease in the capital losses not recognised compared to the prior year is due to the dissolution of a company that held capital losses. Due to uncertainty over the timing and extent of their utilisation, the Group has not recognised deferred tax assets of £10 million (2022: £13 million) in respect of UK losses of £38 million (2022: £53 million), £25 million (2022: £19 million) in respect of overseas losses of £106 million (2022: £84 million) including £2 million in respect of losses that expire between 2024 and 2028. In addition to this the Group has not recognised £5 million (2022: £5 million) in respect of other overseas short-term timing differences of £21 million.
176 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 177 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL Taxation – Other comprehensive income (OCI) and equity Subsidiaries of ITV plc Group have undistributed earnings of £42 million (2022: £26 million) which, if paid out as S T As analysed in the table below a deferred tax charge of £2 million (2022: £23 million charge) has been recognised on dividends, would be subject to tax in the hands of the recipient. An assessable temporary difference exists, but no A T deferred tax liability has been recognised as ITV plc Group is able to control the timing of the distributions from E actuarial movements on pensions. Other temporary differences recognised in other comprehensive income include, M no deferred tax (2022: credit of £5 million) on gilts, £1 million deferred tax charge on derivatives (2022: £1 million these subsidiaries and is not expected to distribute these profits in the foreseeable future. E N credit) and £2 million deferred tax charge on the cost of hedging (2022: £nil). A deferred tax charge of £3 million T (2022: £7 million charge) has been recognised in equity in respect of share-based payments. Finance (No 2) Bill and Pillar Two impact on financial statements S the UK, introducing a global minimum On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in There has been £11 million current tax credit recognised in other comprehensive income in the current year on pensions. effective tax rate of 15% for large groups and for financial years beginning on or after 31 December 2023. Taxation There has been no current tax on foreign exchange movements net of hedging (2022: £nil). There has been £1 million balances are adjusted for a change in tax law if the change has been substantively enacted by the balance sheet date current tax credit recognised in equity in the current year in relation to share-based compensation (2022: £nil). however the amendments to IAS 12 ‘Income Taxes’ Pillar Two income taxes provides an exemption from the requirement to recognise and disclose deferred taxes arising from enacted or substantively enacted tax law that Taxation – Consolidated Statement of Financial Position implements the Pillar Two model rules. Statement of The table below outlines the deferred tax assets/(liabilities) that are recognised in the Consolidated Financial Position, together with their movements in the year: Based on an initial analysis of the current year financial data, most territories in which the Group operates are expected to qualify for one of the safe harbour exemptions such that top-up taxes should not apply. In territories At Recognised in Recognised At where this is not the case there is the potential for Pillar Two taxes to apply, but these are not expected to be 1 January the income in OCI Foreign 31 December material. The Group continues to refine this assessment and analyse the future consequences of these rules. 2023 statement and equity Other exchange 2023 £m £m £m £m £m £m Changes to the current UK system of Audio-visual tax credits Tangible assets 1 (6) – – – (5) the current system of Audio-Visual On 29 November 2023, the UK government issued final legislation to reform Intangible assets (49) (1) – – 1 (49) Expenditure Credit (AVEC) tax credits to merge the four existing AVEC schemes (Film, High-End Television (HETV), Pension scheme (56) (1) (2) – – (59) Children’s Television and Animation) into a single scheme and has reviewed the qualifying criteria. The AVEC legislation Tax losses 27 7 – – (2) 32 was substantively enacted on 5 February 2024 and can be claimed on expenditure incurred from 1 January 2024. Share-based compensation 9 (1) (3) – – 5 The new scheme is one of expenditure credits as opposed to corporate tax relief, requiring a change to the accounting Other temporary differences 30 (5) (3) 1 – 23 treatment to include them within statutory operating profit rather than within the consolidated tax charge. The effect (38) (7) (8) 1 (1) (53) of this change in legislation will therefore be to increase our EBITA, adjusted EBITA, adjusted EBITA margin, profit before tax and tax expense but will leave our profit after tax unchanged, compared to the previous HETV tax credit accounting treatment. We continue to assess the impact on the Group and do not anticipate there to be a material change in their At Recognised in Recognised At net economic value. 1 January the income in OCI Foreign 31 December 2022 statement and equity Other exchange 2022 £m £m £m £m £m £m Tangible assets 4 (3) – – – 1 Intangible assets (45) 1 – (3) (2) (49) Pension scheme (6) (27) (23) – – (56) Tax losses 32 (8) – – 3 27 Share-based compensation 11 5 (7) – – 9 Other temporary differences 29 (12) 6 4 3 30 25 (44) (24) 1 4 (38) At 31 December 2023, the net deferred tax liability position is £53 million (2022: £38 million liability), consisting of total deferred tax assets of £106 million (2022: £133 million) and total deferred tax liabilities of £159 million (2022: £171 million). The Consolidated Statement of Financial Position presents deferred tax after netting off balances within countries – a deferred tax asset of £6 million and a deferred tax liability of £59 million (2022: deferred tax asset of £19 million and a deferred tax liability of £57 million). The deferred tax balances relate to: • Property, plant and equipment temporary differences arising on assets qualifying for tax depreciation • Temporary differences on intangible assets, including those arising on business combinations • Programme rights – temporary differences on intercompany profits on stock • Pension scheme temporary differences on the IAS 19 pension surplus and SDN and LTVC pension funding partnerships • Temporary differences arising from the timing of the use of tax losses • Share-based compensation temporary differences on share schemes • Other temporary differences on provisions and financial instruments The deferred tax balance associated with the pension surplus is partially driven by the employer contributions to the Group’s defined benefit pension scheme made during the year. The adjustment in other comprehensive income to the deferred tax balances relates to the actuarial loss recognised in the year. A deferred tax asset of £32 million (2022: £27 million) has been recognised for tax losses where a full recovery is expected based on forecasted taxable profits. A deferred tax asset of £371 million (2022: £558 million) in respect of capital losses of £1,483 million (2022: £2,231 million) has not been recognised due to uncertainties as to whether capital gains will arise in the appropriate form and relevant territories against which such losses could be utilised. The decrease in the capital losses not recognised compared to the prior year is due to the dissolution of a company that held capital losses. Due to uncertainty over the timing and extent of their utilisation, the Group has not recognised deferred tax assets of £10 million (2022: £13 million) in respect of UK losses of £38 million (2022: £53 million), £25 million (2022: £19 million) in respect of overseas losses of £106 million (2022: £84 million) including £2 million in respect of losses that expire between 2024 and 2028. In addition to this the Group has not recognised £5 million (2022: £5 million) in respect of other overseas short-term timing differences of £21 million.
178 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 179 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL 2.4 Keeping Earnings per share (EPS) is the amount of post-tax profit attributable to each share. Details of the adjustments to earnings are as follows: S T it simple A Earnings Basic EPS is calculated on the Group profit for the year attributable to equity T A. Exceptional items (net of tax) £65 million (2022: £57 million) E per share shareholders of £210 million (2022: £428 million) divided by 4,023 million Exceptional items of £77 million (2022: £65 million), net of related tax credit of £12 million (2022: £8 million). M E (2022: 4,010 million), being the weighted average number of shares in issue N The exceptional items have been taxed in accordance with the tax treatment of the underlying transaction at the T during the year, which excludes Employee Benefit Trust (EBT) shares held in trust tax rate of the jurisdiction to which they relate. The £77 million exceptional charge comprises exceptional costs of S (see note 4.8). £88 million and an exceptional credit of £11 million. £26 million of the net exceptional costs were disallowed for tax Diluted EPS reflects any commitments made by the Group to issue shares in the purposes and so there is no associated tax credit. See note 2.2 for the detailed composition of exceptional items. future and so it includes the impact of share options. B. Amortisation and impairment of acquired intangible assets (net of tax) of £19 million (2022: £45 million) Adjusted EPS is presented in order to show the business performance of the Group Amortisation and impairment of assets acquired through business combinations and investments of £89 million in a consistent manner and reflect how the business is managed and measured on (2022: £84 million), excluding amortisation of software licences and development of £64 million (2022: £27 million), a day-to-day basis. Adjusted EPS reflects the impact of operating and non- net of related tax credit of £6 million (2022: £12 million). operating exceptional items on Basic EPS. Other items excluded from Adjusted EPS are amortisation and impairment of intangible assets acquired through business C. Adjustments to net financing costs (net of tax) £18 million (2022: £nil) combinations; net financing cost adjustments; and the tax adjustments relating to Net financing costs of £45 million (2022: £26 million), is adjusted to reflect the underlying cash cost of interest for the these items. Each of these adjustments is explained in detail in the section below. business. These adjustments of £16 million (2022: £nil) relates principally to finance costs on acquisitions, imputed pension interest and other financial gains and losses that do not reflect the relevant interest cash cost to the business and are not yet realised balances. The tax charge in relation to these adjustments is £2 million (2022: £nil). The calculation of Basic EPS and Adjusted EPS, together with the diluted impact on each, is set out below: Basic earnings per share 2023 2022 Statutory profit for the year attributable to equity shareholders of ITV plc (£m) 210 428 Weighted average number of ordinary shares in issue – million 4,023 4,010 Basic earnings per ordinary share 5.2p 10.7p Diluted earnings per share 2023 2022 Statutory profit for the year attributable to equity shareholders of ITV plc (£m) 210 428 Weighted average number of ordinary shares in issue – million 4,023 4,010 Dilution due to share options – million 36 36 Total weighted average number of ordinary shares in issue – million 4,059 4,046 Diluted earnings per ordinary share 5.2p 10.6p Adjusted earnings per share 2023 2022 Ref. £m £m Statutory profit for the year attributable to equity shareholders of ITV plc 210 428 Exceptional items (net of tax) A 65 57 Profit for the year before exceptional items 275 485 Amortisation and impairment of acquired intangible assets B 19 45 Adjustments to net financing costs C 18 – Adjusted profit for the year attributable to ITV shareholders 312 530 Total weighted average number of ordinary shares in issue – million 4,023 4,010 Adjusted earnings per ordinary share 7.8p 13.2p Diluted adjusted earnings per share 2023 2022 Adjusted profit (£m) 312 530 Weighted average number of ordinary shares in issue – million 4,023 4,010 Dilution due to share options – million 36 36 Total weighted average number of ordinary shares in issue – million 4,059 4,046 Diluted adjusted earnings per ordinary share 7.7p 13.1p
178 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 179 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 2: RESULTS FOR THE YEAR CONTINUED C I AL 2.4 Keeping Earnings per share (EPS) is the amount of post-tax profit attributable to each share. Details of the adjustments to earnings are as follows: S T it simple A Earnings Basic EPS is calculated on the Group profit for the year attributable to equity T A. Exceptional items (net of tax) £65 million (2022: £57 million) E per share shareholders of £210 million (2022: £428 million) divided by 4,023 million Exceptional items of £77 million (2022: £65 million), net of related tax credit of £12 million (2022: £8 million). M E (2022: 4,010 million), being the weighted average number of shares in issue N The exceptional items have been taxed in accordance with the tax treatment of the underlying transaction at the T during the year, which excludes Employee Benefit Trust (EBT) shares held in trust tax rate of the jurisdiction to which they relate. The £77 million exceptional charge comprises exceptional costs of S (see note 4.8). £88 million and an exceptional credit of £11 million. £26 million of the net exceptional costs were disallowed for tax Diluted EPS reflects any commitments made by the Group to issue shares in the purposes and so there is no associated tax credit. See note 2.2 for the detailed composition of exceptional items. future and so it includes the impact of share options. B. Amortisation and impairment of acquired intangible assets (net of tax) of £19 million (2022: £45 million) Adjusted EPS is presented in order to show the business performance of the Group Amortisation and impairment of assets acquired through business combinations and investments of £89 million in a consistent manner and reflect how the business is managed and measured on (2022: £84 million), excluding amortisation of software licences and development of £64 million (2022: £27 million), a day-to-day basis. Adjusted EPS reflects the impact of operating and non-net of related tax credit of £6 million (2022: £12 million). operating exceptional items on Basic EPS. Other items excluded from Adjusted EPS are amortisation and impairment of intangible assets acquired through business C. Adjustments to net financing costs (net of tax) £18 million (2022: £nil) combinations; net financing cost adjustments; and the tax adjustments relating to Net financing costs of £45 million (2022: £26 million), is adjusted to reflect the underlying cash cost of interest for the these items. Each of these adjustments is explained in detail in the section below. business. These adjustments of £16 million (2022: £nil) relates principally to finance costs on acquisitions, imputed pension interest and other financial gains and losses that do not reflect the relevant interest cash cost to the business and are not yet realised balances. The tax charge in relation to these adjustments is £2 million (2022: £nil). The calculation of Basic EPS and Adjusted EPS, together with the diluted impact on each, is set out below: Basic earnings per share 2023 2022 Statutory profit for the year attributable to equity shareholders of ITV plc (£m) 210 428 Weighted average number of ordinary shares in issue – million 4,023 4,010 Basic earnings per ordinary share 5.2p 10.7p Diluted earnings per share 2023 2022 Statutory profit for the year attributable to equity shareholders of ITV plc (£m) 210 428 Weighted average number of ordinary shares in issue – million 4,023 4,010 Dilution due to share options – million 36 36 Total weighted average number of ordinary shares in issue – million 4,059 4,046 Diluted earnings per ordinary share 5.2p 10.6p Adjusted earnings per share 2023 2022 Ref. £m £m Statutory profit for the year attributable to equity shareholders of ITV plc 210 428 Exceptional items (net of tax) A 65 57 Profit for the year before exceptional items 275 485 Amortisation and impairment of acquired intangible assets B 19 45 Adjustments to net financing costs C 18 – Adjusted profit for the year attributable to ITV shareholders 312 530 Total weighted average number of ordinary shares in issue – million 4,023 4,010 Adjusted earnings per ordinary share 7.8p 13.2p Diluted adjusted earnings per share 2023 2022 Adjusted profit (£m) 312 530 Weighted average number of ordinary shares in issue – million 4,023 4,010 Dilution due to share options – million 36 36 Total weighted average number of ordinary shares in issue – million 4,059 4,046 Diluted adjusted earnings per ordinary share 7.7p 13.1p
180 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 181 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES C I AL In this This section shows the assets used to generate the Group’s trading performance Programme rights and other inventory at the year end are shown in the table below: S T section and the liabilities incurred as a result. On the following pages, there are notes A T covering working capital, non-current assets and liabilities, acquisitions and 2023 2022 E £m £m M disposals, provisions and pensions. E Acquired programme rights 284 225 N T Liabilities relating to the Group’s financing activities are addressed in section 4. Commissions 83 103 S Deferred tax assets and liabilities are shown in note 2.3. Sports rights 46 49 413 377 3.1 Keeping Working capital represents the assets and liabilities the Group generates through Working it simple its trading activity. The Group therefore defines working capital as distribution £nil relates to stock that will be transmitted in 2025 and beyond (2022: £6 million transmitted in 2024 and beyond). capital rights, programme rights, trade and other receivables, trade and other payables, contract assets and liabilities and production inventories. Included within programme rights and other inventory is £46 million (2022: £49 million) relating to programme rights Careful management of working capital ensures that the Group can meet its trading that have been paid for but that are not yet in licence. These amounts are considered to be prepayments but are and financing obligations within its ordinary operating cycle. included within programme rights and other inventory as it is more useful to the reader to show all such rights together. Working capital is a driver of the profit to cash conversion ratio, a key performance Programme and transmission commitments indicator for the Group. For those subsidiaries acquired during the year, working Transmission commitments are the contracted future payments under transmission supply agreements that require capital at the date of acquisition is excluded from the profit to cash calculation so the use of transponder capacity for a period of up to ten years with payments increasing over time, limited by specific that only subsequent working capital movements in the period controlled by ITV are RPI caps. The application of IFRS requires judgement regarding the classification of transmission commitments. The reflected in this metric. Group has concluded that these contracts do not constitute leases as defined in IFRS 16 ‘Leases’, as the Group does not control these assets due to the nature of the operation of the assets and the rights retained by the supplier In the following note, you will find further information regarding working capital under the contracts. management and analysis of the elements of working capital. Programming commitments are transactions entered into in the ordinary course of business with programme 3.1.1 Programme rights and commitments suppliers, sports organisations and film distributors in respect of rights to broadcast on the ITV network including Accounting policies ITVX and on BritBox UK. Rights are recognised when the Group controls the respective rights and the risks and rewards associated with them. The Group has onerous contract provisions of £18 million (2022: £34 million) in respect of transponder capacity Programme rights not yet utilised are included in the Consolidated Statement of Financial Position at the lower of usage and sports rights commitments. See note 3.6 for further details. cost and net realisable value. In assessing net realisable value for programmes in production, judgement is required Commitments in respect of these transactions, which are not reflected in the Consolidated Statement of Financial when considering the contracted sales price and estimated costs to complete. Position, are due for payment as follows: Programme rights Transmission Programme Total The Group’s policies with respect to programme rights recognise that the pattern of consumption on linear and 2023 £m £m £m streaming (ITVX) varies. Consumption of content varies based on the type of programme right as well as the type of Within one year 20 488 508 platform it is transmitted on. Programme rights are expensed through operating costs reflecting the pattern in which Later than one year and not more than five years – 380 380 management expects the right to be consumed. 20 868 888 The Group has defined policies on how programme rights are allocated to linear and streaming based on a pattern of viewing. There are also distinct policies across the platforms when these programme rights are recognised in Transmission Programme Total the Consolidated Statement of Financial Position; when these costs are released to the Consolidated Income 2022 £m £m £m Statement; and the impairment review of the carrying values of programme rights held. Within one year 25 466 491 Later than one year and not more than five years 19 349 368 Type of programme Streaming policy Linear policy 44 815 859 Acquired content Cost charged to the Income Statement Cost charged to the Income Statement on a declining-balance method over the over a number of linear transmissions 3.1.2 Distribution rights licence period (episodic) Accounting policies Commissioned content Cost charged to the Income Statement Cost charged to the Income Statement Distribution rights are programme rights the Group buys from producers to derive future revenue, principally through on a declining-balance method over the on first linear transmission (episodic) licensing to other broadcasters. These are classified as non-current assets as these rights are used to derive long- licence period term economic benefit for the Group. Sports rights Cost charged to the Income Statement Cost charged to the Income Statement on first transmission on first linear transmission Distribution rights are recognised initially at cost and charged through operating costs in the Consolidated Income Current affairs, live Cost charged to the Income Statement Cost charged to the Income Statement Statement over a period not exceeding five years, reflecting the value and pattern in which the right is consumed. events, soaps on first transmission on first linear transmission Advances paid for the acquisition of distribution rights are disclosed as distribution rights as soon as they are Library of content Straight-line amortisation over licence windows contracted. These advances are not expensed until the programme is available for distribution. Up to that point, they are (ITVX only) assessed annually for impairment through the reassessment of the future sales expected to be earned from that title. The net book value of distribution rights at the year end is as follows: Acquired programme rights are purchased for the primary purpose of broadcasting on the ITV family of channels, including ad-funded streaming service and subscription streaming service platforms. These are recognised within 2023 2022 current assets the earlier of when payments are made or when the rights are ready for exploitation. £m £m Distribution rights 14 17 Commissions, which primarily comprise programmes purchased, based on editorial specification and over which the Group has some control, are recognised in current assets as payments are made. During the year, £18 million was charged to the Consolidated Income Statement (2022: £25 million). The net realisable value assessment for acquired, commissioned and sports rights is based on estimated airtime value. The net realisable value is assessed on a portfolio basis unless specific indicators of impairment are identified. During the pandemic, sports rights were reviewed separately for impairment following the impact of the pandemic on the planned sporting schedule and the consequential impact on TAR and audience mix for certain sporting events. There are no current specific indicators of impairment, therefore sports rights have now reverted to being assessed with all other content on a portfolio basis.
180 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 181 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES C I AL In this This section shows the assets used to generate the Group’s trading performance Programme rights and other inventory at the year end are shown in the table below: S T section and the liabilities incurred as a result. On the following pages, there are notes A T covering working capital, non-current assets and liabilities, acquisitions and 2023 2022 E £m £m M disposals, provisions and pensions. E Acquired programme rights 284 225 N T Liabilities relating to the Group’s financing activities are addressed in section 4. Commissions 83 103 S Deferred tax assets and liabilities are shown in note 2.3. Sports rights 46 49 413 377 3.1 Keeping Working capital represents the assets and liabilities the Group generates through Working it simple its trading activity. The Group therefore defines working capital as distribution £nil relates to stock that will be transmitted in 2025 and beyond (2022: £6 million transmitted in 2024 and beyond). capital rights, programme rights, trade and other receivables, trade and other payables, contract assets and liabilities and production inventories. Included within programme rights and other inventory is £46 million (2022: £49 million) relating to programme rights Careful management of working capital ensures that the Group can meet its trading that have been paid for but that are not yet in licence. These amounts are considered to be prepayments but are and financing obligations within its ordinary operating cycle. included within programme rights and other inventory as it is more useful to the reader to show all such rights together. Working capital is a driver of the profit to cash conversion ratio, a key performance Programme and transmission commitments indicator for the Group. For those subsidiaries acquired during the year, working Transmission commitments are the contracted future payments under transmission supply agreements that require capital at the date of acquisition is excluded from the profit to cash calculation so the use of transponder capacity for a period of up to ten years with payments increasing over time, limited by specific that only subsequent working capital movements in the period controlled by ITV are RPI caps. The application of IFRS requires judgement regarding the classification of transmission commitments. The reflected in this metric. Group has concluded that these contracts do not constitute leases as defined in IFRS 16 ‘Leases’, as the Group does not control these assets due to the nature of the operation of the assets and the rights retained by the supplier In the following note, you will find further information regarding working capital under the contracts. management and analysis of the elements of working capital. Programming commitments are transactions entered into in the ordinary course of business with programme 3.1.1 Programme rights and commitments suppliers, sports organisations and film distributors in respect of rights to broadcast on the ITV network including Accounting policies ITVX and on BritBox UK. Rights are recognised when the Group controls the respective rights and the risks and rewards associated with them. The Group has onerous contract provisions of £18 million (2022: £34 million) in respect of transponder capacity Programme rights not yet utilised are included in the Consolidated Statement of Financial Position at the lower of usage and sports rights commitments. See note 3.6 for further details. cost and net realisable value. In assessing net realisable value for programmes in production, judgement is required Commitments in respect of these transactions, which are not reflected in the Consolidated Statement of Financial when considering the contracted sales price and estimated costs to complete. Position, are due for payment as follows: Programme rights Transmission Programme Total The Group’s policies with respect to programme rights recognise that the pattern of consumption on linear and 2023 £m £m £m streaming (ITVX) varies. Consumption of content varies based on the type of programme right as well as the type of Within one year 20 488 508 platform it is transmitted on. Programme rights are expensed through operating costs reflecting the pattern in which Later than one year and not more than five years – 380 380 management expects the right to be consumed. 20 868 888 The Group has defined policies on how programme rights are allocated to linear and streaming based on a pattern of viewing. There are also distinct policies across the platforms when these programme rights are recognised in Transmission Programme Total the Consolidated Statement of Financial Position; when these costs are released to the Consolidated Income 2022 £m £m £m Statement; and the impairment review of the carrying values of programme rights held. Within one year 25 466 491 Later than one year and not more than five years 19 349 368 Type of programme Streaming policy Linear policy 44 815 859 Acquired content Cost charged to the Income Statement Cost charged to the Income Statement on a declining-balance method over the over a number of linear transmissions 3.1.2 Distribution rights licence period (episodic) Accounting policies Commissioned content Cost charged to the Income Statement Cost charged to the Income Statement Distribution rights are programme rights the Group buys from producers to derive future revenue, principally through on a declining-balance method over the on first linear transmission (episodic) licensing to other broadcasters. These are classified as non-current assets as these rights are used to derive long- licence period term economic benefit for the Group. Sports rights Cost charged to the Income Statement Cost charged to the Income Statement on first transmission on first linear transmission Distribution rights are recognised initially at cost and charged through operating costs in the Consolidated Income Current affairs, live Cost charged to the Income Statement Cost charged to the Income Statement Statement over a period not exceeding five years, reflecting the value and pattern in which the right is consumed. events, soaps on first transmission on first linear transmission Advances paid for the acquisition of distribution rights are disclosed as distribution rights as soon as they are Library of content Straight-line amortisation over licence windows contracted. These advances are not expensed until the programme is available for distribution. Up to that point, they are (ITVX only) assessed annually for impairment through the reassessment of the future sales expected to be earned from that title. The net book value of distribution rights at the year end is as follows: Acquired programme rights are purchased for the primary purpose of broadcasting on the ITV family of channels, including ad-funded streaming service and subscription streaming service platforms. These are recognised within 2023 2022 current assets the earlier of when payments are made or when the rights are ready for exploitation. £m £m Distribution rights 14 17 Commissions, which primarily comprise programmes purchased, based on editorial specification and over which the Group has some control, are recognised in current assets as payments are made. During the year, £18 million was charged to the Consolidated Income Statement (2022: £25 million). The net realisable value assessment for acquired, commissioned and sports rights is based on estimated airtime value. The net realisable value is assessed on a portfolio basis unless specific indicators of impairment are identified. During the pandemic, sports rights were reviewed separately for impairment following the impact of the pandemic on the planned sporting schedule and the consequential impact on TAR and audience mix for certain sporting events. There are no current specific indicators of impairment, therefore sports rights have now reverted to being assessed with all other content on a portfolio basis.
182 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 183 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL 3.1.3 Trade and other receivables 3.1.4 Trade and other payables due within one year S T Accounting policies Accounting policies A T E Trade receivables are recognised initially at the value of the invoice sent to the customer and subsequently at the Trade payables are recognised at the value of the invoice received from a supplier. The carrying value of current and M amounts considered recoverable (amortised cost). Where payments are not due for more than one year, they are non-current trade payables is considered to approximate fair value. Trade and other payables due within one year E N shown in the financial statements at their net present value to reflect the economic cost of delayed payment. can be analysed as follows: T The Group provides goods and services to substantially all of its customers on credit terms. S 2023 2022 The credit risk management practices of the Group include internal review and reporting of the ageing of trade and £m £m other receivables by days past due. The Group applies the IFRS 9 simplified approach in measuring expected credit Trade payables 105 141 losses, which use a lifetime expected credit loss allowance for all trade receivables. VAT and social security 35 38 Other payables 170 146 To measure expected credit losses, trade receivables and contract assets have been grouped by shared credit risk Acquisition-related liabilities – employment-linked contingent consideration 5 2 characteristics and days past due. As part of the expected credit losses, the Group may make additional provisions for the receivables of particular customers if the deterioration of financial position was observed. Acquisition-related liabilities – payable to sellers under put options agreed on acquisition 39 1 The carrying value of trade receivables is considered to approximate fair value. Trade and other receivables can be Accruals 596 573 analysed as follows: 950 901 2023 2022 3.1.5 Trade and other payables due after more than one year £m £m Due within one year: Trade and other payables due after more than one year can be analysed as follows: Trade receivables 427 476 2023 2022 Other receivables 145 162 £m £m Prepayments 58 54 Trade payables 25 17 630 692 Due after more than one year: Other payables 33 28 Trade receivables 37 24 Acquisition-related liabilities – employment-linked contingent consideration 10 6 Other receivables 25 20 Acquisition-related liabilities – payable to sellers under put options agreed on 62 44 acquisition 24 38 Total trade and other receivables 692 736 67 72 Total trade and other payables due after more than one year 92 89 £464 million (2022: £500 million) of total trade receivables, stated net of provisions for impairment, are aged as follows: Trade payables due after more than one year relates primarily to royalties in both 2023 and 2022. Other payables due 2023 2022 after more than one year relates primarily to film creditors of £24 million (2022: £22 million). £m £m Current 408 437 Acquisition-related liabilities or performance-based employment-linked earnouts are the estimated amounts Up to 30 days overdue 29 34 payable to previous owners. The estimated future payments that are accrued over the period the sellers are required Between 30 and 90 days overdue 21 20 to remain with the business are treated as exceptional costs (see note 2.2). Those amounts not linked to employment are estimated and recognised at acquisition at their time discounted value, with the unwind of the Over 90 days overdue 6 9 discount recorded as part of finance costs. 464 500 Acquisition related liabilities at 31 December 2023 were £78 million (2022: £47 million) which represents the amount Movements in the Group’s provision for impairment of trade receivables and contract assets can be shown as follows: accrued to date at their time discounted value. The total undiscounted estimated future payments of £105 million (2022: £89 million) are sensitive to forecast profits as they are based on a multiple of earnings. The range of 2023 2022 reasonably possible outcomes for the undiscounted liability is between £86 million and £147 million. The liabilities £m £m due after more than one year are expected to be settled between 2025 and 2028. At 1 January 24 43 Charged during the year 4 14 All earnouts are sensitive to forecast profits as they are based on a multiple of earnings and judgement is required Bad debts written off (8) – where there may be adjustments to forecasted profits or when earnouts are negotiated, hence the reason for the Release of provision (11) (33) range noted above. At 31 December* 9 24 * £1 million (2022: £8 million) of the provision relates to contract assets and is included in the balance disclosed in note 3.1.6. Of the provision total, £7 million relates to balances overdue by more than 90 days (2022: £22 million) and £2 million relates to current balances (2022: less than £1 million). In 2023, a settlement of the claim was agreed with the credit insurers in relation to the remaining amount receivable for The Voice of China, resulting in an exceptional credit of US$5 million (£3 million) consistent with the original treatment. See note 2.2. No further recovery of the remaining trade receivable is expected. The remaining release of the provision relates to other settlements for outstanding production related receivables and contract assets. The credit has been taken to operating profit.
182 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 183 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL 3.1.3 Trade and other receivables 3.1.4 Trade and other payables due within one year S T Accounting policies Accounting policies A T E Trade receivables are recognised initially at the value of the invoice sent to the customer and subsequently at the Trade payables are recognised at the value of the invoice received from a supplier. The carrying value of current and M amounts considered recoverable (amortised cost). Where payments are not due for more than one year, they are non-current trade payables is considered to approximate fair value. Trade and other payables due within one year E N shown in the financial statements at their net present value to reflect the economic cost of delayed payment. can be analysed as follows: T The Group provides goods and services to substantially all of its customers on credit terms. S 2023 2022 The credit risk management practices of the Group include internal review and reporting of the ageing of trade and £m £m other receivables by days past due. The Group applies the IFRS 9 simplified approach in measuring expected credit Trade payables 105 141 losses, which use a lifetime expected credit loss allowance for all trade receivables. VAT and social security 35 38 Other payables 170 146 To measure expected credit losses, trade receivables and contract assets have been grouped by shared credit risk Acquisition-related liabilities – employment-linked contingent consideration 5 2 characteristics and days past due. As part of the expected credit losses, the Group may make additional provisions for the receivables of particular customers if the deterioration of financial position was observed. Acquisition-related liabilities – payable to sellers under put options agreed on acquisition 39 1 The carrying value of trade receivables is considered to approximate fair value. Trade and other receivables can be Accruals 596 573 analysed as follows: 950 901 2023 2022 3.1.5 Trade and other payables due after more than one year £m £m Due within one year: Trade and other payables due after more than one year can be analysed as follows: Trade receivables 427 476 2023 2022 Other receivables 145 162 £m £m Prepayments 58 54 Trade payables 25 17 630 692 Due after more than one year: Other payables 33 28 Trade receivables 37 24 Acquisition-related liabilities – employment-linked contingent consideration 10 6 Other receivables 25 20 Acquisition-related liabilities – payable to sellers under put options agreed on 62 44 acquisition 24 38 Total trade and other receivables 692 736 67 72 Total trade and other payables due after more than one year 92 89 £464 million (2022: £500 million) of total trade receivables, stated net of provisions for impairment, are aged as follows: Trade payables due after more than one year relates primarily to royalties in both 2023 and 2022. Other payables due 2023 2022 after more than one year relates primarily to film creditors of £24 million (2022: £22 million). £m £m Current 408 437 Acquisition-related liabilities or performance-based employment-linked earnouts are the estimated amounts Up to 30 days overdue 29 34 payable to previous owners. The estimated future payments that are accrued over the period the sellers are required Between 30 and 90 days overdue 21 20 to remain with the business are treated as exceptional costs (see note 2.2). Those amounts not linked to employment are estimated and recognised at acquisition at their time discounted value, with the unwind of the Over 90 days overdue 6 9 discount recorded as part of finance costs. 464 500 Acquisition related liabilities at 31 December 2023 were £78 million (2022: £47 million) which represents the amount Movements in the Group’s provision for impairment of trade receivables and contract assets can be shown as follows: accrued to date at their time discounted value. The total undiscounted estimated future payments of £105 million (2022: £89 million) are sensitive to forecast profits as they are based on a multiple of earnings. The range of 2023 2022 reasonably possible outcomes for the undiscounted liability is between £86 million and £147 million. The liabilities £m £m due after more than one year are expected to be settled between 2025 and 2028. At 1 January 24 43 Charged during the year 4 14 All earnouts are sensitive to forecast profits as they are based on a multiple of earnings and judgement is required Bad debts written off (8) – where there may be adjustments to forecasted profits or when earnouts are negotiated, hence the reason for the Release of provision (11) (33) range noted above. At 31 December* 9 24 * £1 million (2022: £8 million) of the provision relates to contract assets and is included in the balance disclosed in note 3.1.6. Of the provision total, £7 million relates to balances overdue by more than 90 days (2022: £22 million) and £2 million relates to current balances (2022: less than £1 million). In 2023, a settlement of the claim was agreed with the credit insurers in relation to the remaining amount receivable for The Voice of China, resulting in an exceptional credit of US$5 million (£3 million) consistent with the original treatment. See note 2.2. No further recovery of the remaining trade receivable is expected. The remaining release of the provision relates to other settlements for outstanding production related receivables and contract assets. The credit has been taken to operating profit.
184 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 185 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL 3.1.6 Contract assets and liabilities 3.2 Keeping The following note shows the physical assets used by the Group to operate the S T Contract assets (accrued income) primarily relate to the Group’s right to consideration for work unbilled at the it simple business, generating revenues and profits. These assets include office buildings A Property, plant T and studios, as well as equipment used in broadcast transmission, programme E reporting date. Many of the programmes the Studios division produces are sold internationally and also used within and equipment M the ITV network. production and support activities. E N T Contract liabilities (deferred income) primarily relate to the consideration received from customers in advance of The cost of these assets is the amount initially paid for them or for right of use S transferring a good or service. The following table provides movements in contract assets and liabilities in the year: assets, the discounted future lease payments. A depreciation expense is charged to the Consolidated Income Statement to reflect annual wear and tear and the 2023 2022 reduced value of the asset over time. Depreciation is calculated by estimating the Contract Contract Contract Contract number of years the Group expects the asset to be used (useful economic life). If assets liabilities assets liabilities there has been a technological change or decline in business performance, the £m £m £m £m Directors review the value of the assets to the business to ensure they have not Balance at 1 January 185 (372) 189 (359) fallen below their depreciated value. If an asset’s value falls below its depreciated Decrease due to balance transferred to trade receivables (152) – (180) – value, an additional impairment charge is made against profit. Increases as a result of the changes in the measure of 169 – 170 – This note also explains the accounting policies followed by ITV and the specific progress estimates made in arriving at the net book value of these assets. Decreases due to revenue recognised in the year – 332 – 405 Increase due to cash received – (147) – (383) Accounting policies Acquisitions – – 6 (35) Property, plant and equipment * Balance at 31 December 202 (187) 185 (372) Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Certain items * Contract assets is stated net of provisions for impairment of £1 million (2022: £8 million) which have been included in the reconciliation in note 3.1.3. of property, plant and equipment that were revalued to fair value prior to 1 January 2004 (the date of transition to IFRS) Non-current contract assets of £13 million (2022: £nil) is included in the above reconciliation. are measured on the basis of deemed cost, being the revalued amount less depreciation up to the date of transition. 3.1.7 Production inventories Right of use assets Production inventories includes work in progress and finished programmes in relation to costs capitalised by ITV A contract contains a lease if the contract conveys the right to control the use of an identified asset for a period of Studios in the course of fulfilling production contracts. These costs are capitalised when they relate directly to a time in exchange for consideration. These assets are called right of use assets and have been included on the contract or to a specifically identifiable anticipated contract, the costs generate or enhance the resources of the Group’s balance sheet at a value equal to the discounted future lease payments. For leases recognised on transition entity that will be used in satisfying or continuing to satisfy performance obligations in the future, and the costs are to IFRS 16 ‘Leases’ the value is also adjusted by any prepayments or lease incentives recognised immediately before expected to be recovered. the date of initial application. These costs are presented as production inventories assets and represent actual costs incurred on the production. Depreciation The asset is charged to the income statement as the performance obligations are satisfied. Depreciation is provided to write off the cost of property, plant and equipment less estimated residual value, on a Production inventories at the year end is detailed below: straight-line basis over their estimated useful lives. The annual depreciation charge is sensitive to the estimated useful life of each asset and the expected residual value at the end of its life. The major categories of property, 2023 2022 plant and equipment are depreciated as follows: £m £m Production inventories 234 493 Asset class Depreciation policy Freehold land not depreciated During the year, £498 million was charged to the Consolidated Income Statement for completed productions Freehold buildings up to 60 years delivered (2022: £368 million). Leasehold improvements shorter of residual lease term or estimated useful life Vehicles, equipment and fittings* 3 to 20 years 3.1.8 Working capital management Right of use assets over the term of the lease Cash and working capital management has been a critical area of focus during 2023 and 2022. During the year, the cash inflow from working capital was £90 million (2022: outflow of £150 million) derived as follows: * Equipment includes studio production and technology assets. 2023 2022 Assets under construction are not depreciated until the point at which the asset comes into use by the Group. £m £m Increase in programme rights and distribution rights (33) (70) Impairment of assets Decrease/(increase) in receivables, contract assets and production inventories 274 (133) Property, plant and equipment that is subject to depreciation is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Indicators of impairment may (Decrease)/increase in payables and contract liabilities (151) 53 include changes in technology and business. Working capital inflow/(outflow) 90 (150)
184 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 185 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL 3.1.6 Contract assets and liabilities 3.2 Keeping The following note shows the physical assets used by the Group to operate the S T Contract assets (accrued income) primarily relate to the Group’s right to consideration for work unbilled at the it simple business, generating revenues and profits. These assets include office buildings A Property, plant T and studios, as well as equipment used in broadcast transmission, programme E reporting date. Many of the programmes the Studios division produces are sold internationally and also used within and equipment M the ITV network. production and support activities. E N T Contract liabilities (deferred income) primarily relate to the consideration received from customers in advance of The cost of these assets is the amount initially paid for them or for right of use S transferring a good or service. The following table provides movements in contract assets and liabilities in the year: assets, the discounted future lease payments. A depreciation expense is charged to the Consolidated Income Statement to reflect annual wear and tear and the 2023 2022 reduced value of the asset over time. Depreciation is calculated by estimating the Contract Contract Contract Contract number of years the Group expects the asset to be used (useful economic life). If assets liabilities assets liabilities there has been a technological change or decline in business performance, the £m £m £m £m Directors review the value of the assets to the business to ensure they have not Balance at 1 January 185 (372) 189 (359) fallen below their depreciated value. If an asset’s value falls below its depreciated Decrease due to balance transferred to trade receivables (152) – (180) – value, an additional impairment charge is made against profit. Increases as a result of the changes in the measure of 169 – 170 – This note also explains the accounting policies followed by ITV and the specific progress estimates made in arriving at the net book value of these assets. Decreases due to revenue recognised in the year – 332 – 405 Increase due to cash received – (147) – (383) Accounting policies Acquisitions – – 6 (35) Property, plant and equipment * Balance at 31 December 202 (187) 185 (372) Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Certain items * Contract assets is stated net of provisions for impairment of £1 million (2022: £8 million) which have been included in the reconciliation in note 3.1.3. of property, plant and equipment that were revalued to fair value prior to 1 January 2004 (the date of transition to IFRS) Non-current contract assets of £13 million (2022: £nil) is included in the above reconciliation. are measured on the basis of deemed cost, being the revalued amount less depreciation up to the date of transition. 3.1.7 Production inventories Right of use assets Production inventories includes work in progress and finished programmes in relation to costs capitalised by ITV A contract contains a lease if the contract conveys the right to control the use of an identified asset for a period of Studios in the course of fulfilling production contracts. These costs are capitalised when they relate directly to a time in exchange for consideration. These assets are called right of use assets and have been included on the contract or to a specifically identifiable anticipated contract, the costs generate or enhance the resources of the Group’s balance sheet at a value equal to the discounted future lease payments. For leases recognised on transition entity that will be used in satisfying or continuing to satisfy performance obligations in the future, and the costs are to IFRS 16 ‘Leases’ the value is also adjusted by any prepayments or lease incentives recognised immediately before expected to be recovered. the date of initial application. These costs are presented as production inventories assets and represent actual costs incurred on the production. Depreciation The asset is charged to the income statement as the performance obligations are satisfied. Depreciation is provided to write off the cost of property, plant and equipment less estimated residual value, on a Production inventories at the year end is detailed below: straight-line basis over their estimated useful lives. The annual depreciation charge is sensitive to the estimated useful life of each asset and the expected residual value at the end of its life. The major categories of property, 2023 2022 plant and equipment are depreciated as follows: £m £m Production inventories 234 493 Asset class Depreciation policy Freehold land not depreciated During the year, £498 million was charged to the Consolidated Income Statement for completed productions Freehold buildings up to 60 years delivered (2022: £368 million). Leasehold improvements shorter of residual lease term or estimated useful life Vehicles, equipment and fittings* 3 to 20 years 3.1.8 Working capital management Right of use assets over the term of the lease Cash and working capital management has been a critical area of focus during 2023 and 2022. During the year, the cash inflow from working capital was £90 million (2022: outflow of £150 million) derived as follows: * Equipment includes studio production and technology assets. 2023 2022 Assets under construction are not depreciated until the point at which the asset comes into use by the Group. £m £m Increase in programme rights and distribution rights (33) (70) Impairment of assets Decrease/(increase) in receivables, contract assets and production inventories 274 (133) Property, plant and equipment that is subject to depreciation is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Indicators of impairment may (Decrease)/increase in payables and contract liabilities (151) 53 include changes in technology and business. Working capital inflow/(outflow) 90 (150)
186 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 187 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Property, plant and equipment 3.3 Keeping The following note identifies the non-physical assets used by the Group to generate S T Property, plant and equipment can be analysed as follows: it simple revenue and profits. A Intangible T E assets These assets include formats and brands, customer contracts and relationships, M Vehicles, E Improvements to leasehold equipment contractual arrangements, licences, software development, film libraries and N Right T Freehold land and buildings and fittings of use goodwill. The cost of these assets is the amount that the Group has paid or, where S land and Long Short Owned assets Total there has been a business combination, the fair value of the specific intangible buildings £m £m £m £m £m £m assets that could be sold separately or which arise from legal rights. In the case of Cost goodwill, its cost is the amount the Group has paid in acquiring a business over and At 1 January 2022 12 87 26 235 154 514 above the fair value of the individual assets and liabilities acquired. The value of Additions – 2 – 33 57 92 goodwill is the ‘intangible’ value that comes from, for example, a uniquely strong Reclassifications – – – 4 1 5 market position and the outstanding productivity of its employees. Foreign exchange – 2 – 4 6 12 The value of intangible assets, with the exception of goodwill, reduces over the Disposals and retirements – (6) – (62) (10) (78) number of years the Group expects to use the asset, the useful economic life, via an At 31 December 2022 12 85 26 214 208 545 annual amortisation charge to the Consolidated Income Statement. Where there Additions – 2 – 28 12 42 has been a technological change or decline in business performance, the Directors Derecognition of right of use asset – – – – (14) (14) review the value of assets, including goodwill, to ensure they have not fallen below Foreign exchange – (1) – (2) (3) (6) their amortised value. Should an asset’s value fall below its amortised value, an additional impairment charge is made against profit. Disposals and retirements – (2) (8) (33) (43) (86) At 31 December 2023 12 84 18 207 160 481 This note explains the accounting policies applied and the specific judgements and estimates made by the Directors in arriving at the net book value of these assets. Depreciation At 1 January 2022 – 25 19 152 64 260 Accounting policies Charge for the year 1 3 1 31 25 61 Goodwill Goodwill represents the future economic benefits that arise from assets that are not capable of being individually Foreign exchange – – – 3 2 5 identified and separately recognised. Goodwill is stated at its recoverable amount being cost less any accumulated Disposals and retirements – (1) – (62) (4) (67) impairment losses and is allocated to the business to which it relates. At 31 December 2022 1 27 20 124 87 259 Charge for the year 1 3 1 25 22 52 All business combinations that have occurred since 1 January 2009 were accounted for using the acquisition Derecognition of right of use asset – – – – (6) (6) method. Under this method, goodwill is measured as the fair value of the consideration transferred (including the recognition of any part of the business not yet owned (non-controlling interests)), less the fair value of the Foreign exchange – – – (2) (1) (3) identifiable assets acquired and liabilities assumed, all measured at the acquisition date. The identification of Disposals and retirements – (2) (8) (32) (42) (84) acquired assets and liabilities and the allocation of the purchase price to them is considered a key judgement and is At 31 December 2023 2 28 13 115 60 218 based on the Group’s understanding and experience of the media business. Any contingent consideration expected to be transferred in the future is recognised at fair value at the acquisition date and recognised within other payables. Net book value Contingent consideration classified as an asset or liability that is a financial instrument is measured at fair value with changes in fair value recognised in the Consolidated Income Statement. The determination of fair value is based on At 31 December 2023 10 56 5 92 100 263 an estimate of discounted cash flows. The key assumptions take into consideration the probability of meeting each At 31 December 2022 11 58 6 90 121 286 performance target and the discount rate. Included within property, plant and equipment are assets in the course of construction of £19 million (2022: £34 million). Where less than 100% of a subsidiary is acquired, and call and put options are granted over the remaining interest, a non-controlling interest is initially recognised in equity at fair value, which is established based on the value of Included within the depreciation charge for the year of £52 million (2022: £61 million) is £6 million (2022: £8 million) the put option. A call option is recognised as a derivative financial instrument, carried at fair value. The put option in respect of accelerated depreciation following a change in useful life of the related assets in relation to the move is recognised as a liability within other payables, carried at the present value of the put option exercise price, and a to a new London site. This depreciation has been included in exceptional items. See note 2.2 for further details. corresponding charge is included in merger and other reserves. Any subsequent remeasurement of the put option liability is recognised within finance income or cost. Disposals and retirements for the year include assets written off with nil net book value that are not expected to generate any future economic benefits. Subsequent adjustments to the fair value of net assets acquired can only be made within 12 months of the acquisition date, and only if fair values were determined provisionally at an earlier reporting date. Included in net book value of right of use assets is £100 million (2022: £121 million) related to properties and £nil These adjustments are accounted for from the date of acquisition. (2022: £nil) relating to vehicles, equipment and fittings. Acquisitions of non-controlling interests are accounted for as transactions with owners and therefore no goodwill The Group signed a subleasing arrangement, which is classified as a finance lease in accordance with IFRS 16 is recognised as a result of such transactions. Transaction costs incurred in connection with those business ‘Leases’. In accordance with the standard, the right of use asset with a net book value of £8 million was derecognised combinations, such as legal fees, due diligence fees and other professional fees, are expensed as incurred. The and replaced by a net investment in the sublease which has been recognised within other receivables. This Directors consider these costs to reflect the cost of acquisition and to form a part of the capital transaction, and arrangement does not impact the lease liabilities arising from the original lease which have been included in note 4.6. highlight them separately as exceptional items. Capital commitments The Group has capital commitments of £2 million at 31 December 2023 (2022: £11 million).
186 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 187 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Property, plant and equipment 3.3 Keeping The following note identifies the non-physical assets used by the Group to generate S T Property, plant and equipment can be analysed as follows: it simple revenue and profits. A Intangible T E assets These assets include formats and brands, customer contracts and relationships, M Vehicles, E Improvements to leasehold equipment contractual arrangements, licences, software development, film libraries and N Right T Freehold land and buildings and fittings of use goodwill. The cost of these assets is the amount that the Group has paid or, where S land and Long Short Owned assets Total there has been a business combination, the fair value of the specific intangible buildings £m £m £m £m £m £m assets that could be sold separately or which arise from legal rights. In the case of Cost goodwill, its cost is the amount the Group has paid in acquiring a business over and At 1 January 2022 12 87 26 235 154 514 above the fair value of the individual assets and liabilities acquired. The value of Additions – 2 – 33 57 92 goodwill is the ‘intangible’ value that comes from, for example, a uniquely strong Reclassifications – – – 4 1 5 market position and the outstanding productivity of its employees. Foreign exchange – 2 – 4 6 12 The value of intangible assets, with the exception of goodwill, reduces over the Disposals and retirements – (6) – (62) (10) (78) number of years the Group expects to use the asset, the useful economic life, via an At 31 December 2022 12 85 26 214 208 545 annual amortisation charge to the Consolidated Income Statement. Where there Additions – 2 – 28 12 42 has been a technological change or decline in business performance, the Directors Derecognition of right of use asset – – – – (14) (14) review the value of assets, including goodwill, to ensure they have not fallen below Foreign exchange – (1) – (2) (3) (6) their amortised value. Should an asset’s value fall below its amortised value, an additional impairment charge is made against profit. Disposals and retirements – (2) (8) (33) (43) (86) At 31 December 2023 12 84 18 207 160 481 This note explains the accounting policies applied and the specific judgements and estimates made by the Directors in arriving at the net book value of these assets. Depreciation At 1 January 2022 – 25 19 152 64 260 Accounting policies Charge for the year 1 3 1 31 25 61 Goodwill Goodwill represents the future economic benefits that arise from assets that are not capable of being individually Foreign exchange – – – 3 2 5 identified and separately recognised. Goodwill is stated at its recoverable amount being cost less any accumulated Disposals and retirements – (1) – (62) (4) (67) impairment losses and is allocated to the business to which it relates. At 31 December 2022 1 27 20 124 87 259 Charge for the year 1 3 1 25 22 52 All business combinations that have occurred since 1 January 2009 were accounted for using the acquisition Derecognition of right of use asset – – – – (6) (6) method. Under this method, goodwill is measured as the fair value of the consideration transferred (including the recognition of any part of the business not yet owned (non-controlling interests)), less the fair value of the Foreign exchange – – – (2) (1) (3) identifiable assets acquired and liabilities assumed, all measured at the acquisition date. The identification of Disposals and retirements – (2) (8) (32) (42) (84) acquired assets and liabilities and the allocation of the purchase price to them is considered a key judgement and is At 31 December 2023 2 28 13 115 60 218 based on the Group’s understanding and experience of the media business. Any contingent consideration expected to be transferred in the future is recognised at fair value at the acquisition date and recognised within other payables. Net book value Contingent consideration classified as an asset or liability that is a financial instrument is measured at fair value with changes in fair value recognised in the Consolidated Income Statement. The determination of fair value is based on At 31 December 2023 10 56 5 92 100 263 an estimate of discounted cash flows. The key assumptions take into consideration the probability of meeting each At 31 December 2022 11 58 6 90 121 286 performance target and the discount rate. Included within property, plant and equipment are assets in the course of construction of £19 million (2022: £34 million). Where less than 100% of a subsidiary is acquired, and call and put options are granted over the remaining interest, a non-controlling interest is initially recognised in equity at fair value, which is established based on the value of Included within the depreciation charge for the year of £52 million (2022: £61 million) is £6 million (2022: £8 million) the put option. A call option is recognised as a derivative financial instrument, carried at fair value. The put option in respect of accelerated depreciation following a change in useful life of the related assets in relation to the move is recognised as a liability within other payables, carried at the present value of the put option exercise price, and a to a new London site. This depreciation has been included in exceptional items. See note 2.2 for further details. corresponding charge is included in merger and other reserves. Any subsequent remeasurement of the put option liability is recognised within finance income or cost. Disposals and retirements for the year include assets written off with nil net book value that are not expected to generate any future economic benefits. Subsequent adjustments to the fair value of net assets acquired can only be made within 12 months of the acquisition date, and only if fair values were determined provisionally at an earlier reporting date. Included in net book value of right of use assets is £100 million (2022: £121 million) related to properties and £nil These adjustments are accounted for from the date of acquisition. (2022: £nil) relating to vehicles, equipment and fittings. Acquisitions of non-controlling interests are accounted for as transactions with owners and therefore no goodwill The Group signed a subleasing arrangement, which is classified as a finance lease in accordance with IFRS 16 is recognised as a result of such transactions. Transaction costs incurred in connection with those business ‘Leases’. In accordance with the standard, the right of use asset with a net book value of £8 million was derecognised combinations, such as legal fees, due diligence fees and other professional fees, are expensed as incurred. The and replaced by a net investment in the sublease which has been recognised within other receivables. This Directors consider these costs to reflect the cost of acquisition and to form a part of the capital transaction, and arrangement does not impact the lease liabilities arising from the original lease which have been included in note 4.6. highlight them separately as exceptional items. Capital commitments The Group has capital commitments of £2 million at 31 December 2023 (2022: £11 million).
188 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 189 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Other intangible assets Impairment S T Intangible assets other than goodwill are those that are distinct and can be sold separately or which arise from legal rights. Goodwill is not subject to amortisation and is tested annually for impairment and when circumstances indicate that A T the carrying value may be impaired. E The main intangible assets the Group has valued are formats, brands, licences, contractual arrangements, customer M E N contracts and relationships and libraries. Other intangible assets are subject to amortisation and are reviewed for impairment whenever events or changes in T circumstances indicate that the amount carried in the Consolidated Statement of Financial Position is less than its S Within ITV, there are two types of other intangible assets: those assets directly purchased by the Group for day-to- recoverable amount. day operational purposes (such as software licences and development) and intangible assets identified as part of an acquisition of a business. Determining whether the carrying amount of intangible assets has any indication of impairment requires judgement. Any impairment is recognised in the Consolidated Income Statement. Intangible assets acquired directly by the Group are stated at cost less accumulated amortisation. Those separately identified intangible assets acquired as part of an acquisition or business combination are shown at fair value at the An impairment test is performed by assessing the recoverable amount of each asset, or for goodwill the cash- date of acquisition less accumulated amortisation. generating unit (CGU), or group of CGUs, related to the goodwill. Total assets (which include goodwill) are grouped at the lowest levels for which there are separately identifiable cash flows. The Directors have identified three CGUs, Each class of intangible assets’ valuation method on initial recognition, amortisation method and estimated useful Media & Entertainment, ITV Studios and SDN. life is set out in the table below: The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. The value in use is Class of intangible asset Amortisation method Estimated useful life Valuation method based on the present value of the future cash flows expected to arise from the asset. Brands Straight-line 8 to 14 years Applying a royalty rate to the expected future revenue over the life of the brand In testing for impairment, estimates are used in deriving cash flows and the discount rates. Such estimates reflect Formats Straight-line up to 8 years Expected future cash flows from those assets existing current market assessments of the risks specific to the asset and the time value of money. The estimation process Customer Straight-line or up to 6 years at the date of acquisition are estimated. If applicable, is complex due to the inherent risks and uncertainties associated with long-term forecasting. If different estimates contracts reducing balance a contributory charge is deducted for the use of other of the projected future cash flows or a different selection of an appropriate discount rate or long-term growth rate as appropriate assets needed to exploit the cash flow. The net cash were made, these changes could materially alter the projected value of the cash flows of the asset, and as a Customer relationships Straight-line 5 to 10 years flow is then discounted back to present value consequence materially different amounts would be reported in the financial statements. Contractual Straight-line up to 13 years Expected future cash flows from those contracts Impairment losses in respect of goodwill cannot be reversed. In respect of assets other than goodwill, an impairment arrangements depending on the existing at the date of acquisition are estimated. loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An contract terms If applicable, a contributory charge is deducted impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount for the use of other assets needed to exploit the that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. cash flow. The net cash flow is then discounted back to present value There is a wide range of potential outcomes regarding the possible future performance of each of ITV Group’s cash- Licences Straight-line 11 to 29 years Start-up basis of expected future cash flows existing generating units, Media & Entertainment, ITV Studios and SDN. In the impairment review the Directors used the depending on at the date of acquisition. If applicable, a contributory scenarios utilised for the viability statement. The Directors, however, do not consider that any reasonably possible term of licence charge is deducted for the use of other assets needed changes in the key assumptions would cause the recoverable amount of the Group’s cash-generating units to fall to exploit the cash flow. The net cash flow is then below their carrying values and therefore they are not considered key sources of estimation uncertainty. discounted back to present value. Public service broadcasting (PSB) licences are valued as a start-up business with only the licence in place Libraries and other Sum of digits or up to 20 years Initially at cost and subsequently at cost less straight-line as accumulated amortisation appropriate Software licences and Straight-line 1 to 10 years Initially at cost and subsequently at cost less development accumulated amortisation Cloud computing arrangements Cloud computing arrangements are reviewed to determine if they are within the scope of IAS 38 ‘Intangible Assets’, IFRS 16 ‘Leases’, or a service contract. This is to determine if the Group has control of the software intangible asset. Control is assumed if the Group has the right to take possession of the software and run it on its own or a third- party’s computer infrastructure or if the Group has exclusive rights to use the software whereby the supplier cannot make the software available to other customers. Configuration of the software involves the setting of various flags or switches within the application software or defining values to set up the software’s existing code to function in a specified way. Customisation involves modifying the software code in the application or writing additional code. Customisation generally changes or creates additional functionalities within the software. In both situations, the Group also needs to assess if there is a separate intangible asset. If no separate intangible asset is identified, then these costs are expensed when incurred. If an asset is identified, it is capitalised and amortised over the life of the asset. Fair value on acquisition Determining the fair value of the purchase consideration allocated to intangible assets arising on acquisition requires judgement. The Directors make estimates regarding the timing and amount of future cash flows derived from exploiting the assets being acquired. The Directors then estimate an appropriate discount rate to apply to the forecast cash flows. Such estimates are based on current budgets and forecasts, extrapolated for an appropriate period taking into account growth rates, operating costs and the expected useful lives of assets. Judgements are also made regarding whether, and for how long, licences will be renewed; this drives our amortisation policy for those assets. The Directors estimate the appropriate discount rate that reflects current market assessments of the time value of money and the risks specific to the assets or businesses being acquired. Amortisation tement over the estimated useful lives of intangible assets Amortisation is charged to the Consolidated Income Sta unless such lives are judged to be indefinite. Indefinite life assets, such as goodwill, are not amortised but are tested for impairment at each year end.
188 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 189 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Other intangible assets Impairment S T Intangible assets other than goodwill are those that are distinct and can be sold separately or which arise from legal rights. Goodwill is not subject to amortisation and is tested annually for impairment and when circumstances indicate that A T the carrying value may be impaired. E The main intangible assets the Group has valued are formats, brands, licences, contractual arrangements, customer M E N contracts and relationships and libraries. Other intangible assets are subject to amortisation and are reviewed for impairment whenever events or changes in T circumstances indicate that the amount carried in the Consolidated Statement of Financial Position is less than its S Within ITV, there are two types of other intangible assets: those assets directly purchased by the Group for day-to-recoverable amount. day operational purposes (such as software licences and development) and intangible assets identified as part of an acquisition of a business. Determining whether the carrying amount of intangible assets has any indication of impairment requires judgement. Any impairment is recognised in the Consolidated Income Statement. Intangible assets acquired directly by the Group are stated at cost less accumulated amortisation. Those separately identified intangible assets acquired as part of an acquisition or business combination are shown at fair value at the An impairment test is performed by assessing the recoverable amount of each asset, or for goodwill the cash- date of acquisition less accumulated amortisation. generating unit (CGU), or group of CGUs, related to the goodwill. Total assets (which include goodwill) are grouped at the lowest levels for which there are separately identifiable cash flows. The Directors have identified three CGUs, Each class of intangible assets’ valuation method on initial recognition, amortisation method and estimated useful Media & Entertainment, ITV Studios and SDN. life is set out in the table below: The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. The value in use is Class of intangible asset Amortisation method Estimated useful life Valuation method based on the present value of the future cash flows expected to arise from the asset. Brands Straight-line 8 to 14 years Applying a royalty rate to the expected future revenue over the life of the brand In testing for impairment, estimates are used in deriving cash flows and the discount rates. Such estimates reflect Formats Straight-line up to 8 years Expected future cash flows from those assets existing current market assessments of the risks specific to the asset and the time value of money. The estimation process Customer Straight-line or up to 6 years at the date of acquisition are estimated. If applicable, is complex due to the inherent risks and uncertainties associated with long-term forecasting. If different estimates contracts reducing balance a contributory charge is deducted for the use of other of the projected future cash flows or a different selection of an appropriate discount rate or long-term growth rate as appropriate assets needed to exploit the cash flow. The net cash were made, these changes could materially alter the projected value of the cash flows of the asset, and as a Customer relationships Straight-line 5 to 10 years flow is then discounted back to present value consequence materially different amounts would be reported in the financial statements. Contractual Straight-line up to 13 years Expected future cash flows from those contracts Impairment losses in respect of goodwill cannot be reversed. In respect of assets other than goodwill, an impairment arrangements depending on the existing at the date of acquisition are estimated. loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An contract terms If applicable, a contributory charge is deducted impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount for the use of other assets needed to exploit the that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. cash flow. The net cash flow is then discounted back to present value There is a wide range of potential outcomes regarding the possible future performance of each of ITV Group’s cash- Licences Straight-line 11 to 29 years Start-up basis of expected future cash flows existing generating units, Media & Entertainment, ITV Studios and SDN. In the impairment review the Directors used the depending on at the date of acquisition. If applicable, a contributory scenarios utilised for the viability statement. The Directors, however, do not consider that any reasonably possible term of licence charge is deducted for the use of other assets needed changes in the key assumptions would cause the recoverable amount of the Group’s cash-generating units to fall to exploit the cash flow. The net cash flow is then below their carrying values and therefore they are not considered key sources of estimation uncertainty. discounted back to present value. Public service broadcasting (PSB) licences are valued as a start-up business with only the licence in place Libraries and other Sum of digits or up to 20 years Initially at cost and subsequently at cost less straight-line as accumulated amortisation appropriate Software licences and Straight-line 1 to 10 years Initially at cost and subsequently at cost less development accumulated amortisation Cloud computing arrangements Cloud computing arrangements are reviewed to determine if they are within the scope of IAS 38 ‘Intangible Assets’, IFRS 16 ‘Leases’, or a service contract. This is to determine if the Group has control of the software intangible asset. Control is assumed if the Group has the right to take possession of the software and run it on its own or a third- party’s computer infrastructure or if the Group has exclusive rights to use the software whereby the supplier cannot make the software available to other customers. Configuration of the software involves the setting of various flags or switches within the application software or defining values to set up the software’s existing code to function in a specified way. Customisation involves modifying the software code in the application or writing additional code. Customisation generally changes or creates additional functionalities within the software. In both situations, the Group also needs to assess if there is a separate intangible asset. If no separate intangible asset is identified, then these costs are expensed when incurred. If an asset is identified, it is capitalised and amortised over the life of the asset. Fair value on acquisition Determining the fair value of the purchase consideration allocated to intangible assets arising on acquisition requires judgement. The Directors make estimates regarding the timing and amount of future cash flows derived from exploiting the assets being acquired. The Directors then estimate an appropriate discount rate to apply to the forecast cash flows. Such estimates are based on current budgets and forecasts, extrapolated for an appropriate period taking into account growth rates, operating costs and the expected useful lives of assets. Judgements are also made regarding whether, and for how long, licences will be renewed; this drives our amortisation policy for those assets. The Directors estimate the appropriate discount rate that reflects current market assessments of the time value of money and the risks specific to the assets or businesses being acquired. Amortisation tement over the estimated useful lives of intangible assets Amortisation is charged to the Consolidated Income Sta unless such lives are judged to be indefinite. Indefinite life assets, such as goodwill, are not amortised but are tested for impairment at each year end.
190 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 191 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Intangible assets ITV Studios S T Intangible assets can be analysed as follows: The goodwill for ITV Studios has arisen as a result of the acquisition of production businesses since 1999. Significant A T balances were created from the acquisition by Granada of United News and Media’s production businesses in 2000 E M Customer Software and the merger of Granada and Carlton in 2004 to form ITV plc. ITV Studios goodwill also includes the goodwill E Formats contracts and Contractual Libraries licences and N arising from acquisitions since 2012, with the largest acquisitions being Leftfield in 2014, followed by Talpa in 2015 T Goodwill and brands relationships arrangements Licences and other development Total and Plimsoll in 2022. S £m £m £m £m £m £m £m £m Cost At 1 January 2022 3,893 527 441 11 176 104 240 5,392 The key assumptions on which the forecast cash flows for the whole CGU were based (as represented by the approved financial budget for 2024 and forecast to 2026) include revenue (including international revenue and the ITV Studios Additions – – – – – – 44 44 share of ITV output, growth in commissions and hours produced), margins and the pre-tax market discount rate. Acquisitions 107 1 13 – – – – 121 These assumptions have been determined by using a combination of extrapolation of historical trends within the Disposals – – – – – – (5) (5) business, industry estimates and in-house estimates of growth rates in all markets. No impairment was identified. Foreign exchange 37 21 8 – – 2 1 69 At 31 December 2022 4,037 549 462 11 176 106 280 5,621 A pre-tax discount rate of 10.7% (2022: 10.5%) has been used in discounting the projected cash flows. No reasonably possible change in assumptions or discount rate would lead to an impairment. Additions – – – – – – 39 39 Disposals – – (1) – – – (63) (64) Media & Entertainment Foreign exchange (18) (9) (4) – – (1) – (32) The goodwill in this CGU arose as a result of the acquisition of broadcasting businesses since 1999, the largest of At 31 December 2023 4,019 540 457 11 176 105 256 5,564 which was the merger of Carlton and Granada in 2004 to form ITV plc, which was treated as an acquisition of Carlton for accounting purposes. Media & Entertainment goodwill also includes the goodwill arising on acquisition of UTV Amortisation and Limited in February 2016. impairment At 1 January 2022 2,654 460 433 11 129 93 134 3,914 The main assumptions on which the forecast cash flow projections for this CGU are based (as represented by the Charge for the year – 41 6 – 2 – 27 76 approved financial budget for 2024 and forecast to 2026) include: the size, performance and share of the television Reclassifications – – – – – – (5) (5) and streaming advertising market; share of commercial impacts; programme and other costs; and the pre-tax Foreign exchange – 19 7 – – – 1 27 market discount rate. At 31 December 2022 2,654 520 446 11 131 93 157 4,012 In forming its assumptions about the television and streaming advertising market, the Group has used a combination Charge for the year – 17 4 – 2 – 64 87 of long-term trends, industry forecasts and in-house estimates, which place greater emphasis on recent experience. Disposals – – (1) – – – (63) (64) No impairment was identified. Foreign exchange – (8) (4) – – (1) – (13) An impairment charge of £2,309 million was recognised in the Media & Entertainment CGU in 2008, as a result of the At 31 December 2023 2,654 529 445 11 133 92 158 4,022 downturn in the short-term outlook for the advertising market. The current year impairment review, set out above, Net book value results in significant headroom. Even though the advertising market has improved since the impairment was At 31 December 2023 1,365 11 12 – 43 13 98 1,542 recognised in 2008 and the impaired assets are still owned and operated by the Group, due to accounting rules the At 31 December 2022 1,383 29 16 – 45 13 123 1,609 impairment to goodwill cannot be reversed. Goodwill impairment tests A pre-tax discount rate of 10.4% (2022: 10.4%) has been used in discounting the projected cash flows. No reasonably possible change in assumptions or discount rate would lead to an impairment. The carrying amount of goodwill for each CGU is represented as follows: SDN 2023 2022 Goodwill was recognised when the Group acquired SDN (the licence operator for DTT Multiplex A) in 2005. £m £m ITV Studios 903 921 It represented the wider strategic benefits of the acquisition specific to the Group, principally the enhanced ability to promote Freeview as a platform, business relationships with the channels which are on Multiplex A and additional Media & Entertainment 386 386 capacity available from 2010. SDN’s multiplex licence was renewed during 2022 and expires in 2034. SDN 76 76 1,365 1,383 The main assumptions on which the forecast cash flows are based (as represented by the approved financial budget for 2024 and forecast to 2026) are: income to be earned from renewals of medium-term contracts; the market There has been no impairment charge for any CGU during the year (2022: £nil). price of available multiplex video streams; and the pre-tax market discount rate. These assumptions have been determined by using a combination of current contract terms, recent market transactions and in-house estimates When assessing impairment, the recoverable amount of each CGU is based on value in use calculations. These of video stream availability and pricing. No impairment was identified. calculations require the use of estimates, specifically: pre-tax cash flow projections; long-term growth rates; and a pre-tax market discount rate. Cash flow projections are based on the Group’s current long-term plan. Beyond the A pre-tax discount rate of 9.1% (2022: 9.4%) has been used in discounting the projected cash flows. No reasonably plan, these projections are extrapolated using an estimated nominal long-term growth rate of 1.5% (2022: 1.5%). The possible change in assumptions or discount rate would lead to an impairment. growth rate used is consistent with the long-term average growth rates for both the industry and the countries in which the CGUs are located and is appropriate because these are long-term businesses. The discount rate has been updated for each CGU to reflect the latest market assumptions for the risk-free rate, the equity risk premium and the net cost of debt. There is currently no reasonably possible change in discount rate that would reduce the headroom in any CGU to zero.
190 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 191 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Intangible assets ITV Studios S T Intangible assets can be analysed as follows: The goodwill for ITV Studios has arisen as a result of the acquisition of production businesses since 1999. Significant A T balances were created from the acquisition by Granada of United News and Media’s production businesses in 2000 E M Customer Software and the merger of Granada and Carlton in 2004 to form ITV plc. ITV Studios goodwill also includes the goodwill E Formats contracts and Contractual Libraries licences and N arising from acquisitions since 2012, with the largest acquisitions being Leftfield in 2014, followed by Talpa in 2015 T Goodwill and brands relationships arrangements Licences and other development Total and Plimsoll in 2022. S £m £m £m £m £m £m £m £m Cost At 1 January 2022 3,893 527 441 11 176 104 240 5,392 The key assumptions on which the forecast cash flows for the whole CGU were based (as represented by the approved financial budget for 2024 and forecast to 2026) include revenue (including international revenue and the ITV Studios Additions – – – – – – 44 44 share of ITV output, growth in commissions and hours produced), margins and the pre-tax market discount rate. Acquisitions 107 1 13 – – – – 121 These assumptions have been determined by using a combination of extrapolation of historical trends within the Disposals – – – – – – (5) (5) business, industry estimates and in-house estimates of growth rates in all markets. No impairment was identified. Foreign exchange 37 21 8 – – 2 1 69 At 31 December 2022 4,037 549 462 11 176 106 280 5,621 A pre-tax discount rate of 10.7% (2022: 10.5%) has been used in discounting the projected cash flows. No reasonably possible change in assumptions or discount rate would lead to an impairment. Additions – – – – – – 39 39 Disposals – – (1) – – – (63) (64) Media & Entertainment Foreign exchange (18) (9) (4) – – (1) – (32) The goodwill in this CGU arose as a result of the acquisition of broadcasting businesses since 1999, the largest of At 31 December 2023 4,019 540 457 11 176 105 256 5,564 which was the merger of Carlton and Granada in 2004 to form ITV plc, which was treated as an acquisition of Carlton for accounting purposes. Media & Entertainment goodwill also includes the goodwill arising on acquisition of UTV Amortisation and Limited in February 2016. impairment At 1 January 2022 2,654 460 433 11 129 93 134 3,914 The main assumptions on which the forecast cash flow projections for this CGU are based (as represented by the Charge for the year – 41 6 – 2 – 27 76 approved financial budget for 2024 and forecast to 2026) include: the size, performance and share of the television Reclassifications – – – – – – (5) (5) and streaming advertising market; share of commercial impacts; programme and other costs; and the pre-tax Foreign exchange – 19 7 – – – 1 27 market discount rate. At 31 December 2022 2,654 520 446 11 131 93 157 4,012 In forming its assumptions about the television and streaming advertising market, the Group has used a combination Charge for the year – 17 4 – 2 – 64 87 of long-term trends, industry forecasts and in-house estimates, which place greater emphasis on recent experience. Disposals – – (1) – – – (63) (64) No impairment was identified. Foreign exchange – (8) (4) – – (1) – (13) An impairment charge of £2,309 million was recognised in the Media & Entertainment CGU in 2008, as a result of the At 31 December 2023 2,654 529 445 11 133 92 158 4,022 downturn in the short-term outlook for the advertising market. The current year impairment review, set out above, Net book value results in significant headroom. Even though the advertising market has improved since the impairment was At 31 December 2023 1,365 11 12 – 43 13 98 1,542 recognised in 2008 and the impaired assets are still owned and operated by the Group, due to accounting rules the At 31 December 2022 1,383 29 16 – 45 13 123 1,609 impairment to goodwill cannot be reversed. Goodwill impairment tests A pre-tax discount rate of 10.4% (2022: 10.4%) has been used in discounting the projected cash flows. No reasonably possible change in assumptions or discount rate would lead to an impairment. The carrying amount of goodwill for each CGU is represented as follows: SDN 2023 2022 Goodwill was recognised when the Group acquired SDN (the licence operator for DTT Multiplex A) in 2005. £m £m ITV Studios 903 921 It represented the wider strategic benefits of the acquisition specific to the Group, principally the enhanced ability to promote Freeview as a platform, business relationships with the channels which are on Multiplex A and additional Media & Entertainment 386 386 capacity available from 2010. SDN’s multiplex licence was renewed during 2022 and expires in 2034. SDN 76 76 1,365 1,383 The main assumptions on which the forecast cash flows are based (as represented by the approved financial budget for 2024 and forecast to 2026) are: income to be earned from renewals of medium-term contracts; the market There has been no impairment charge for any CGU during the year (2022: £nil). price of available multiplex video streams; and the pre-tax market discount rate. These assumptions have been determined by using a combination of current contract terms, recent market transactions and in-house estimates When assessing impairment, the recoverable amount of each CGU is based on value in use calculations. These of video stream availability and pricing. No impairment was identified. calculations require the use of estimates, specifically: pre-tax cash flow projections; long-term growth rates; and a pre-tax market discount rate. Cash flow projections are based on the Group’s current long-term plan. Beyond the A pre-tax discount rate of 9.1% (2022: 9.4%) has been used in discounting the projected cash flows. No reasonably plan, these projections are extrapolated using an estimated nominal long-term growth rate of 1.5% (2022: 1.5%). The possible change in assumptions or discount rate would lead to an impairment. growth rate used is consistent with the long-term average growth rates for both the industry and the countries in which the CGUs are located and is appropriate because these are long-term businesses. The discount rate has been updated for each CGU to reflect the latest market assumptions for the risk-free rate, the equity risk premium and the net cost of debt. There is currently no reasonably possible change in discount rate that would reduce the headroom in any CGU to zero.
192 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 193 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL 3.4 Keeping The following section outlines the Group's assets and liabilities held for sale. 3.5 Keeping The Group holds non-controlling interests in a number of different entities. S T it simple it simple Accounting for these investments, and the Group’s share of any profits and losses, A Assets Assets and any associated liabilities, where management is committed to a plan to sell, Investments T depends on the level of control or influence the Group is granted via its interest. E classified as are recognised as held for sale in the Consolidated Statement of Financial Position. M The three principal types of non-consolidated investments are joint arrangements E held for sale N The sale should be highly probable and within 12 months of classification as held for sale. (joint ventures or joint operations), associates, and equity investments. T S A joint arrangement is an investment where the Group has joint control, with one or Accounting policies more third parties. An associate is an entity over which the Group has significant The Group measures non-current assets that are classified as held for sale at the lower of their carrying amount and influence (i.e. power to participate in the investee’s financial and operating fair value less costs to sell. decisions). Any other investment is an equity investment. On 1 March 2024, the Group announced the sale of its entire 50% interest in digital streaming service, BritBox Accounting policies International to its joint venture partner BBC Studios for a cash consideration of £255 million. The transaction has been effected by the disposal of the Group’s 50% interests in BritBox LLC, BB Rights LLC, Denipurna Limited and For joint ventures and associates, the Group applies equity accounting. Under this method, it recognises the BritBox International Limited and the 100% interest in ITV SVOD Australia Pty Ltd, which holds the 50% interest in investment in the entity at cost and subsequently adjusts this for its share of profits or losses, which are recognised BritBox Australia Management Pty Limited. in the Consolidated Income Statement within non-operating items and included in adjusted profit. At 31 December 2023, the Group included these interests at their carrying value, as held for sale in the Consolidated Where the Group has invested in associates by acquiring preference shares or convertible debt instruments, the Statement of Financial Position. There are no liabilities associated with this sale. share of profit recognised is usually £nil as no equity interest exists. 2023 2022 Equity investments are held at fair value unless the investment is a start-up business, in which case it is valued £m £m initially at cost as a proxy for fair value. Assets classified as held for sale - investments in joint ventures 66 – The carrying amount of each category of our investments is represented as follows: 66 – Joint ventures Associates Equity investments Total The results for the entities held for sale (other than ITV SVOD Australia Pty Ltd) are included in share of profits and £m £m £m £m losses after tax of joint ventures and associated undertakings and not within the M&E reportable segment. At 1 January 2022 43 51 4 98 Additions 5 6 7 18 Cash Balances held within ITV SVOD Australia Pty Ltd were fully utilised prior to completion of the sale and therefore Share of profits 7 1 – 8 have not been included in the above assets held for sale. Impairments/fair value Included in the Group’s Consolidated Statement of Financial Position are working capital balances with the entities adjustments – (4) – (4) held for sale, for content and other related trading activities. These balances will be settled in the normal course Foreign exchange 4 6 – 10 of business. At 31 December 2022 59 60 11 130 Additions 5 3 10 18 Share of profits/ (losses) 8 (8) – – Impairments/fair value adjustments – (5) – (5) Dividends received (3) – – (3) Foreign exchange (3) (3) – (6) Classified as held for sale (66) – – (66) At 31 December 2023 – 47 21 68 On 1 March 2024, the Group announced the sale of its entire 50% interest in digital streaming service, BritBox International to its joint venture partner BBC Studios for a cash consideration of £255 million. The transaction has been effected by the disposal of the Group’s 50% interests in BritBox LLC, BB Rights LLC, Denipurna Limited and BritBox International Limited and the 100% interest in ITV SVOD Australia Pty Ltd, which holds the 50% interest in BritBox Australia Management Pty Limited. At 31 December 2023, the Group included these interests at their carrying value of £66 million, as held for sale in the Consolidated Statement of Financial Position. See notes 3.4 and 5.3. At 31 December 2023, there were no other significant investments in joint ventures (2022: £48 million invested in BritBox LLC in the US). The Group’s associates include £31 million (2022: £38 million) relating to a 45% investment in Blumhouse TV Holdings LLC, a film and television production company in the US. The equity investments relate primarily to Group’s Media for Equity programme. No individual investment is considered material to the Group. Please refer to page 240 for the list of joint ventures, associates and other significant holdings held at 31 December 2023.
192 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 193 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL 3.4 Keeping The following section outlines the Group's assets and liabilities held for sale. 3.5 Keeping The Group holds non-controlling interests in a number of different entities. S T it simple it simple Accounting for these investments, and the Group’s share of any profits and losses, A Assets Assets and any associated liabilities, where management is committed to a plan to sell, Investments T depends on the level of control or influence the Group is granted via its interest. E classified as are recognised as held for sale in the Consolidated Statement of Financial Position. M The three principal types of non-consolidated investments are joint arrangements E held for sale N The sale should be highly probable and within 12 months of classification as held for sale. (joint ventures or joint operations), associates, and equity investments. T S A joint arrangement is an investment where the Group has joint control, with one or Accounting policies more third parties. An associate is an entity over which the Group has significant The Group measures non-current assets that are classified as held for sale at the lower of their carrying amount and influence (i.e. power to participate in the investee’s financial and operating fair value less costs to sell. decisions). Any other investment is an equity investment. On 1 March 2024, the Group announced the sale of its entire 50% interest in digital streaming service, BritBox Accounting policies International to its joint venture partner BBC Studios for a cash consideration of £255 million. The transaction has been effected by the disposal of the Group’s 50% interests in BritBox LLC, BB Rights LLC, Denipurna Limited and For joint ventures and associates, the Group applies equity accounting. Under this method, it recognises the BritBox International Limited and the 100% interest in ITV SVOD Australia Pty Ltd, which holds the 50% interest in investment in the entity at cost and subsequently adjusts this for its share of profits or losses, which are recognised BritBox Australia Management Pty Limited. in the Consolidated Income Statement within non-operating items and included in adjusted profit. At 31 December 2023, the Group included these interests at their carrying value, as held for sale in the Consolidated Where the Group has invested in associates by acquiring preference shares or convertible debt instruments, the Statement of Financial Position. There are no liabilities associated with this sale. share of profit recognised is usually £nil as no equity interest exists. 2023 2022 Equity investments are held at fair value unless the investment is a start-up business, in which case it is valued £m £m initially at cost as a proxy for fair value. Assets classified as held for sale - investments in joint ventures 66 – The carrying amount of each category of our investments is represented as follows: 66 – Joint ventures Associates Equity investments Total The results for the entities held for sale (other than ITV SVOD Australia Pty Ltd) are included in share of profits and £m £m £m £m losses after tax of joint ventures and associated undertakings and not within the M&E reportable segment. At 1 January 2022 43 51 4 98 Additions 5 6 7 18 Cash Balances held within ITV SVOD Australia Pty Ltd were fully utilised prior to completion of the sale and therefore Share of profits 7 1 – 8 have not been included in the above assets held for sale. Impairments/fair value Included in the Group’s Consolidated Statement of Financial Position are working capital balances with the entities adjustments – (4) – (4) held for sale, for content and other related trading activities. These balances will be settled in the normal course Foreign exchange 4 6 – 10 of business. At 31 December 2022 59 60 11 130 Additions 5 3 10 18 Share of profits/ (losses) 8 (8) – – Impairments/fair value adjustments – (5) – (5) Dividends received (3) – – (3) Foreign exchange (3) (3) – (6) Classified as held for sale (66) – – (66) At 31 December 2023 – 47 21 68 On 1 March 2024, the Group announced the sale of its entire 50% interest in digital streaming service, BritBox International to its joint venture partner BBC Studios for a cash consideration of £255 million. The transaction has been effected by the disposal of the Group’s 50% interests in BritBox LLC, BB Rights LLC, Denipurna Limited and BritBox International Limited and the 100% interest in ITV SVOD Australia Pty Ltd, which holds the 50% interest in BritBox Australia Management Pty Limited. At 31 December 2023, the Group included these interests at their carrying value of £66 million, as held for sale in the Consolidated Statement of Financial Position. See notes 3.4 and 5.3. At 31 December 2023, there were no other significant investments in joint ventures (2022: £48 million invested in BritBox LLC in the US). The Group’s associates include £31 million (2022: £38 million) relating to a 45% investment in Blumhouse TV Holdings LLC, a film and television production company in the US. The equity investments relate primarily to Group’s Media for Equity programme. No individual investment is considered material to the Group. Please refer to page 240 for the list of joint ventures, associates and other significant holdings held at 31 December 2023.
194 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 195 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL 3.6 Keeping A provision is recognised by the Group where an obligation exists relating to events Legal and other provisions £126 million (2022: £126 million) S T in the past and it is probable that cash will be paid to settle it. Represents provisions for potential liabilities (arising from legal disputes and claims) and their related legal costs. A Provisions it simple T These include £52 million (2022: £52 million) for the potential liability that may arise as a result of the Box Clever E A provision is made where the Group is not certain how much cash will be required to M Financial Support Directions (FSDs) issued by the Pensions Regulator (tPR), employee-related tax and other E settle a liability, so an estimate is required. The main estimates relate to the cost of N provisions of £61 million (2022: £59 million) and other legal and related costs. T holding properties that are no longer in use by the Group, the likelihood of settling S legal claims and contracts the Group has entered into that are now unprofitable. Box Clever Pension Scheme Box Clever Technology Limited (Box Clever) was a TV rental business joint venture set up by Granada Rental and Accounting policies Retail Limited and Carmelite Investments Limited (parent company of Thorn Limited (Thorn) in 1999. The business A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal went into administrative receivership in 2003. The Box Clever Pension Scheme (the Scheme) was managed from its or constructive obligation arising from past events, it is probable cash will be paid to settle it and the amount can establishment by an independent Trustee and the Group has not had any commercial connection with the Box be estimated reliably. Provisions are determined by discounting the expected future cash flows by a rate that Clever business since it went into administrative receivership in 2003. After proceedings in the Upper Tribunal and reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding Court of Appeal were dismissed, certain companies within ITV were issued with FSDs by tPR on 17 March 2020. of the discount is recognised as a financing cost in the Consolidated Income Statement. The value of the provision is An FSD does not set out what form any financial support should take, nor its amount, and those issues have not yet determined based on assumptions and estimates in relation to the amount and timing of actual cash flows, which been resolved as part of the legal process. are dependent on future events. The legislation provides that any contribution that ITV may make must be considered reasonable. If an agreement is Provisions reached with tPR there may not be an immediate cash flow impact. If an agreement cannot be reached, further legal proceedings could take several years to resolve. The movements in provisions during the year are as follows: At 31 December 2003, the Scheme was estimated to have had a deficit on a buyout basis of £25 million. An estimate Legal and of the deficit in the Box Clever Group Pension Scheme was calculated at £110 million as at 31 March 2021. This Contract Property other provisions provisions provisions Total estimate was calculated on a buyout basis based on membership data as of February 2020. This estimate has been £m £m £m £m updated based on 31 December 2023 market conditions and has reduced to £78 million primarily due to the increase At 1 January 2023 34 9 126 169 in gilt yields and recent changes in inflation. All of these valuations were of the whole Scheme, encompassing Additions – 2 20 22 liabilities in respect of former employees of Granada's joint venture partner, Thorn, as well as former employees Utilised (16) (1) (15) (32) of the Group. Released – – (5) (5) As reported previously, in 2022 the Group received a warning notice from tPR that it was considering exercising Foreign exchange – – – – its power to issue a contribution notice for the amount of £133 million, which is based on a buyout estimate as at At 31 December 2023 18 10 126 154 31 March 2021 provided by the Scheme’s actuarial adviser, plus a prudent margin. The Group made representations in relation to the warning notice on 31 October 2022, tPR responded on 28 July 2023 and the Group replied on Analysed between: 14 November 2023. ITV has continued to engage with tPR during the relevant period. Current 12 1 124 137 There remains a significant number of undecided issues as to the quantum and form of financial support and the Non-current 6 9 2 17 Directors continue to believe there are many important factors which need to be taken into account in any decision, and therefore there remains uncertainty around the financial support to be provided. The provision remains at Provisions of £137 million are classified as current liabilities (2022: £139 million). Unwind of the discount is £nil in £52 million, and represents the offer made to settle the matter and is based on an IAS 19 valuation to transfer certain 2023 and 2022. liabilities into the existing ITV pension scheme, which we consider to be the most likely form of settlement. We are Contract provisions £18 million (2022: £34 million) continuing to engage with tPR to resolve the matter. Contract provisions represent liabilities in respect of onerous contracts in relation to individual sports rights Employee-related of £11 million (2022: £17 million) and transmission capacity supply contracts of £7 million (2022: £17 million). The determination of the employment tax status of some individuals contracted by the Group is complex. HMRC has issued assessments to the Group for several individuals engaged by the Group during the tax years 2016/17 to Sports rights 2018/19 as employed for tax purposes and a provision of £56 million was made. Following the pandemic and up to 31 December 2022, the Group recognised provisions for individual sports rights when estimated revenues were less than the value of the rights. This was considered an indicator of impairment. During 2023, we have further reviewed the provision, which has resulted in an increase in the provision of £2 million The provision is sensitive to the changes in the sporting schedule and consequential impact on TAR. In calculating (2022: £20 million). This has resulted in a £5 million charge to the profit and loss account and a £3 million credit to the provision for sports rights, management has made estimates and used assumptions in determining the nature, exceptional items (2022: £10 million) as this relates to periods up to 31 December 2022 and therefore does not amount and timing of potential outflows, including the commercial impacts of the target audience that will be relate to the current year. generated by those rights, scheduling of the events and revenue forecasts. Due to ongoing reviews by HMRC and court cases in this matter, the final amount payable could be significantly In periods prior to the pandemic, all programme rights (including sports rights) were assessed for impairment on a different to the £58 million currently provided (2022: £56 million). It is difficult to provide a range for the expected portfolio basis unless specific indicators of impairment were identified. In 2023, the Group has included sports rights final amounts payable as case law is continually evolving on this matter, particularly in relation to Front of Camera in the portfolio assessment as there are no specific indicators of impairment. No further impairments have arisen. presenters. Very few cases have reached the higher courts and fact patterns can be very different in individual cases, The provision held at 31 December 2023 is £11 million (2022: £17 million). £6 million of the provision was utilised so determination of employment status for tax purposes remains very subjective. during the year. In the prior year £5 million was released due to certain sporting events being cancelled and a refund A further £3 million (2022: £3 million) is provided in relation to other employment related matters. issued to the Group. The remaining provision is expected to be utilised between 2024 and 2025. Other Transponders Other provisions relate to settlements or proposed settlements on a number of legal cases as well as historical In 2020 and 2021, the Group reviewed the efficiency of its transponder capacity usage with a view to reducing capacity environmental provisions in relation to our production sites, closure costs and provision for legal fees for other requirements. This has allowed the Group to reorganise channels over fewer transponders with the result that all channels ongoing litigation. have been cleared from two transponders. They are no longer utilised and are therefore not generating revenues. Management has applied judgement in its assessment that the individual element of the contract is separable from the remaining elements of the contract, which are not considered onerous. The contracted future commitment to October 2024 was therefore recognised as a provision in 2020 and 2021 as there are no future economic benefits expected. The total provision for onerous contracts at 31 December 2023 is £7 million (2022: £17 million). £10 million of the provision was utilised during the year (2022: £10 million). Property provisions £10 million (2022: £9 million) These provisions primarily relate to expected dilapidation costs at the Group’s rental properties.
194 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 195 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL 3.6 Keeping A provision is recognised by the Group where an obligation exists relating to events Legal and other provisions £126 million (2022: £126 million) S T in the past and it is probable that cash will be paid to settle it. Represents provisions for potential liabilities (arising from legal disputes and claims) and their related legal costs. A Provisions it simple T These include £52 million (2022: £52 million) for the potential liability that may arise as a result of the Box Clever E A provision is made where the Group is not certain how much cash will be required to M Financial Support Directions (FSDs) issued by the Pensions Regulator (tPR), employee-related tax and other E settle a liability, so an estimate is required. The main estimates relate to the cost of N provisions of £61 million (2022: £59 million) and other legal and related costs. T holding properties that are no longer in use by the Group, the likelihood of settling S legal claims and contracts the Group has entered into that are now unprofitable. Box Clever Pension Scheme Box Clever Technology Limited (Box Clever) was a TV rental business joint venture set up by Granada Rental and Accounting policies Retail Limited and Carmelite Investments Limited (parent company of Thorn Limited (Thorn) in 1999. The business A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal went into administrative receivership in 2003. The Box Clever Pension Scheme (the Scheme) was managed from its or constructive obligation arising from past events, it is probable cash will be paid to settle it and the amount can establishment by an independent Trustee and the Group has not had any commercial connection with the Box be estimated reliably. Provisions are determined by discounting the expected future cash flows by a rate that Clever business since it went into administrative receivership in 2003. After proceedings in the Upper Tribunal and reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding Court of Appeal were dismissed, certain companies within ITV were issued with FSDs by tPR on 17 March 2020. of the discount is recognised as a financing cost in the Consolidated Income Statement. The value of the provision is An FSD does not set out what form any financial support should take, nor its amount, and those issues have not yet determined based on assumptions and estimates in relation to the amount and timing of actual cash flows, which been resolved as part of the legal process. are dependent on future events. The legislation provides that any contribution that ITV may make must be considered reasonable. If an agreement is Provisions reached with tPR there may not be an immediate cash flow impact. If an agreement cannot be reached, further legal proceedings could take several years to resolve. The movements in provisions during the year are as follows: At 31 December 2003, the Scheme was estimated to have had a deficit on a buyout basis of £25 million. An estimate Legal and of the deficit in the Box Clever Group Pension Scheme was calculated at £110 million as at 31 March 2021. This Contract Property other provisions provisions provisions Total estimate was calculated on a buyout basis based on membership data as of February 2020. This estimate has been £m £m £m £m updated based on 31 December 2023 market conditions and has reduced to £78 million primarily due to the increase At 1 January 2023 34 9 126 169 in gilt yields and recent changes in inflation. All of these valuations were of the whole Scheme, encompassing Additions – 2 20 22 liabilities in respect of former employees of Granada's joint venture partner, Thorn, as well as former employees Utilised (16) (1) (15) (32) of the Group. Released – – (5) (5) As reported previously, in 2022 the Group received a warning notice from tPR that it was considering exercising Foreign exchange – – – – its power to issue a contribution notice for the amount of £133 million, which is based on a buyout estimate as at At 31 December 2023 18 10 126 154 31 March 2021 provided by the Scheme’s actuarial adviser, plus a prudent margin. The Group made representations in relation to the warning notice on 31 October 2022, tPR responded on 28 July 2023 and the Group replied on Analysed between: 14 November 2023. ITV has continued to engage with tPR during the relevant period. Current 12 1 124 137 There remains a significant number of undecided issues as to the quantum and form of financial support and the Non-current 6 9 2 17 Directors continue to believe there are many important factors which need to be taken into account in any decision, and therefore there remains uncertainty around the financial support to be provided. The provision remains at Provisions of £137 million are classified as current liabilities (2022: £139 million). Unwind of the discount is £nil in £52 million, and represents the offer made to settle the matter and is based on an IAS 19 valuation to transfer certain 2023 and 2022. liabilities into the existing ITV pension scheme, which we consider to be the most likely form of settlement. We are Contract provisions £18 million (2022: £34 million) continuing to engage with tPR to resolve the matter. Contract provisions represent liabilities in respect of onerous contracts in relation to individual sports rights Employee-related of £11 million (2022: £17 million) and transmission capacity supply contracts of £7 million (2022: £17 million). The determination of the employment tax status of some individuals contracted by the Group is complex. HMRC has issued assessments to the Group for several individuals engaged by the Group during the tax years 2016/17 to Sports rights 2018/19 as employed for tax purposes and a provision of £56 million was made. Following the pandemic and up to 31 December 2022, the Group recognised provisions for individual sports rights when estimated revenues were less than the value of the rights. This was considered an indicator of impairment. During 2023, we have further reviewed the provision, which has resulted in an increase in the provision of £2 million The provision is sensitive to the changes in the sporting schedule and consequential impact on TAR. In calculating (2022: £20 million). This has resulted in a £5 million charge to the profit and loss account and a £3 million credit to the provision for sports rights, management has made estimates and used assumptions in determining the nature, exceptional items (2022: £10 million) as this relates to periods up to 31 December 2022 and therefore does not amount and timing of potential outflows, including the commercial impacts of the target audience that will be relate to the current year. generated by those rights, scheduling of the events and revenue forecasts. Due to ongoing reviews by HMRC and court cases in this matter, the final amount payable could be significantly In periods prior to the pandemic, all programme rights (including sports rights) were assessed for impairment on a different to the £58 million currently provided (2022: £56 million). It is difficult to provide a range for the expected portfolio basis unless specific indicators of impairment were identified. In 2023, the Group has included sports rights final amounts payable as case law is continually evolving on this matter, particularly in relation to Front of Camera in the portfolio assessment as there are no specific indicators of impairment. No further impairments have arisen. presenters. Very few cases have reached the higher courts and fact patterns can be very different in individual cases, The provision held at 31 December 2023 is £11 million (2022: £17 million). £6 million of the provision was utilised so determination of employment status for tax purposes remains very subjective. during the year. In the prior year £5 million was released due to certain sporting events being cancelled and a refund A further £3 million (2022: £3 million) is provided in relation to other employment related matters. issued to the Group. The remaining provision is expected to be utilised between 2024 and 2025. Other Transponders Other provisions relate to settlements or proposed settlements on a number of legal cases as well as historical In 2020 and 2021, the Group reviewed the efficiency of its transponder capacity usage with a view to reducing capacity environmental provisions in relation to our production sites, closure costs and provision for legal fees for other requirements. This has allowed the Group to reorganise channels over fewer transponders with the result that all channels ongoing litigation. have been cleared from two transponders. They are no longer utilised and are therefore not generating revenues. Management has applied judgement in its assessment that the individual element of the contract is separable from the remaining elements of the contract, which are not considered onerous. The contracted future commitment to October 2024 was therefore recognised as a provision in 2020 and 2021 as there are no future economic benefits expected. The total provision for onerous contracts at 31 December 2023 is £7 million (2022: £17 million). £10 million of the provision was utilised during the year (2022: £10 million). Property provisions £10 million (2022: £9 million) These provisions primarily relate to expected dilapidation costs at the Group’s rental properties.
196 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 197 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL 3.7 Keeping In this note, we explain the accounting policies governing the Group’s pension Unless otherwise stated, references to Defined Benefit Schemes (‘the Schemes’) within this note refer to the ITV S T it simple schemes, followed by analysis of the components of the net defined benefit Pension Scheme, the Unfunded Scheme and the UTV Pension Scheme combined. Details on each scheme are A Pensions T pension surplus or deficit, including assumptions made, and where the related provided below. E M movements have been recognised in the financial statements. In addition, we have E N placed text boxes to explain some of the technical terms used in the disclosure. The liabilities of the Schemes are measured by discounting the best estimate of future cash flows to be paid using T the ‘projected unit’ method. These calculations are complex and are performed by a qualified actuary. There are S What are the Group’s pension schemes? many judgements and estimates necessary to calculate the Group’s estimated liabilities, the main assumptions are There are two types of pension schemes. A ‘Defined Contribution’ scheme that is set out later in this note. Movements in assumptions during the year are called ‘actuarial gains and losses’ and these open to ITV employees, and a number of ‘Defined Benefit’ schemes that have been are recognised in the period in which they arise through the Consolidated Statement of Comprehensive Income. closed to new members since 2006 and closed to future accrual in 2017. In 2016, on acquisition of UTV Limited, the Group took over the UTV Defined Benefit Scheme, The accounting defined benefit pension surplus or deficit (IAS 19) is different from the actuarial valuation surplus or which closed to future accrual at the end of March 2019. deficit as they are calculated on the basis of different assumptions, such as discount rate. The accounting defined benefit pension surplus or deficit (IAS 19) figure is calculated as at the balance sheet date, and the actuarial What is a Defined Contribution scheme? valuation surplus or deficit (or funding surplus or deficit) is calculated per the last triennial valuation. The Defined Contribution scheme is where the Group makes fixed payments into a separate fund on behalf of those employees participating in saving for their The latest triennial valuation of the ITV Pension Scheme was undertaken as at 31 December 2019 by an independent retirement. ITV has no further obligation to the participating employee and the risks actuary appointed by the Trustee of the Scheme and agreed in early 2022. The funding deficit of Section A of the ITV and rewards associated with this type of scheme are assumed by the members Pension Scheme as at 31 December 2019 amounted to £252 million, down from £489 million at 1 January 2017. rather than the Group. Although the Trustee of the scheme makes available a range of investment options, it is the members’ responsibility to make investment The IAS 19 surplus or deficit does not drive the deficit funding contribution. Following the above triennial valuation of decisions relating to their retirement benefits. Section A of the ITV Pensions Scheme, ITV paid deficit reduction contributions of £40 million in 2023, and expects the deficit reduction contributions to be £53 million in 2024 and £28 million in 2025. What is a Defined Benefit scheme? In a Defined Benefit scheme, members receive payments during retirement, the value The next triennial valuation of the ITV Pension Scheme as at 31 December 2022 by an independent actuary of which is dependent on factors such as salary and length of service. The Group appointed by the Trustee of the Scheme is currently underway and is expected to be agreed in the coming months. makes contributions to the scheme, a separate Trustee-administered fund that is not The Group will then update any required deficit reduction contributions in line with the valuation. consolidated in these financial statements, but is reflected on the defined benefit pension surplus or deficit line in the Consolidated Statement of Financial Position. An unfunded scheme in relation to former beneficiaries who accrued benefits in excess of the maximum allowed for tax purposes is accounted for under IAS 19 and the Group is responsible for meeting the pension obligations as they The Trustee, appointed according to the terms of the Schemes’ documentation, fall due. For the four former Granada executives within the unfunded scheme, there is additional security in the form is required to act in the best interest of the beneficiaries and is responsible of a charge over £48 million (2022: £47 million) of securitised gilts held by the Group, which are classified as other for managing and investing the assets of the Scheme and its funding position. pension assets to reflect the Group’s net pension surplus or deficit. Schemes can be funded, where regular cash contributions are made by the employer into a fund which is invested. In the event of poor investment returns or Due to the size of the UTV Pension Scheme, the Directors present the results and position of the UTV Pension increases in liabilities, the Group may need to address this through increased levels Scheme within this note combined with the existing ITV Schemes. In January 2024, the triennial valuation of the of contribution. Alternatively, schemes can be unfunded, where no regular money or UTV Scheme as at 30 June 2023 was completed. The Scheme had assets of £91 million as at the valuation date assets are required to be put aside to cover future payments but in some cases, and £88 million of liabilities resulting in an agreed Technical Provisions surplus of £3 million and hence there are security is required. no deficit contributions payable. The accounting defined benefit pension surplus or deficit (IAS 19) is different from the The principal employer of the ITV Pension Scheme and the Unfunded Scheme is ITV Services Limited, the Granada actuarial valuation surplus or deficit as they are calculated on the basis of different supplementary scheme is Granada Group Limited and the UTV Pension Scheme is UTV Limited. assumptions, such as discount rate. The accounting defined benefit pension surplus or deficit (IAS 19) figure is calculated as at the balance sheet date. While the actuarial The defined benefit pension surplus (under IAS 19) ember 2023 (2022: £192 million) is stated after including the unfunded surplus or deficit (which drives cash funding requirements) is calculated as part of the Net pension surplus of £209 million at 31 Dec triennial valuations. The next triennial valuation will be as at 31 December 2022 and is scheme security asset of £48 million (2022: £47 million). The totals recognised in 2023 and 2022 are: currently underway for the ITV Pension Scheme. The triennial valuation at 30 June 2023 2022 2023 for the UTV Pension Scheme was agreed in early 2024. £m £m Total defined benefit scheme obligations (2,194) (2,292) Accounting policies Total defined benefit scheme assets 2,355 2,437 Defined contribution scheme Defined benefit pension surplus (IAS 19) 161 145 Obligations under the Group’s defined contribution schemes are recognised as an operating cost in the Consolidated Income Statement as incurred. For 2023, total contributions expensed were £25 million (2022: £29 million). Presented as: Defined benefit scheme Defined benefit pension surplus* 187 172 The Group’s obligation in respect of the Defined Benefit Scheme is calculated by estimating the amount of future Defined benefit pension deficit (26) (27) retirement benefit that eligible employees (‘beneficiaries’) have earned during their services. That benefit payable Defined benefit pension surplus/(deficit) (IAS 19) 161 145 in the future is discounted to today’s value and then the fair value of scheme assets is deducted to measure the defined benefit pension position. Other pension asset 48 47 Net pension surplus 209 192 * Included with the defined benefit pension surplus is the UTV Scheme. The defined benefit scheme assets in the UTV Scheme were valued at £94 million as at 31 December 2023 (2022: £94 million) and the defined benefit scheme obligations were £85 million (2022: £85 million). The following notes provide further detail on the value of the Schemes’ assets and liabilities, how these are accounted for and their impact on the financial statements.
196 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 197 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL 3.7 Keeping In this note, we explain the accounting policies governing the Group’s pension Unless otherwise stated, references to Defined Benefit Schemes (‘the Schemes’) within this note refer to the ITV S T it simple schemes, followed by analysis of the components of the net defined benefit Pension Scheme, the Unfunded Scheme and the UTV Pension Scheme combined. Details on each scheme are A Pensions T pension surplus or deficit, including assumptions made, and where the related provided below. E M movements have been recognised in the financial statements. In addition, we have E N placed text boxes to explain some of the technical terms used in the disclosure. The liabilities of the Schemes are measured by discounting the best estimate of future cash flows to be paid using T the ‘projected unit’ method. These calculations are complex and are performed by a qualified actuary. There are S What are the Group’s pension schemes? many judgements and estimates necessary to calculate the Group’s estimated liabilities, the main assumptions are There are two types of pension schemes. A ‘Defined Contribution’ scheme that is set out later in this note. Movements in assumptions during the year are called ‘actuarial gains and losses’ and these open to ITV employees, and a number of ‘Defined Benefit’ schemes that have been are recognised in the period in which they arise through the Consolidated Statement of Comprehensive Income. closed to new members since 2006 and closed to future accrual in 2017. In 2016, on acquisition of UTV Limited, the Group took over the UTV Defined Benefit Scheme, The accounting defined benefit pension surplus or deficit (IAS 19) is different from the actuarial valuation surplus or which closed to future accrual at the end of March 2019. deficit as they are calculated on the basis of different assumptions, such as discount rate. The accounting defined benefit pension surplus or deficit (IAS 19) figure is calculated as at the balance sheet date, and the actuarial What is a Defined Contribution scheme? valuation surplus or deficit (or funding surplus or deficit) is calculated per the last triennial valuation. The Defined Contribution scheme is where the Group makes fixed payments into a separate fund on behalf of those employees participating in saving for their The latest triennial valuation of the ITV Pension Scheme was undertaken as at 31 December 2019 by an independent retirement. ITV has no further obligation to the participating employee and the risks actuary appointed by the Trustee of the Scheme and agreed in early 2022. The funding deficit of Section A of the ITV and rewards associated with this type of scheme are assumed by the members Pension Scheme as at 31 December 2019 amounted to £252 million, down from £489 million at 1 January 2017. rather than the Group. Although the Trustee of the scheme makes available a range of investment options, it is the members’ responsibility to make investment The IAS 19 surplus or deficit does not drive the deficit funding contribution. Following the above triennial valuation of decisions relating to their retirement benefits. Section A of the ITV Pensions Scheme, ITV paid deficit reduction contributions of £40 million in 2023, and expects the deficit reduction contributions to be £53 million in 2024 and £28 million in 2025. What is a Defined Benefit scheme? In a Defined Benefit scheme, members receive payments during retirement, the value The next triennial valuation of the ITV Pension Scheme as at 31 December 2022 by an independent actuary of which is dependent on factors such as salary and length of service. The Group appointed by the Trustee of the Scheme is currently underway and is expected to be agreed in the coming months. makes contributions to the scheme, a separate Trustee-administered fund that is not The Group will then update any required deficit reduction contributions in line with the valuation. consolidated in these financial statements, but is reflected on the defined benefit pension surplus or deficit line in the Consolidated Statement of Financial Position. An unfunded scheme in relation to former beneficiaries who accrued benefits in excess of the maximum allowed for tax purposes is accounted for under IAS 19 and the Group is responsible for meeting the pension obligations as they The Trustee, appointed according to the terms of the Schemes’ documentation, fall due. For the four former Granada executives within the unfunded scheme, there is additional security in the form is required to act in the best interest of the beneficiaries and is responsible of a charge over £48 million (2022: £47 million) of securitised gilts held by the Group, which are classified as other for managing and investing the assets of the Scheme and its funding position. pension assets to reflect the Group’s net pension surplus or deficit. Schemes can be funded, where regular cash contributions are made by the employer into a fund which is invested. In the event of poor investment returns or Due to the size of the UTV Pension Scheme, the Directors present the results and position of the UTV Pension increases in liabilities, the Group may need to address this through increased levels Scheme within this note combined with the existing ITV Schemes. In January 2024, the triennial valuation of the of contribution. Alternatively, schemes can be unfunded, where no regular money or UTV Scheme as at 30 June 2023 was completed. The Scheme had assets of £91 million as at the valuation date assets are required to be put aside to cover future payments but in some cases, and £88 million of liabilities resulting in an agreed Technical Provisions surplus of £3 million and hence there are security is required. no deficit contributions payable. The accounting defined benefit pension surplus or deficit (IAS 19) is different from the The principal employer of the ITV Pension Scheme and the Unfunded Scheme is ITV Services Limited, the Granada actuarial valuation surplus or deficit as they are calculated on the basis of different supplementary scheme is Granada Group Limited and the UTV Pension Scheme is UTV Limited. assumptions, such as discount rate. The accounting defined benefit pension surplus or deficit (IAS 19) figure is calculated as at the balance sheet date. While the actuarial The defined benefit pension surplus (under IAS 19) ember 2023 (2022: £192 million) is stated after including the unfunded surplus or deficit (which drives cash funding requirements) is calculated as part of the Net pension surplus of £209 million at 31 Dec triennial valuations. The next triennial valuation will be as at 31 December 2022 and is scheme security asset of £48 million (2022: £47 million). The totals recognised in 2023 and 2022 are: currently underway for the ITV Pension Scheme. The triennial valuation at 30 June 2023 2022 2023 for the UTV Pension Scheme was agreed in early 2024. £m £m Total defined benefit scheme obligations (2,194) (2,292) Accounting policies Total defined benefit scheme assets 2,355 2,437 Defined contribution scheme Defined benefit pension surplus (IAS 19) 161 145 Obligations under the Group’s defined contribution schemes are recognised as an operating cost in the Consolidated Income Statement as incurred. For 2023, total contributions expensed were £25 million (2022: £29 million). Presented as: Defined benefit scheme Defined benefit pension surplus* 187 172 The Group’s obligation in respect of the Defined Benefit Scheme is calculated by estimating the amount of future Defined benefit pension deficit (26) (27) retirement benefit that eligible employees (‘beneficiaries’) have earned during their services. That benefit payable Defined benefit pension surplus/(deficit) (IAS 19) 161 145 in the future is discounted to today’s value and then the fair value of scheme assets is deducted to measure the defined benefit pension position. Other pension asset 48 47 Net pension surplus 209 192 * Included with the defined benefit pension surplus is the UTV Scheme. The defined benefit scheme assets in the UTV Scheme were valued at £94 million as at 31 December 2023 (2022: £94 million) and the defined benefit scheme obligations were £85 million (2022: £85 million). The following notes provide further detail on the value of the Schemes’ assets and liabilities, how these are accounted for and their impact on the financial statements.
198 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 199 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Defined benefit scheme obligations Assumptions used to estimate the Scheme obligations S T A Keeping What causes movements in the defined benefit pension obligations? Keeping What are the main assumptions used to estimate the Scheme obligations? T E it simple The areas that impact the defined benefit obligation (the pension scheme it simple The main assumptions are: M E liabilities) position at the year end are as follows: N • An estimate of increases in pension payments and the effect of inflation T • Past service cost – is a change in present value of the benefits built up by the • The life expectancy of beneficiaries S beneficiaries in the prior periods; can be positive or negative resulting from • The discount rate used to estimate the present day fair value of these obligations changes to the existing plan as a result of an agreement between ITV and How do we determine the appropriate assumptions? employees or legislative change (including legal rulings) or as a result of The Group takes independent actuarial advice relating to the appropriateness of significant reduction by ITV in the number of employees covered by the plan the assumptions used. (curtailment) • Interest cost – the pension obligations payable in the future are discounted IFRS requires that we estimate a discount rate by reference to high-quality to the present value at year end. A discount factor is used to determine the fixed income investments in the UK that match the estimated term of the current value today of the future cost. The interest cost is the unwinding of one pension obligations. year’s movement in the present value of the obligation. It is broadly determined by multiplying the discount rate at the beginning of the year by the updated The inflation assumption has been set by looking at the difference between the present value of the obligation during the year. The discount rate is a key yields on fixed and index-linked government bonds. The inflation assumption is assumption explained later in this note. This interest cost is recognised through used as a basis for the remaining financial assumptions, except where caps have net financing costs in the Consolidated Income Statement (see note 4.4) been implemented. • Actuarial gains or losses – there are broadly two causes of actuarial movements: The discount rate has therefore been obtained using the yields available on AA rated ‘experience’ adjustments, which arise when comparing assumptions made when corporate bonds, which match projected cash flows. The Group’s estimate of the estimating the liabilities and what has actually occurred, and adjustments resulting weighted average term of the liabilities is 12 years (2021: 15 years). from changes in actuarial assumptions e.g. movements in corporate bond yields or change in mortality. Key assumptions are explained in detail later in this note. Actuarial gains or losses are recognised through other comprehensive income The principal assumptions used in the Schemes’ valuations at the year end were: • Benefits paid – any cash benefits paid out by the Scheme will reduce the obligation 2023 2022 Discount rate 4.75% 5.05% The movement in the present value of the Group’s defined benefit obligation is analysed below: Inflation assumption (RPI) 3.05% 3.15% 2023 2022 Deferred/ Deferred/ £m £m Pensioner Pensioner Defined benefit obligation at 1 January 2,292 3,943 Rate of increase in pension payment (LPI* 5% pension increases) 2.80%/3.00% 2.80%/3.00% Interest cost 112 63 Rate of increase to deferred pensions (CPI) 2.50% 2.50% Actuarial gain (63) (1,119) * Limited Price Index. Settlement payments from plan assets – buyout of Section C – (439) Benefits paid (147) (156) From February 2030 onwards, increases in the RPI will be aligned with those under the Consumer Prices Index (CPI). Defined benefit obligation at 31 December 2,194 2,292 For Defined Benefit schemes, it means that members with RPI-linked pension increases will see future retirement benefits increase more slowly from 2030 than they otherwise would. The Group’s approach to setting RPI and CPI Of the above total defined benefit obligation at 31 December 2023 £39 million relates to the unfunded schemes inflation assumptions is as follows: (2022: £40 million). • The Group continued to set RPI inflation in line with the market break-even expectations for inflation less an inflation risk premium of 0.3% In April 2022, the Trustee completed a buyout of Section C, which in practical terms split the bulk annuity policy into • The assumptions linked to RPI and CPI as at 31 December 2023 have been determined by weighting the cash individual annuity policies for each scheme member. At that time, the relevant scheme assets were transferred to flows to which the link applies the insurance company, which became responsible for paying the pensions and therefore it removed those liabilities The table below reflects published mortality investigation data in conjunction with the results of investigations into from the pension scheme, represented by ‘settlement payments from plan assets – buyout of Section C’ in the table the mortality experience of Scheme beneficiaries. The assumed life expectations on retirement for Section A are: above. The value of the assets and liabilities settled was equal and therefore the settlement cost was £nil. The buyout represents a full and definitive settlement of the liabilities insured, which as at 31 December 2021 2023 2023 2022 2022 represented around 13% of ITV's total defined benefit obligation on the IAS 19 accounting basis. Retiring today at age 60 65 60 65 Males 25.7 21.1 26.2 21.6 Females 27.3 22.6 28.9 24.1 Retiring in 20 years at age 60 65 60 65 Males 27.1 22.3 27.5 22.7 Females 28.9 24.0 30.4 25.5 The net pension surplus is sensitive to changes in assumptions. These are disclosed further in this note.
198 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 199 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Defined benefit scheme obligations Assumptions used to estimate the Scheme obligations S T A Keeping What causes movements in the defined benefit pension obligations? Keeping What are the main assumptions used to estimate the Scheme obligations? T E it simple The areas that impact the defined benefit obligation (the pension scheme it simple The main assumptions are: M E liabilities) position at the year end are as follows: N • An estimate of increases in pension payments and the effect of inflation T • Past service cost – is a change in present value of the benefits built up by the • The life expectancy of beneficiaries S beneficiaries in the prior periods; can be positive or negative resulting from • The discount rate used to estimate the present day fair value of these obligations changes to the existing plan as a result of an agreement between ITV and How do we determine the appropriate assumptions? employees or legislative change (including legal rulings) or as a result of The Group takes independent actuarial advice relating to the appropriateness of significant reduction by ITV in the number of employees covered by the plan the assumptions used. (curtailment) • Interest cost – the pension obligations payable in the future are discounted IFRS requires that we estimate a discount rate by reference to high-quality to the present value at year end. A discount factor is used to determine the fixed income investments in the UK that match the estimated term of the current value today of the future cost. The interest cost is the unwinding of one pension obligations. year’s movement in the present value of the obligation. It is broadly determined by multiplying the discount rate at the beginning of the year by the updated The inflation assumption has been set by looking at the difference between the present value of the obligation during the year. The discount rate is a key yields on fixed and index-linked government bonds. The inflation assumption is assumption explained later in this note. This interest cost is recognised through used as a basis for the remaining financial assumptions, except where caps have net financing costs in the Consolidated Income Statement (see note 4.4) been implemented. • Actuarial gains or losses – there are broadly two causes of actuarial movements: The discount rate has therefore been obtained using the yields available on AA rated ‘experience’ adjustments, which arise when comparing assumptions made when corporate bonds, which match projected cash flows. The Group’s estimate of the estimating the liabilities and what has actually occurred, and adjustments resulting weighted average term of the liabilities is 12 years (2021: 15 years). from changes in actuarial assumptions e.g. movements in corporate bond yields or change in mortality. Key assumptions are explained in detail later in this note. Actuarial gains or losses are recognised through other comprehensive income The principal assumptions used in the Schemes’ valuations at the year end were: • Benefits paid – any cash benefits paid out by the Scheme will reduce the obligation 2023 2022 Discount rate 4.75% 5.05% The movement in the present value of the Group’s defined benefit obligation is analysed below: Inflation assumption (RPI) 3.05% 3.15% 2023 2022 Deferred/ Deferred/ £m £m Pensioner Pensioner Defined benefit obligation at 1 January 2,292 3,943 Rate of increase in pension payment (LPI* 5% pension increases) 2.80%/3.00% 2.80%/3.00% Interest cost 112 63 Rate of increase to deferred pensions (CPI) 2.50% 2.50% Actuarial gain (63) (1,119) * Limited Price Index. Settlement payments from plan assets – buyout of Section C – (439) Benefits paid (147) (156) From February 2030 onwards, increases in the RPI will be aligned with those under the Consumer Prices Index (CPI). Defined benefit obligation at 31 December 2,194 2,292 For Defined Benefit schemes, it means that members with RPI-linked pension increases will see future retirement benefits increase more slowly from 2030 than they otherwise would. The Group’s approach to setting RPI and CPI Of the above total defined benefit obligation at 31 December 2023 £39 million relates to the unfunded schemes inflation assumptions is as follows: (2022: £40 million). • The Group continued to set RPI inflation in line with the market break-even expectations for inflation less an inflation risk premium of 0.3% In April 2022, the Trustee completed a buyout of Section C, which in practical terms split the bulk annuity policy into • The assumptions linked to RPI and CPI as at 31 December 2023 have been determined by weighting the cash individual annuity policies for each scheme member. At that time, the relevant scheme assets were transferred to flows to which the link applies the insurance company, which became responsible for paying the pensions and therefore it removed those liabilities The table below reflects published mortality investigation data in conjunction with the results of investigations into from the pension scheme, represented by ‘settlement payments from plan assets – buyout of Section C’ in the table the mortality experience of Scheme beneficiaries. The assumed life expectations on retirement for Section A are: above. The value of the assets and liabilities settled was equal and therefore the settlement cost was £nil. The buyout represents a full and definitive settlement of the liabilities insured, which as at 31 December 2021 2023 2023 2022 2022 represented around 13% of ITV's total defined benefit obligation on the IAS 19 accounting basis. Retiring today at age 60 65 60 65 Males 25.7 21.1 26.2 21.6 Females 27.3 22.6 28.9 24.1 Retiring in 20 years at age 60 65 60 65 Males 27.1 22.3 27.5 22.7 Females 28.9 24.0 30.4 25.5 The net pension surplus is sensitive to changes in assumptions. These are disclosed further in this note.
200 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 201 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Total defined benefit scheme assets How are the Schemes’ assets invested? S T At 31 December 2023, the Schemes’ assets were invested in a diversified portfolio that consisted primarily of A Keeping The Scheme holds assets across a number of different classes, which are managed T debt securities, infrastructure, property and insurance policies matching pensions due to certain beneficiaries. E it simple by the Trustee, who consults with the Group on changes to its investment policy. M The Trustee is responsible for deciding the investment strategy for the Schemes’ assets, although changes in E N What are the Pension Scheme assets? investment policies require consultation with the Group. The assets are invested in different classes to hedge T At 31 December 2023, the Schemes’ assets were invested in a diversified portfolio against unfavourable movements in the funding obligation. When selecting the mix of assets to hold, and S that consisted primarily of debt securities, infrastructure, property and insurance considering their related risks and returns, the Trustee will weigh up the variability of returns against the target policies matching the pensions due to certain beneficiaries. The tables below set long-term rate of return on the overall portfolio. out the major categories of assets. The fair value of the Schemes’ assets is shown in the following table by major category: Financial instruments are in place in order to provide protection against changes in market factors (interest rates and inflation), which could act to increase the net Market value Quoted Market value Market value Quoted Market value pension surplus/deficit. 2023 2023 2023 2022 2022 2022 £m £m % £m £m % One such instrument is the longevity swap, which the Scheme transacted in 2011 to Liability hedging assets obtain protection against the effect of increases in the life expectancy of the majority Fixed interest gilts 449 449 365 365 of pensioner beneficiaries at that date. Under the swap, the Trustee agreed to make Index-linked interest gilts 516 516 788 786 pre-determined payments in return for payments to meet the specified pension Interest rate and inflation hedging obligations as they fall due, irrespective of how long the beneficiaries and their derivatives dependants live. The difference in the present values of these two streams of (swaps and repos) (112) (142) (375) (401) payments is reflected in the Scheme assets. The swap had a nil valuation at inception 853 823 36% 778 750 32% and, using market-based assumptions, is subsequently adjusted for changes in the market life expectancy and market discount rates, in line with its fair value. Other bonds 1,456 62 62% 1,447 58 59% How do we measure the pension Scheme assets? Defined benefit scheme assets are measured at their fair value and can change due Return seeking investments to the following: Infrastructure 175 174 • Interest income on scheme assets – this is determined by multiplying the fair Property 149 171 value of the Scheme assets by the discount rate, both taken as of the beginning 324 14% 345 14% of the year. This is recognised through net financing costs in the Consolidated Other investments Income Statement • Return on assets arise from differences between the actual return and interest Cash and cash equivalents 41 121 income on Scheme assets and are recognised in the Consolidated Statement of Insurance policies 41 17 Other Comprehensive Income Longevity swap fair value (360) (271) • Employer’s contributions are paid into the Scheme to be managed and invested, (278) (12%) (133) (5%) and Total Scheme assets 2,355 885 100% 2,437 808 100% • Benefits and administrative expenses paid out by the Schemes will lower the fair value of the Schemes’ assets Included in the above are overseas assets of £24 million (2022: £315 million). None of these assets are quoted. The movement in the fair value of the defined benefit schemes’ assets is analysed below: The Trustee entered into a longevity swap in 2011, which hedges the risk of increasing life expectancy over the next 70 years for 11,700 current pensioners at inception covering £1.7 billion of the pension obligation. The fair value of the 2023 2022 longevity swap is negative due to declining mortality assumptions and equals the discounted value of the projected £m £m net cash flows resulting from the contract. The fair value loss has increased in 2023 due to the latest mortality Fair value of Scheme assets at 1 January 2,437 3,873 analysis from the triennial valuation. Interest income on Scheme assets 120 63 Loss on assets, excluding interest income (98) (1,039) Employer contributions 50 145 Settlement payments from plan assets – buyout of Section C – (439) Benefits paid (147) (156) Administrative expenses paid (7) (6) Pension insurance risk premium – buyout of Section C – (4) Fair value of Scheme assets at 31 December 2,355 2,437
200 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 201 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Total defined benefit scheme assets How are the Schemes’ assets invested? S T At 31 December 2023, the Schemes’ assets were invested in a diversified portfolio that consisted primarily of A Keeping The Scheme holds assets across a number of different classes, which are managed T debt securities, infrastructure, property and insurance policies matching pensions due to certain beneficiaries. E it simple by the Trustee, who consults with the Group on changes to its investment policy. M The Trustee is responsible for deciding the investment strategy for the Schemes’ assets, although changes in E N What are the Pension Scheme assets? investment policies require consultation with the Group. The assets are invested in different classes to hedge T At 31 December 2023, the Schemes’ assets were invested in a diversified portfolio against unfavourable movements in the funding obligation. When selecting the mix of assets to hold, and S that consisted primarily of debt securities, infrastructure, property and insurance considering their related risks and returns, the Trustee will weigh up the variability of returns against the target policies matching the pensions due to certain beneficiaries. The tables below set long-term rate of return on the overall portfolio. out the major categories of assets. The fair value of the Schemes’ assets is shown in the following table by major category: Financial instruments are in place in order to provide protection against changes in market factors (interest rates and inflation), which could act to increase the net Market value Quoted Market value Market value Quoted Market value pension surplus/deficit. 2023 2023 2023 2022 2022 2022 £m £m % £m £m % One such instrument is the longevity swap, which the Scheme transacted in 2011 to Liability hedging assets obtain protection against the effect of increases in the life expectancy of the majority Fixed interest gilts 449 449 365 365 of pensioner beneficiaries at that date. Under the swap, the Trustee agreed to make Index-linked interest gilts 516 516 788 786 pre-determined payments in return for payments to meet the specified pension Interest rate and inflation hedging obligations as they fall due, irrespective of how long the beneficiaries and their derivatives dependants live. The difference in the present values of these two streams of (swaps and repos) (112) (142) (375) (401) payments is reflected in the Scheme assets. The swap had a nil valuation at inception 853 823 36% 778 750 32% and, using market-based assumptions, is subsequently adjusted for changes in the market life expectancy and market discount rates, in line with its fair value. Other bonds 1,456 62 62% 1,447 58 59% How do we measure the pension Scheme assets? Defined benefit scheme assets are measured at their fair value and can change due Return seeking investments to the following: Infrastructure 175 174 • Interest income on scheme assets – this is determined by multiplying the fair Property 149 171 value of the Scheme assets by the discount rate, both taken as of the beginning 324 14% 345 14% of the year. This is recognised through net financing costs in the Consolidated Other investments Income Statement • Return on assets arise from differences between the actual return and interest Cash and cash equivalents 41 121 income on Scheme assets and are recognised in the Consolidated Statement of Insurance policies 41 17 Other Comprehensive Income Longevity swap fair value (360) (271) • Employer’s contributions are paid into the Scheme to be managed and invested, (278) (12%) (133) (5%) and Total Scheme assets 2,355 885 100% 2,437 808 100% • Benefits and administrative expenses paid out by the Schemes will lower the fair value of the Schemes’ assets Included in the above are overseas assets of £24 million (2022: £315 million). None of these assets are quoted. The movement in the fair value of the defined benefit schemes’ assets is analysed below: The Trustee entered into a longevity swap in 2011, which hedges the risk of increasing life expectancy over the next 70 years for 11,700 current pensioners at inception covering £1.7 billion of the pension obligation. The fair value of the 2023 2022 longevity swap is negative due to declining mortality assumptions and equals the discounted value of the projected £m £m net cash flows resulting from the contract. The fair value loss has increased in 2023 due to the latest mortality Fair value of Scheme assets at 1 January 2,437 3,873 analysis from the triennial valuation. Interest income on Scheme assets 120 63 Loss on assets, excluding interest income (98) (1,039) Employer contributions 50 145 Settlement payments from plan assets – buyout of Section C – (439) Benefits paid (147) (156) Administrative expenses paid (7) (6) Pension insurance risk premium – buyout of Section C – (4) Fair value of Scheme assets at 31 December 2,355 2,437
202 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 203 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Defined pension deficit sensitivities Keeping What was the impact of movements on the Schemes’ assets and liabilities? S T it simple The notes above describe how the Scheme obligations and assets are comprised A Keeping Which assumptions have the biggest impact on the Scheme? T and measured. The following note sets out the impact of various movements and E it simple It is important to note that comparatively small changes in the assumptions used M expenses of the Scheme on the Group’s financial statements. E may have a significant effect on the Consolidated Income Statement and N T Consolidated Statement of Financial Position. This ‘sensitivity’ to change is Amounts recognised through the Consolidated Income Statement S analysed below to demonstrate how small changes in assumptions can have a large impact on the estimation of the defined benefit pension obligation. The Trustee Amounts recognised through the Consolidated Income Statement are as follows: manages the investment, mortality and inflation risks to ensure the pension obligations are met as they fall due. 2023 2022 £m £m The investment strategy is aimed at the Trustee’s actuarial valuation liabilities Amount charged to operating costs: rather than IAS 19 defined pension liabilities. As such, the effectiveness of the risk Scheme administration expenses (7) (6) hedging strategies on a valuation basis will not be the same as on an accounting (7) (6) basis. Those hedging strategies have significant impact on the movement in the net Amount charged to exceptional costs: pension deficit as assumptions change, offsetting the impacts on the obligation Pension insurance risk premium – buyout of Section C – (4) disclosed below. In practice, changes in one assumption may be accompanied by offsetting changes Amounts credited to net financing cost in another assumption (although this is not always the case). Changes in the Net interest on defined benefit obligation 8 – assumptions may occur at the same time as changes in the market value of Scheme assets, which may or may not offset the changes in assumptions. Total charged in the Consolidated Income Statement 1 (10) Changes in assumptions have a different level of impact as the value of the net pension surplus/(deficit) fluctuates, because the relationship between them is not linear. Amounts recognised through the Consolidated Statement of Comprehensive Income The amounts recognised through the Consolidated Statement of Comprehensive Income are: The analysis below considers the impact of a single change in principal assumptions on the defined benefit obligation 2023 2022 while keeping the other assumptions unchanged and does not take into account any risk hedging strategies: £m £m Remeasurement (losses)/gains Assumption Change in assumption Impact on defined benefit obligation Loss on scheme assets excluding interest income (98) (1,039) Discount rate Increase by 0.1% Decrease by £25 million Actuarial gains/(losses) on liabilities arising from change in: Decrease by 0.1% Increase by £25 million – experience adjustments 45 (119) Increase by 0.5% Decrease by £115 million – financial assumptions (68) 1,228 Decrease by 0.5% Increase by £125 million – demographic assumptions 86 10 Rate of inflation Increase by 0.1% Increase by £10 million 63 1,119 (Retail Price Index) Decrease by 0.1% Decrease by £10 million Rate of inflation Increase by 0.1% Increase by £5 million Total recognised in the Consolidated Statement of Comprehensive Income (35) 80 (Consumer Price Index) Decrease by 0.1% Decrease by £5 million The £63 million actuarial gain (2022: £1,119 million actuarial gain) on the Schemes’ liabilities was principally due to the Life expectancies Increase by one year Increase by £70 million change in the mortality assumptions in line with the latest mortality analysis from the triennial valuation and the updated census data underlying the liability calculations, and to a lesser extent the decrease in market implied inflation. The sensitivity analysis has been determined by extrapolating the impact on the defined benefit obligation at the This actuarial gain was partially offset by the decrease in bond yields which increased the value of the liabilities. year end with changes in key assumptions that might reasonably occur. The £98 million loss (2022: £1,039 million loss) on the Schemes’ assets was principally due to a decrease in the fair While the Schemes’ risk hedging strategy is aimed at a valuation basis, the Directors estimate that on an accounting value of the longevity swap, driven by updating the value of the swap in line with the latest mortality analysis from basis any change in asset values would significantly offset the above impact on the defined benefit obligation. the triennial valuation, and to a lesser extent by the assets slightly underperforming expectations. In particular, while an increase in assumption of life expectancies by one year would increase the defined benefit . obligation by £70 million, the assets would benefit from an estimated increase of the value of the longevity swap by £60 million, resulting in a net increase in the defined pension deficit of £10 million. Further, the ITV Pension Scheme invests in UK government bonds and interest rate and inflation swap contracts and therefore movements in the defined benefit obligation are typically offset, to an extent, by asset movements.
202 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 203 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED C I AL Defined pension deficit sensitivities Keeping What was the impact of movements on the Schemes’ assets and liabilities? S T it simple The notes above describe how the Scheme obligations and assets are comprised A Keeping Which assumptions have the biggest impact on the Scheme? T and measured. The following note sets out the impact of various movements and E it simple It is important to note that comparatively small changes in the assumptions used M expenses of the Scheme on the Group’s financial statements. E may have a significant effect on the Consolidated Income Statement and N T Consolidated Statement of Financial Position. This ‘sensitivity’ to change is Amounts recognised through the Consolidated Income Statement S analysed below to demonstrate how small changes in assumptions can have a large impact on the estimation of the defined benefit pension obligation. The Trustee Amounts recognised through the Consolidated Income Statement are as follows: manages the investment, mortality and inflation risks to ensure the pension obligations are met as they fall due. 2023 2022 £m £m The investment strategy is aimed at the Trustee’s actuarial valuation liabilities Amount charged to operating costs: rather than IAS 19 defined pension liabilities. As such, the effectiveness of the risk Scheme administration expenses (7) (6) hedging strategies on a valuation basis will not be the same as on an accounting (7) (6) basis. Those hedging strategies have significant impact on the movement in the net Amount charged to exceptional costs: pension deficit as assumptions change, offsetting the impacts on the obligation Pension insurance risk premium – buyout of Section C – (4) disclosed below. In practice, changes in one assumption may be accompanied by offsetting changes Amounts credited to net financing cost in another assumption (although this is not always the case). Changes in the Net interest on defined benefit obligation 8 – assumptions may occur at the same time as changes in the market value of Scheme assets, which may or may not offset the changes in assumptions. Total charged in the Consolidated Income Statement 1 (10) Changes in assumptions have a different level of impact as the value of the net pension surplus/(deficit) fluctuates, because the relationship between them is not linear. Amounts recognised through the Consolidated Statement of Comprehensive Income The amounts recognised through the Consolidated Statement of Comprehensive Income are: The analysis below considers the impact of a single change in principal assumptions on the defined benefit obligation 2023 2022 while keeping the other assumptions unchanged and does not take into account any risk hedging strategies: £m £m Remeasurement (losses)/gains Assumption Change in assumption Impact on defined benefit obligation Loss on scheme assets excluding interest income (98) (1,039) Discount rate Increase by 0.1% Decrease by £25 million Actuarial gains/(losses) on liabilities arising from change in: Decrease by 0.1% Increase by £25 million – experience adjustments 45 (119) Increase by 0.5% Decrease by £115 million – financial assumptions (68) 1,228 Decrease by 0.5% Increase by £125 million – demographic assumptions 86 10 Rate of inflation Increase by 0.1% Increase by £10 million 63 1,119 (Retail Price Index) Decrease by 0.1% Decrease by £10 million Rate of inflation Increase by 0.1% Increase by £5 million Total recognised in the Consolidated Statement of Comprehensive Income (35) 80 (Consumer Price Index) Decrease by 0.1% Decrease by £5 million The £63 million actuarial gain (2022: £1,119 million actuarial gain) on the Schemes’ liabilities was principally due to the Life expectancies Increase by one year Increase by £70 million change in the mortality assumptions in line with the latest mortality analysis from the triennial valuation and the updated census data underlying the liability calculations, and to a lesser extent the decrease in market implied inflation. The sensitivity analysis has been determined by extrapolating the impact on the defined benefit obligation at the This actuarial gain was partially offset by the decrease in bond yields which increased the value of the liabilities. year end with changes in key assumptions that might reasonably occur. The £98 million loss (2022: £1,039 million loss) on the Schemes’ assets was principally due to a decrease in the fair While the Schemes’ risk hedging strategy is aimed at a valuation basis, the Directors estimate that on an accounting value of the longevity swap, driven by updating the value of the swap in line with the latest mortality analysis from basis any change in asset values would significantly offset the above impact on the defined benefit obligation. the triennial valuation, and to a lesser extent by the assets slightly underperforming expectations. In particular, while an increase in assumption of life expectancies by one year would increase the defined benefit . obligation by £70 million, the assets would benefit from an estimated increase of the value of the longevity swap by £60 million, resulting in a net increase in the defined pension deficit of £10 million. Further, the ITV Pension Scheme invests in UK government bonds and interest rate and inflation swap contracts and therefore movements in the defined benefit obligation are typically offset, to an extent, by asset movements.
204 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 205 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS C I AL Addressing the defined benefit pension deficit In this This section outlines how the Group manages its capital structure and related S T section financing costs, including its balance sheet liquidity and access to capital markets. A Keeping The Group works closely with the Trustee to agree appropriate levels of funding T E it simple for the Scheme. This involves agreeing a Schedule of Contributions at each triennial The Directors determine the appropriate capital structure of ITV; specifically how M E valuation, which specifies the contribution rates for the employer and, where much is raised from shareholders (equity) and how much is borrowed from financial N T relevant, scheme beneficiaries and the date these contributions are due. A recovery institutions (debt) in order to finance the Group’s activities both now and in the S plan setting out the steps that will be taken to address a funding shortfall is future. Maintaining capital discipline and balance sheet efficiency remains also agreed. important to the Group. Any potential courses of action in relation to this will take In the event that the Group’s defined benefit scheme is in a net liability position, into account the Group’s liquidity needs, flexibility to invest in the business, pension the Directors must take steps to manage the size of the deficit. Apart from the deficit initiatives and impact on credit ratings. funding agreements mentioned above, this could involve pledging additional assets The Directors consider the Group’s capital structure and dividend policy at least to the Scheme, as was the case in the SDN and London Television Centre pension twice a year ahead of announcing results. The Directors take into account the funding partnerships. available realised distributable reserves from which a dividend would be paid in addition to liquidity and solvency of the Group. The Directors also consider the The levels of ongoing contributions to the Scheme are based on the expected future cash flows of the Scheme. capital structure and dividend policy in the context of the Group’s ability to continue Contributions in 2023 for administration expenses are £7 million (2022: £6 million). as a going concern, to execute the strategy and to invest in opportunities to grow the business and enhance shareholder value. The ITV plc Board oversees The Group has two asset-backed pension funding agreements with the Trustee – the SDN pension funding governance and approves tax and treasury related policies and procedures. partnership and the London Television Centre pension funding partnership which were set up in 2010 and 2014 respectively to address the pension deficit. Net debt is the Group’s key measure used to evaluate total cash resources net of 4.1 Keeping the current outstanding debt, including our discounted lease liabilities. A full SDN Pension Funding Partnership Net debt it simple analysis and discussion of net debt and covenant net debt is included in the In 2010, ITV established a Pension Funding Partnership (PFP) with the Trustees backed by SDN, which was Operating and Financial Performance Review. subsequently extended in 2011. The PFP addressed £200 million of the funding deficit in Section A of the defined benefit pension scheme and under the original agreement, a payment of up to £200 million was due in 2022. The The tables below analyse movements in the components of net debt during the year: existing PFP agreement was amended and extended to 2031. As a result of this agreement, payments of £94 million were made under the SDN PFP arrangement in 2022. The Group is committed to up to nine annual payments of £16 million from 2023. These payments are required if the Scheme is calculated to be in a technical deficit. Currency and This calculation is based upon the most recent triennial valuation updated for current market conditions. 1 January non-cash 31 December The partnership’s interest in SDN provides collateral for these payments. 2023 Net cash flow movements 2023 £m £m £m £m The £16 million payment under the SDN PFP was not required to be paid in 2023. However, this assessment is Loans and facilities due within one year (289) 278 6 (5) made on an annual basis and therefore the £16 million payment may resume in 2024. The Group retains day to day Loans and facilities due after one year (541) (228) 11 (758) operational control of SDN and SDN’s revenues, profits and cashflows continue to be consolidated in the Group’s Total loans and facilities (830) 50 17 (763) financial statements. On completion of the final payment in 2031, the Scheme’s partnership interest will have been repaid in full and it will have no right to any further payments. Currency component of forwards and swaps * London Television Centre Pension Funding Partnership held against euro denominated bonds (9) 10 (16) (15) Trustees backed by the London Television Centre, Lease liabilities (132) 26 (9) (115) In 2014, ITV established a Pension Funding Partnership with the which resulted in the assets of Section A of the defined benefit pension scheme being increased by £50 million. Total debt (971) 86 (8) (893) In November 2019, the London Television Centre was sold. £50 million of the proceeds was previously held in a restricted bank account as a replacement asset in the pension funding arrangement. In 2022, this security was Cash 257 (37) (5) 215 replaced with a surety bond and the cash was released to the Group. This structure continues to be reviewed. Cash equivalents 91 38 (4) 125 The Scheme’s interest in these Partnerships reduces the deficit on a funding basis but does not impact the deficit Total cash and cash equivalents 348 1 (9) 340 on an IAS 19 basis as the Scheme’s interest is not a transferrable financial instrument. Deficit funding contributions Net debt (623) 87 (17) (553) The accounting surplus or deficit does not drive the deficit funding contribution. The Group’s deficit funding * Net cash flow from currency component of forwards and swaps relates to the euro denominated bond repaid in the year contributions in 2023 were £40 million (31 December 2022: £137 million). This included £37 million deficit contribution agreed as part of the triennial valuation and £3 million annual payment under the London Television Centre PFP. The 2022 amount included £15 million deferred from 2020 and £25 million of deficit contributions agreed as part of the triennial valuation, £80 million one-off payment following the extension of the SDN PFP, a £3 million payment on the SDN PFP for the bridging period between the end date of the original agreement and the date of the extension, and £11 million and £3 million annual payments due under the SDN and London Television Centre PFPs respectively. Deficit contributions for 2024 and 2025 consist of contributions agreed with the Trustees following the last finalised triennial valuation (£53 million and £28 million respectively) and the annual payments under the SDN PFP and London Television Centre PFP (£16 million and £3 million respectively). IFRIC 14 clarifies how the asset ceiling rules should be applied if the Schemes are expected to be in surplus, for example as a result of deficit funding agreements. The Group has determined that it has an unconditional right to a refund of any surplus assets if the Schemes are run off until the last member dies. On this basis, IFRIC 14 rules do not cause any change in the pension deficit accounting or disclosures. In June 2023, the High Court ruled in the Virgin Media case that some historical rule amendments made without the correct actuarial certification were not valid. The Trustees of ITV’s defined benefit pension schemes have taken advice on the implications of the Virgin Media decision. Initial investigations have not revealed evidence that this will be a material issue for ITV’s pension schemes, and the Trustees are awaiting the outcome of the appeal (due in 2024) before deciding if further investigations are necessary. As a result, ITV does not consider it necessary to make any allowance for the potential impact of the Virgin Media case in its financial statements.
204 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 205 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 3: OPERATING ASSETS AND LIABILITIES CONTINUED SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS C I AL Addressing the defined benefit pension deficit In this This section outlines how the Group manages its capital structure and related S T section financing costs, including its balance sheet liquidity and access to capital markets. A Keeping The Group works closely with the Trustee to agree appropriate levels of funding T E it simple for the Scheme. This involves agreeing a Schedule of Contributions at each triennial The Directors determine the appropriate capital structure of ITV; specifically how M E valuation, which specifies the contribution rates for the employer and, where much is raised from shareholders (equity) and how much is borrowed from financial N T relevant, scheme beneficiaries and the date these contributions are due. A recovery institutions (debt) in order to finance the Group’s activities both now and in the S plan setting out the steps that will be taken to address a funding shortfall is future. Maintaining capital discipline and balance sheet efficiency remains also agreed. important to the Group. Any potential courses of action in relation to this will take In the event that the Group’s defined benefit scheme is in a net liability position, into account the Group’s liquidity needs, flexibility to invest in the business, pension the Directors must take steps to manage the size of the deficit. Apart from the deficit initiatives and impact on credit ratings. funding agreements mentioned above, this could involve pledging additional assets The Directors consider the Group’s capital structure and dividend policy at least to the Scheme, as was the case in the SDN and London Television Centre pension twice a year ahead of announcing results. The Directors take into account the funding partnerships. available realised distributable reserves from which a dividend would be paid in addition to liquidity and solvency of the Group. The Directors also consider the The levels of ongoing contributions to the Scheme are based on the expected future cash flows of the Scheme. capital structure and dividend policy in the context of the Group’s ability to continue Contributions in 2023 for administration expenses are £7 million (2022: £6 million). as a going concern, to execute the strategy and to invest in opportunities to grow the business and enhance shareholder value. The ITV plc Board oversees The Group has two asset-backed pension funding agreements with the Trustee – the SDN pension funding governance and approves tax and treasury related policies and procedures. partnership and the London Television Centre pension funding partnership which were set up in 2010 and 2014 respectively to address the pension deficit. Net debt is the Group’s key measure used to evaluate total cash resources net of 4.1 Keeping the current outstanding debt, including our discounted lease liabilities. A full SDN Pension Funding Partnership Net debt it simple analysis and discussion of net debt and covenant net debt is included in the In 2010, ITV established a Pension Funding Partnership (PFP) with the Trustees backed by SDN, which was Operating and Financial Performance Review. subsequently extended in 2011. The PFP addressed £200 million of the funding deficit in Section A of the defined benefit pension scheme and under the original agreement, a payment of up to £200 million was due in 2022. The The tables below analyse movements in the components of net debt during the year: existing PFP agreement was amended and extended to 2031. As a result of this agreement, payments of £94 million were made under the SDN PFP arrangement in 2022. The Group is committed to up to nine annual payments of £16 million from 2023. These payments are required if the Scheme is calculated to be in a technical deficit. Currency and This calculation is based upon the most recent triennial valuation updated for current market conditions. 1 January non-cash 31 December The partnership’s interest in SDN provides collateral for these payments. 2023 Net cash flow movements 2023 £m £m £m £m The £16 million payment under the SDN PFP was not required to be paid in 2023. However, this assessment is Loans and facilities due within one year (289) 278 6 (5) made on an annual basis and therefore the £16 million payment may resume in 2024. The Group retains day to day Loans and facilities due after one year (541) (228) 11 (758) operational control of SDN and SDN’s revenues, profits and cashflows continue to be consolidated in the Group’s Total loans and facilities (830) 50 17 (763) financial statements. On completion of the final payment in 2031, the Scheme’s partnership interest will have been repaid in full and it will have no right to any further payments. Currency component of forwards and swaps * London Television Centre Pension Funding Partnership held against euro denominated bonds (9) 10 (16) (15) Trustees backed by the London Television Centre, Lease liabilities (132) 26 (9) (115) In 2014, ITV established a Pension Funding Partnership with the which resulted in the assets of Section A of the defined benefit pension scheme being increased by £50 million. Total debt (971) 86 (8) (893) In November 2019, the London Television Centre was sold. £50 million of the proceeds was previously held in a restricted bank account as a replacement asset in the pension funding arrangement. In 2022, this security was Cash 257 (37) (5) 215 replaced with a surety bond and the cash was released to the Group. This structure continues to be reviewed. Cash equivalents 91 38 (4) 125 The Scheme’s interest in these Partnerships reduces the deficit on a funding basis but does not impact the deficit Total cash and cash equivalents 348 1 (9) 340 on an IAS 19 basis as the Scheme’s interest is not a transferrable financial instrument. Deficit funding contributions Net debt (623) 87 (17) (553) The accounting surplus or deficit does not drive the deficit funding contribution. The Group’s deficit funding * Net cash flow from currency component of forwards and swaps relates to the euro denominated bond repaid in the year contributions in 2023 were £40 million (31 December 2022: £137 million). This included £37 million deficit contribution agreed as part of the triennial valuation and £3 million annual payment under the London Television Centre PFP. The 2022 amount included £15 million deferred from 2020 and £25 million of deficit contributions agreed as part of the triennial valuation, £80 million one-off payment following the extension of the SDN PFP, a £3 million payment on the SDN PFP for the bridging period between the end date of the original agreement and the date of the extension, and £11 million and £3 million annual payments due under the SDN and London Television Centre PFPs respectively. Deficit contributions for 2024 and 2025 consist of contributions agreed with the Trustees following the last finalised triennial valuation (£53 million and £28 million respectively) and the annual payments under the SDN PFP and London Television Centre PFP (£16 million and £3 million respectively). IFRIC 14 clarifies how the asset ceiling rules should be applied if the Schemes are expected to be in surplus, for example as a result of deficit funding agreements. The Group has determined that it has an unconditional right to a refund of any surplus assets if the Schemes are run off until the last member dies. On this basis, IFRIC 14 rules do not cause any change in the pension deficit accounting or disclosures. In June 2023, the High Court ruled in the Virgin Media case that some historical rule amendments made without the correct actuarial certification were not valid. The Trustees of ITV’s defined benefit pension schemes have taken advice on the implications of the Virgin Media decision. Initial investigations have not revealed evidence that this will be a material issue for ITV’s pension schemes, and the Trustees are awaiting the outcome of the appeal (due in 2024) before deciding if further investigations are necessary. As a result, ITV does not consider it necessary to make any allowance for the potential impact of the Virgin Media case in its financial statements.
206 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 207 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Currency and 4.2 Borrowings Keeping The Group borrows money from financial institutions in the form of bonds, bank S 1 January non-cash 31 December T Acquisitions** it simple facilities and other financial instruments. The interest payable on these instruments A 2022 Net cash flow movements 2022 T £m £m £m £m £m is shown in the net financing costs note (note 4.4). E M Loans and facilities due within one year (290) (19) 257 (237) (289) E There are Board-approved policies in place to manage the Group’s financial risks. N T Loans and facilities due after one year (732) – – 191 (541) Macroeconomic market risks, which impact currency transactions and interest S Total loans and facilities (1,022) (19) 257 (46) (830) rates, are discussed in note 4.3. Credit and liquidity risks are set out below. • Credit risk: the risk of financial loss to the Group if a customer or counterparty Currency component of forwards and swaps (36) – – 27 (9) fails to meet its contractual obligations held against euro denominated bonds • Liquidity risk: the risk that the Group will not be able to meet its financial Lease liabilities (92) – 26 (66) (132) obligations as they fall due Total debt (1,150) (19) 283 (85) (971) The Group is required to disclose the fair value of its debt instruments. The fair value is the amount the Group would pay a third party to transfer the liability. * Restricted cash 50 – (50) – – This estimation of fair value is consistent with instruments included in note 4.5. Cash 246 – 5 6 257 Accounting policies Cash equivalents 440 – (355) 6 91 Borrowings * Borrowings are recognised initially at fair value less directly attributable transaction costs, with subsequent Total cash and cash equivalents 686 – (350) 12 348 measurement at amortised cost using the effective interest rate method. Under the amortised cost method, Net debt (414) (19) (117) (73) (623) the difference between the amount initially recognised and the redemption value is recorded in the Consolidated Income Statement over the period of the borrowing on an effective interest rate basis. * On 1 January 2022, £50 million of cash was presented as restricted in favour of the commitments under the asset-backed pension agreements. This balance was £nil at 31 December 2022 given the restriction was removed in the year and the cash replaced with a surety bond. Managing credit and liquidity risk ** Loans on acquisition included £98 million for Plimsoll Productions and £4 million for Lingo Pictures. The Plimsoll Productions loan was reduced by £83 Credit risk million, which was repaid as part of the acquisition using cash raised from the Group’s subscription for new shares. This £83 million was treated as a cash The Group’s maximum exposure to credit risk is represented by the carrying amount of derivative financial assets outflow on acquisition rather than a repayment of debt. (see note 4.3), trade receivables (see note 3.1.3), contract assets (see note 3.1.6) and cash and cash equivalents Loans and facilities due within one year (see note 4.1). The €259 million Eurobond was repaid in December 2023. The sterling-equivalent repayment value, totalling Trade and other receivables £233 million, had been hedged using forward exchange contracts. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Loans and loan notes due after one year The majority of trade receivables relate to airtime sales contracts with advertising agencies and advertisers. In January 2022, the Group entered into a new syndicated £500 million Revolving Credit Facility (RCF) to meet Credit insurance has been taken out against these companies to minimise the impact on the Group in the event short-term funding requirements. The original terms of the RCF ran until January 2027; however, the Group took of a possible default. The Group also reviews other significant receivables and will seek to take out credit insurance the opportunity to request an extension for one year on the first and second anniversary of the facility. As a result, on an individual basis where appropriate. Credit risk over contract assets is monitored proactively using daily reports £83 million of the £500 million RCF matures in 2028 and £417 million matures in January 2029. The RCF was from an external credit risk company. These reports are used to determine contractual obligations, monitor risk and undrawn as at 31 December 2023 (2022: £50 million drawn). amend terms where required. The Group has a €600 million Eurobond in issue at a fixed coupon of 1.375%, which matures in September 2026 Cash and cash equivalents and derivative financial instruments and has been swapped back to sterling (£533 million) using a number of cross-currency interest rate swaps. The Group operates investment guidelines with respect to surplus cash that emphasise preservation of capital. The The resulting fixed rate payable in sterling is c.2.9%. guidelines set out procedures and limits on counterparty risk and maturity profile of cash placed. Counterparty limits for cash deposits are largely based upon long-term ratings published by the major credit rating agencies. Cash and A new £230 million term loan was taken out in the year, and was fully drawn-down in December 2023 in order to cash equivalents include money market funds valued at fair value through profit and loss. repay the €259 million Eurobond. The term loan matures in July 2027. Interest on the loan is determined as an Cash and cash equivalents and derivative financial instruments exposure is limited to high credit quality financial aggregate of compounded SONIA plus a margin. institutions rated by two of the key rating agencies used by the Group. Counterparty credit limits are set in relation Available facilities to these ratings, in order to limit the concentration of exposure to individual counterparties based on their credit The Group has good access to liquidity: quality. As such, investments are sufficiently spread across high credit quality rated counterparties. • The Group has a £300 million bilateral loan facility, which matures on 30 June 2026. Utilisation requests are subject to Counterparty credit limits are reviewed by the Group’s Board of Directors on an annual basis and may be updated the lender’s ability to source ITV Credit Default Swaps (CDS) in the market at the time the utilisation request is made. throughout the year subject to approval of the Group’s Audit & Risk Committee. Investment exposure with external The facility remains free of financial covenants. The facility is currently undrawn (31 December 2022: undrawn). counterparties is made only with Board approved counterparties and within credit limits assigned to each • As noted above, the Group has £500 million of committed funding through a RCF with a group of relationship counterparty. The credit quality of financial counterparties and the outstanding exposure is monitored throughout banks, which is currently fully available until January 2028. £417 million of the funding remains committed until the year by the Group’s Treasury function in accordance with the Group’s policy. 2029. At 31 December 2023, the facility was unutilised (31 December 2022: £50 million drawn). The RCF documentation defines a leverage covenant (which has to be maintained at less than 3.5x) and an interest cover Borrowings covenant (which has to be maintained at greater than 3.0x). Both are tested at 30 June and 31 December each ITV is rated as investment grade by Moody’s and S&P. ITV’s credit ratings, which in turn are affected by key metrics, year. All financial covenants were met and the facility remains available at 31 December 2023. The £500 million such as leverage, the cost of credit default swap hedging, and the absolute level of interest rates are key RCF contains Scope 1, 2 and 3 greenhouse gas emissions targets which align to ITV's stated objective to have Net determinants in the cost of new borrowings for ITV. Zero carbon emissions by 2030. These targets are measured at the end of each financial year and independently verified in July following the relevant December year end. Scope 1 and 2 emissions are measured separately to Scope 3 emissions. The margin on the facility reduces by 2.5bps if Scope 1, 2 and 3 targets are met, by 1.25bps if either Scope 1 and 2 targets are met or Scope 3 targets are met, and increases by 2.5bps if neither target is met. Failing to meet targets does not impact the availability of the RCF. The Group met Scope 1, 2 and 3 targets for 2023; however, 2023 emissions will not be verified until July 2024. Over the life of the facility, it may be necessary to recalibrate the baseline emissions level set in 2019, particularly in relation to Scope 3 emissions and there is a mechanism in the RCF documentation that allows for this. • In December 2023, the Group secured £100 million of committed funding via a new bilateral RCF, which matures in December 2028. The terms and conditions, including financial covenants but not emissions targets, are aligned to the £500 million RCF facility. The facility is currently undrawn.
206 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 207 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Currency and 4.2 Borrowings Keeping The Group borrows money from financial institutions in the form of bonds, bank S 1 January non-cash 31 December T Acquisitions** it simple facilities and other financial instruments. The interest payable on these instruments A 2022 Net cash flow movements 2022 T £m £m £m £m £m is shown in the net financing costs note (note 4.4). E M Loans and facilities due within one year (290) (19) 257 (237) (289) E There are Board-approved policies in place to manage the Group’s financial risks. N T Loans and facilities due after one year (732) – – 191 (541) Macroeconomic market risks, which impact currency transactions and interest S Total loans and facilities (1,022) (19) 257 (46) (830) rates, are discussed in note 4.3. Credit and liquidity risks are set out below. • Credit risk: the risk of financial loss to the Group if a customer or counterparty Currency component of forwards and swaps (36) – – 27 (9) fails to meet its contractual obligations held against euro denominated bonds • Liquidity risk: the risk that the Group will not be able to meet its financial Lease liabilities (92) – 26 (66) (132) obligations as they fall due Total debt (1,150) (19) 283 (85) (971) The Group is required to disclose the fair value of its debt instruments. The fair value is the amount the Group would pay a third party to transfer the liability. * Restricted cash 50 – (50) – – This estimation of fair value is consistent with instruments included in note 4.5. Cash 246 – 5 6 257 Accounting policies Cash equivalents 440 – (355) 6 91 Borrowings * Borrowings are recognised initially at fair value less directly attributable transaction costs, with subsequent Total cash and cash equivalents 686 – (350) 12 348 measurement at amortised cost using the effective interest rate method. Under the amortised cost method, Net debt (414) (19) (117) (73) (623) the difference between the amount initially recognised and the redemption value is recorded in the Consolidated Income Statement over the period of the borrowing on an effective interest rate basis. * On 1 January 2022, £50 million of cash was presented as restricted in favour of the commitments under the asset-backed pension agreements. This balance was £nil at 31 December 2022 given the restriction was removed in the year and the cash replaced with a surety bond. Managing credit and liquidity risk ** Loans on acquisition included £98 million for Plimsoll Productions and £4 million for Lingo Pictures. The Plimsoll Productions loan was reduced by £83 Credit risk million, which was repaid as part of the acquisition using cash raised from the Group’s subscription for new shares. This £83 million was treated as a cash The Group’s maximum exposure to credit risk is represented by the carrying amount of derivative financial assets outflow on acquisition rather than a repayment of debt. (see note 4.3), trade receivables (see note 3.1.3), contract assets (see note 3.1.6) and cash and cash equivalents Loans and facilities due within one year (see note 4.1). The €259 million Eurobond was repaid in December 2023. The sterling-equivalent repayment value, totalling Trade and other receivables £233 million, had been hedged using forward exchange contracts. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Loans and loan notes due after one year The majority of trade receivables relate to airtime sales contracts with advertising agencies and advertisers. In January 2022, the Group entered into a new syndicated £500 million Revolving Credit Facility (RCF) to meet Credit insurance has been taken out against these companies to minimise the impact on the Group in the event short-term funding requirements. The original terms of the RCF ran until January 2027; however, the Group took of a possible default. The Group also reviews other significant receivables and will seek to take out credit insurance the opportunity to request an extension for one year on the first and second anniversary of the facility. As a result, on an individual basis where appropriate. Credit risk over contract assets is monitored proactively using daily reports £83 million of the £500 million RCF matures in 2028 and £417 million matures in January 2029. The RCF was from an external credit risk company. These reports are used to determine contractual obligations, monitor risk and undrawn as at 31 December 2023 (2022: £50 million drawn). amend terms where required. The Group has a €600 million Eurobond in issue at a fixed coupon of 1.375%, which matures in September 2026 Cash and cash equivalents and derivative financial instruments and has been swapped back to sterling (£533 million) using a number of cross-currency interest rate swaps. The Group operates investment guidelines with respect to surplus cash that emphasise preservation of capital. The The resulting fixed rate payable in sterling is c.2.9%. guidelines set out procedures and limits on counterparty risk and maturity profile of cash placed. Counterparty limits for cash deposits are largely based upon long-term ratings published by the major credit rating agencies. Cash and A new £230 million term loan was taken out in the year, and was fully drawn-down in December 2023 in order to cash equivalents include money market funds valued at fair value through profit and loss. repay the €259 million Eurobond. The term loan matures in July 2027. Interest on the loan is determined as an Cash and cash equivalents and derivative financial instruments exposure is limited to high credit quality financial aggregate of compounded SONIA plus a margin. institutions rated by two of the key rating agencies used by the Group. Counterparty credit limits are set in relation Available facilities to these ratings, in order to limit the concentration of exposure to individual counterparties based on their credit The Group has good access to liquidity: quality. As such, investments are sufficiently spread across high credit quality rated counterparties. • The Group has a £300 million bilateral loan facility, which matures on 30 June 2026. Utilisation requests are subject to Counterparty credit limits are reviewed by the Group’s Board of Directors on an annual basis and may be updated the lender’s ability to source ITV Credit Default Swaps (CDS) in the market at the time the utilisation request is made. throughout the year subject to approval of the Group’s Audit & Risk Committee. Investment exposure with external The facility remains free of financial covenants. The facility is currently undrawn (31 December 2022: undrawn). counterparties is made only with Board approved counterparties and within credit limits assigned to each • As noted above, the Group has £500 million of committed funding through a RCF with a group of relationship counterparty. The credit quality of financial counterparties and the outstanding exposure is monitored throughout banks, which is currently fully available until January 2028. £417 million of the funding remains committed until the year by the Group’s Treasury function in accordance with the Group’s policy. 2029. At 31 December 2023, the facility was unutilised (31 December 2022: £50 million drawn). The RCF documentation defines a leverage covenant (which has to be maintained at less than 3.5x) and an interest cover Borrowings covenant (which has to be maintained at greater than 3.0x). Both are tested at 30 June and 31 December each ITV is rated as investment grade by Moody’s and S&P. ITV’s credit ratings, which in turn are affected by key metrics, year. All financial covenants were met and the facility remains available at 31 December 2023. The £500 million such as leverage, the cost of credit default swap hedging, and the absolute level of interest rates are key RCF contains Scope 1, 2 and 3 greenhouse gas emissions targets which align to ITV's stated objective to have Net determinants in the cost of new borrowings for ITV. Zero carbon emissions by 2030. These targets are measured at the end of each financial year and independently verified in July following the relevant December year end. Scope 1 and 2 emissions are measured separately to Scope 3 emissions. The margin on the facility reduces by 2.5bps if Scope 1, 2 and 3 targets are met, by 1.25bps if either Scope 1 and 2 targets are met or Scope 3 targets are met, and increases by 2.5bps if neither target is met. Failing to meet targets does not impact the availability of the RCF. The Group met Scope 1, 2 and 3 targets for 2023; however, 2023 emissions will not be verified until July 2024. Over the life of the facility, it may be necessary to recalibrate the baseline emissions level set in 2019, particularly in relation to Scope 3 emissions and there is a mechanism in the RCF documentation that allows for this. • In December 2023, the Group secured £100 million of committed funding via a new bilateral RCF, which matures in December 2028. The terms and conditions, including financial covenants but not emissions targets, are aligned to the £500 million RCF facility. The facility is currently undrawn.
208 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 209 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Liquidity risk 4.3 Keeping What is a derivative? S T The Group’s financing policy is to fund itself for the medium to long-term by using debt instruments with a range it simple A derivative is a type of financial instrument typically used to manage risk. A A Managing T of maturities and to ensure access to appropriate short-term borrowing facilities with a minimum of £250 million derivative’s value changes over time in response to underlying variables, such as E market risks: M of undrawn facilities available at all times. exchange rates or interest rates and is entered into for a fixed period. A hedge is E derivative N where a derivative is used to manage exposure in an underlying variable. T Long-term funding comes from the UK and European capital markets, while any short to medium-term debt requirements financial S were provided throughout 2023 through bank credit facilities totalling £900 million (see below). Management monitors instruments The Group is exposed to certain market risks. In accordance with Board-approved rolling forecasts of the Group’s liquidity reserve (comprising undrawn bank facilities and cash and cash equivalents) on the policies, which are set out in this note, the Group manages these risks by using basis of expected cash flows. This monitoring includes financial ratios to assess any possible future impact on credit ratings derivative financial instruments to hedge the underlying exposures. and headroom and takes into account the accessibility of cash and cash equivalents. Why do we need them? Fair value versus book value The key market risks facing the Group are: The tables below provide fair value information for the Group’s borrowings: • Currency risk arising from: Book value Fair value i. Translation risk, that is the risk in the period of adverse currency fluctuations in the 2023 2022 2023 2022 translation of foreign currency profits, assets and liabilities (‘balance sheet risk’) Maturity £m £m £m £m and non-functional currency monetary assets and liabilities (‘income statement Loans due within one year risk’) and ii. Transaction risk, that is the risk that currency fluctuations will have a negative effect €259 (previously €500) million Eurobond Dec 2023 – 229 – 227 on the value of the Group’s non-functional currency trading cash flows. A non- * Revolving credit facility – 50 – 50 functional currency transaction is a transaction in any currency other than the Other short-term loans Various 5 10 5 10 reporting currency of the subsidiary 5 289 5 287 • Interest rate risk to the Group arises from significant changes in interest rates on borrowings issued at or swapped to floating rates Loans due in more than one year How do we use them? The Group mainly employs three types of derivative financial instruments when €600 million Eurobond Sept 2026 520 531 490 480 managing its currency and interest rate risk: £230 million Term Loan July 2027 230 – 230 – • Foreign exchange swap contracts are derivative instruments used to hedge Other long-term loans Various 8 10 8 10 income statement translation risk arising from short-term intercompany loans 758 541 728 490 denominated in a foreign currency • Forward foreign exchange contracts are derivative instruments used to hedge 763 830 733 777 transaction risk so they enable the sale or purchase of foreign currency at a known fixed rate on an agreed future date and * The £500 million Revolving Credit Facility matures in January 2028 (£83 million) and January 2029 (£417 million) • Cross-currency interest rate swaps are derivative instruments used to exchange the principal and interest coupons in a debt instrument from one currency to another Analysis of the derivatives used by the Group to hedge its exposure and the various methods used to calculate their respective fair values are detailed in this section. Accounting policies Derivative financial instruments are initially recognised at fair value and are subsequently remeasured at fair value with the movement recorded in the Consolidated Income Statement, except where derivatives qualify for cash flow hedge accounting. In this case, the effective portion of a cash flow hedge is recognised in other comprehensive income and presented in the hedging reserve within equity. The cumulative gain or loss is later reclassified to the Consolidated Income Statement in the same period as the relevant hedged transaction is realised. Derivatives with positive fair values are recorded as assets and negative fair values as liabilities.
208 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 209 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Liquidity risk 4.3 Keeping What is a derivative? S T The Group’s financing policy is to fund itself for the medium to long-term by using debt instruments with a range it simple A derivative is a type of financial instrument typically used to manage risk. A A Managing T of maturities and to ensure access to appropriate short-term borrowing facilities with a minimum of £250 million derivative’s value changes over time in response to underlying variables, such as E market risks: M of undrawn facilities available at all times. exchange rates or interest rates and is entered into for a fixed period. A hedge is E derivative N where a derivative is used to manage exposure in an underlying variable. T Long-term funding comes from the UK and European capital markets, while any short to medium-term debt requirements financial S were provided throughout 2023 through bank credit facilities totalling £900 million (see below). Management monitors instruments The Group is exposed to certain market risks. In accordance with Board-approved rolling forecasts of the Group’s liquidity reserve (comprising undrawn bank facilities and cash and cash equivalents) on the policies, which are set out in this note, the Group manages these risks by using basis of expected cash flows. This monitoring includes financial ratios to assess any possible future impact on credit ratings derivative financial instruments to hedge the underlying exposures. and headroom and takes into account the accessibility of cash and cash equivalents. Why do we need them? Fair value versus book value The key market risks facing the Group are: The tables below provide fair value information for the Group’s borrowings: • Currency risk arising from: Book value Fair value i. Translation risk, that is the risk in the period of adverse currency fluctuations in the 2023 2022 2023 2022 translation of foreign currency profits, assets and liabilities (‘balance sheet risk’) Maturity £m £m £m £m and non-functional currency monetary assets and liabilities (‘income statement Loans due within one year risk’) and ii. Transaction risk, that is the risk that currency fluctuations will have a negative effect €259 (previously €500) million Eurobond Dec 2023 – 229 – 227 on the value of the Group’s non-functional currency trading cash flows. A non- * Revolving credit facility – 50 – 50 functional currency transaction is a transaction in any currency other than the Other short-term loans Various 5 10 5 10 reporting currency of the subsidiary 5 289 5 287 • Interest rate risk to the Group arises from significant changes in interest rates on borrowings issued at or swapped to floating rates Loans due in more than one year How do we use them? The Group mainly employs three types of derivative financial instruments when €600 million Eurobond Sept 2026 520 531 490 480 managing its currency and interest rate risk: £230 million Term Loan July 2027 230 – 230 – • Foreign exchange swap contracts are derivative instruments used to hedge Other long-term loans Various 8 10 8 10 income statement translation risk arising from short-term intercompany loans 758 541 728 490 denominated in a foreign currency • Forward foreign exchange contracts are derivative instruments used to hedge 763 830 733 777 transaction risk so they enable the sale or purchase of foreign currency at a known fixed rate on an agreed future date and * The £500 million Revolving Credit Facility matures in January 2028 (£83 million) and January 2029 (£417 million) • Cross-currency interest rate swaps are derivative instruments used to exchange the principal and interest coupons in a debt instrument from one currency to another Analysis of the derivatives used by the Group to hedge its exposure and the various methods used to calculate their respective fair values are detailed in this section. Accounting policies Derivative financial instruments are initially recognised at fair value and are subsequently remeasured at fair value with the movement recorded in the Consolidated Income Statement, except where derivatives qualify for cash flow hedge accounting. In this case, the effective portion of a cash flow hedge is recognised in other comprehensive income and presented in the hedging reserve within equity. The cumulative gain or loss is later reclassified to the Consolidated Income Statement in the same period as the relevant hedged transaction is realised. Derivatives with positive fair values are recorded as assets and negative fair values as liabilities.
210 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 211 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Determining fair value What is the value of our derivative financial instruments? S T The fair value of forward foreign exchange contracts is determined by the change in price between the contracted rates The following table shows the fair value of derivative financial instruments analysed by type of contract. Interest rate A T E and the market rates at the reporting date. The contracted cash flows are then discounted by the time remaining to the swap fair values exclude accrued interest. M settlement date of the contract, with a discount curve that incorporates credit risk. The fair value of interest rate swaps E N is the estimated amount that the Group would receive or pay to exit the swap at the reporting date, taking into account Assets Liabilities T current interest rates and the Group’s current creditworthiness, as well as that of the swap counterparties. At 31 December 2023 £m £m S Current Third-party valuations are used to fair value the Group’s cross currency interest rate derivatives. The valuation Foreign exchange forward contracts and swaps – cash flow hedges 3 (1) techniques use inputs, such as interest rate yield curves and currency prices/yields, volatilities of underlying Foreign exchange forward contracts and swaps – fair value through profit or loss 1 – instruments and correlations between inputs. Non-current How do we manage our currency and interest rate risk? Cross-currency interest swaps – cash flow hedges – (15) Currency risk Foreign exchange forward contracts and swaps – cash flow hedges 1 (1) As the Group expands its international operations, the performance of the business becomes increasingly sensitive 5 (17) to movements in foreign exchange rates, primarily with respect to the US dollar and the euro. The Group’s foreign exchange policy is to use forward foreign exchange contracts to hedge material non-functional Assets Liabilities currency denominated costs or revenue for up to five years forward. At 31 December 2022 £m £m Current The Group ensures that its net exposure to foreign currency denominated cash balances is kept to a minimal level, Foreign exchange forward contracts and swaps – cash flow hedges 2 (6) where necessary using foreign currency swaps to exchange balances back into sterling or by buying or selling foreign Foreign exchange forward contracts and swaps – fair value through profit or loss – (1) currencies at spot rates. Non-current The Group also utilises foreign exchange swaps and cross-currency interest rate swaps both to manage foreign Cross-currency interest swaps – cash flow hedges – (8) currency cash flow timing differences and to hedge foreign currency denominated monetary items. Foreign exchange forward contracts and swaps – cash flow hedges 2 – 4 (15) The following table highlights the Group’s exposure to foreign currency risk resulting from a 10% strengthening/weakening in sterling against the US dollar, euro and Australian dollar, assuming all other variables are Cash flow hedges held constant: The Group applies hedge accounting for certain foreign currency firm commitments and highly probable cash flows where the underlying cash flows are payable within the next five years. In order to fix the sterling cash outflows Impact on Impact on Impact on Impact on associated with the commitments and interest payments – which are mainly denominated in US dollars or euros – profit before tax profit before tax Equity Equity the Group has taken out forward foreign exchange contracts and cross-currency interest rate swaps for the same 2023 2022 2023 2022 £m £m £m £m foreign currency amount and maturity date as the expected foreign currency outflow. US dollar – increase 10% (6) (9) 7 6 US dollar – decrease 10% 7 9 (8) (8) There is an economic relationship between the hedged items (being between 60% to 100% of the total exposure) and Euro – increase 10% (1) (4) 1 (3) the hedging instruments as the terms of the foreign exchange forward contracts and cross-currency interest rate swaps Euro – decrease 10% 2 5 – 4 match the terms of the expected highly probable forecast transactions or firm commitments (i.e. % notional amount Australian dollar – increase 10% (1) (1) (2) (4) and expected receipt or payment date). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange forward contracts are identical to the hedged risk components. Australian dollar – decrease 10% 1 1 2 4 Sources of ineffectiveness include: Interest rate risk • Different interest rate curve applied to discounting the hedged items and hedging instruments The Group’s interest rate policy is to allow fixed rate gross debt to vary between 20% and 100% of total gross debt • Differences in the timing of the cash flows of the hedged items and the hedging instruments to accommodate floating rate borrowings under the Revolving Credit Facility. • The counterparties’ credit risk differently impacting the fair value movements of the hedging instruments and For financial assets and liabilities classified at fair value through profit or loss, the movements in the year relating hedged items and to changes in fair value and interest are not separated. • Changes to the forecasted amount of cash flows of hedged items and hedging instruments At 31 December 2023, the Group’s fixed rate debt represented 69.9% of total gross debt (2022: 93.8%), therefore The Group uses the hedge relationship, credit risk and hedge ratio to measure the hedge effectiveness. the majority of debt is issued at fixed rates, and changes in the floating rates of interest do not materially affect The amount recognised in other comprehensive income during the year all relates to the effective portion of the the Group’s net interest charge. revaluation loss associated with these contracts. A cumulative loss of £28 million (2022: £33 million of cumulative gain) was recycled to the Consolidated Income statement to off-set movements on the hedged item, a residual £7 million loss (2022: £3 million loss) remained on the income statement which were not offset. Under IFRS 9, the Group has adopted the ‘cost of hedging’ approach which allows the recognition of the value of the currency basis at inception of the hedge to be recorded on the Consolidated Statement of Financial Position and amortised through net financing costs in the Consolidated Income Statement over the life of the bond. Any mark-to- market change in fair value of the currency basis is recognised in ‘cost of hedging’ in the Consolidated Statement of Comprehensive Income. Net investment hedges ro denominated debt to hedge against the change in The Group ceased net investment hedging in May 2022 using eu the sterling value of its euro denominated net assets due to movements in foreign exchange rates. A change to the risk management objective meant that the remaining euro denominated monetary items on the Consolidated Statement of Financial Position could be considered in isolation on a net basis and therefore manage the remaining foreign exchange volatility in a more efficient way. The amount relating to discontinued hedges is a loss of £19 million at 31 December 2023 (2022: £19 million loss).
210 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 211 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Determining fair value What is the value of our derivative financial instruments? S T The fair value of forward foreign exchange contracts is determined by the change in price between the contracted rates The following table shows the fair value of derivative financial instruments analysed by type of contract. Interest rate A T E and the market rates at the reporting date. The contracted cash flows are then discounted by the time remaining to the swap fair values exclude accrued interest. M settlement date of the contract, with a discount curve that incorporates credit risk. The fair value of interest rate swaps E N is the estimated amount that the Group would receive or pay to exit the swap at the reporting date, taking into account Assets Liabilities T current interest rates and the Group’s current creditworthiness, as well as that of the swap counterparties. At 31 December 2023 £m £m S Current Third-party valuations are used to fair value the Group’s cross currency interest rate derivatives. The valuation Foreign exchange forward contracts and swaps – cash flow hedges 3 (1) techniques use inputs, such as interest rate yield curves and currency prices/yields, volatilities of underlying Foreign exchange forward contracts and swaps – fair value through profit or loss 1 – instruments and correlations between inputs. Non-current How do we manage our currency and interest rate risk? Cross-currency interest swaps – cash flow hedges – (15) Currency risk Foreign exchange forward contracts and swaps – cash flow hedges 1 (1) As the Group expands its international operations, the performance of the business becomes increasingly sensitive 5 (17) to movements in foreign exchange rates, primarily with respect to the US dollar and the euro. The Group’s foreign exchange policy is to use forward foreign exchange contracts to hedge material non-functional Assets Liabilities currency denominated costs or revenue for up to five years forward. At 31 December 2022 £m £m Current The Group ensures that its net exposure to foreign currency denominated cash balances is kept to a minimal level, Foreign exchange forward contracts and swaps – cash flow hedges 2 (6) where necessary using foreign currency swaps to exchange balances back into sterling or by buying or selling foreign Foreign exchange forward contracts and swaps – fair value through profit or loss – (1) currencies at spot rates. Non-current The Group also utilises foreign exchange swaps and cross-currency interest rate swaps both to manage foreign Cross-currency interest swaps – cash flow hedges – (8) currency cash flow timing differences and to hedge foreign currency denominated monetary items. Foreign exchange forward contracts and swaps – cash flow hedges 2 – 4 (15) The following table highlights the Group’s exposure to foreign currency risk resulting from a 10% strengthening/weakening in sterling against the US dollar, euro and Australian dollar, assuming all other variables are Cash flow hedges held constant: The Group applies hedge accounting for certain foreign currency firm commitments and highly probable cash flows where the underlying cash flows are payable within the next five years. In order to fix the sterling cash outflows Impact on Impact on Impact on Impact on associated with the commitments and interest payments – which are mainly denominated in US dollars or euros – profit before tax profit before tax Equity Equity the Group has taken out forward foreign exchange contracts and cross-currency interest rate swaps for the same 2023 2022 2023 2022 £m £m £m £m foreign currency amount and maturity date as the expected foreign currency outflow. US dollar – increase 10% (6) (9) 7 6 US dollar – decrease 10% 7 9 (8) (8) There is an economic relationship between the hedged items (being between 60% to 100% of the total exposure) and Euro – increase 10% (1) (4) 1 (3) the hedging instruments as the terms of the foreign exchange forward contracts and cross-currency interest rate swaps Euro – decrease 10% 2 5 – 4 match the terms of the expected highly probable forecast transactions or firm commitments (i.e. % notional amount Australian dollar – increase 10% (1) (1) (2) (4) and expected receipt or payment date). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange forward contracts are identical to the hedged risk components. Australian dollar – decrease 10% 1 1 2 4 Sources of ineffectiveness include: Interest rate risk • Different interest rate curve applied to discounting the hedged items and hedging instruments The Group’s interest rate policy is to allow fixed rate gross debt to vary between 20% and 100% of total gross debt • Differences in the timing of the cash flows of the hedged items and the hedging instruments to accommodate floating rate borrowings under the Revolving Credit Facility. • The counterparties’ credit risk differently impacting the fair value movements of the hedging instruments and For financial assets and liabilities classified at fair value through profit or loss, the movements in the year relating hedged items and to changes in fair value and interest are not separated. • Changes to the forecasted amount of cash flows of hedged items and hedging instruments At 31 December 2023, the Group’s fixed rate debt represented 69.9% of total gross debt (2022: 93.8%), therefore The Group uses the hedge relationship, credit risk and hedge ratio to measure the hedge effectiveness. the majority of debt is issued at fixed rates, and changes in the floating rates of interest do not materially affect The amount recognised in other comprehensive income during the year all relates to the effective portion of the the Group’s net interest charge. revaluation loss associated with these contracts. A cumulative loss of £28 million (2022: £33 million of cumulative gain) was recycled to the Consolidated Income statement to off-set movements on the hedged item, a residual £7 million loss (2022: £3 million loss) remained on the income statement which were not offset. Under IFRS 9, the Group has adopted the ‘cost of hedging’ approach which allows the recognition of the value of the currency basis at inception of the hedge to be recorded on the Consolidated Statement of Financial Position and amortised through net financing costs in the Consolidated Income Statement over the life of the bond. Any mark-to- market change in fair value of the currency basis is recognised in ‘cost of hedging’ in the Consolidated Statement of Comprehensive Income. Net investment hedges ro denominated debt to hedge against the change in The Group ceased net investment hedging in May 2022 using eu the sterling value of its euro denominated net assets due to movements in foreign exchange rates. A change to the risk management objective meant that the remaining euro denominated monetary items on the Consolidated Statement of Financial Position could be considered in isolation on a net basis and therefore manage the remaining foreign exchange volatility in a more efficient way. The amount relating to discontinued hedges is a loss of £19 million at 31 December 2023 (2022: £19 million loss).
212 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 213 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Undiscounted financial liabilities Timing profile of hedging instrument S T A T Keeping The Group is required to disclose the expected timings of cash outflows for each of Keeping The Group is required to provide a breakdown that discloses a profile of the timing E its financial liabilities (including derivatives). The amounts disclosed in the table are of the nominal amount of the hedging instrument and if applicable, the average M it simple it simple E the contractual undiscounted cash flows (including interest), so will not always price or rate (for example strike or forward prices etc.) of the hedging instrument. N T reconcile with the amounts disclosed on the Statement of Financial Position. S The Group is holding the following foreign exchange and cross-currency interest rate swap contracts: Total Between Between Less than Between Between Greater than Carrying contractual Less than 1 and 2 2 and 5 Over At 31 December 2023 1 year 1 to 2 years 2 to 5 years 5 years Total value cash flows 1 year years years 5 years Foreign exchange forward contracts and swaps At 31 December 2023 £m £m £m £m £m £m Non-derivative financial liabilities Notional amount (£m) (5) – – – (5) Borrowings (763) (785) (12) (8) (763) (2) Average forward rate (AUD/EUR) 1.6933 – – – Lease liabilities (115) (140) (18) (19) (52) (51) Foreign exchange forward contracts and swaps Trade and other payables (931) (931) (906) (25) – – Notional amount (£m) (1) (11) – – (12) Other payables – non-current (33) (33) – (33) – – Average forward rate (AUD/GBP) 1.2773 1.7559 – – * Foreign exchange forward contracts and swaps Other payables – commitments on acquisitions (78) (105) (47) – (55) (3) Derivative financial instruments Notional amount (£m) 9 2 – – 11 Foreign exchange forward contracts and swaps – Average forward rate (CAD/GBP) 1.7711 1.6594 – – cash flow hedges Foreign exchange forward contracts and swaps Inflow 4 195 150 45 – – Notional amount (£m) (1) – – – (1) Outflow (2) (193) (149) (44) – – Average forward rate (DKK/GBP) 8.6515 – – – Cross-currency swaps – cash flow hedges Foreign exchange forward contracts and swaps Inflow – 542 7 7 528 – Notional amount (£m) 1 8 – – 9 Outflow (15) (580) (16) (16) (548) – Average forward rate (EUR/GBP) 1.1278 1.1272 – – Foreign exchange forward contracts and swaps – Foreign exchange forward contracts and swaps fair value through profit or loss Notional amount (£m) 1 – – – 1 Inflow 1 177 171 6 – – Average forward rate (ILS/GBP) 4.6398 – – – Outflow – (176) (170) (6) – – Foreign exchange forward contracts and swaps (1,932) (2,029) (990) (93) (890) (56) Notional amount (£m) (1) – – – (1) Average forward rate (SEK/GBP) 12.9636 – – – Foreign exchange forward contracts and swaps Total Between Between Notional amount (£m) 4 – – – 4 Carrying contractual Less than 1 and 2 2 and 5 Over value cash flows 1 year years years 5 years Average forward rate (NOK/GBP) 13.2027 – – – At 31 December 2022 £m £m £m £m £m £m Non-derivative financial liabilities Foreign exchange forward contracts and swaps Borrowings (830) (865) (302) (8) (550) (5) Notional amount (£m) (4) – – – (4) Lease liabilities (132) (149) (21) (26) (37) (65) Average forward rate (ZAR/AUD) 12.6830 – – – Trade and other payables (915) (915) (898) (14) (3) – Foreign exchange forward contracts and swaps Other payables – non-current (28) (28) – (25) (3) – Notional amount (£m) (56) 20 – – (36) * Average forward rate (USD/GBP) 1.3431 1.2188 – – Other payables – commitments on acquisitions (47) (89) (8) (26) (33) (22) Foreign exchange forward contracts and swaps Derivative financial instruments Notional amount (£m) (5) – – – (5) Foreign exchange forward contracts and swaps – Average forward rate (ZAR/EUR) 20.6262 – – – cash flow hedges Inflow 4 480 401 63 16 – Foreign exchange forward contracts and swaps Outflow (6) (486) (409) (61) (16) – Notional amount (£m) (1) – – – (1) Cross-currency swaps – cash flow hedges Average forward rate (ZAR/GBP) 23.0200 – – – Inflow – 560 7 7 546 – Cross-currency interest rate swaps Outflow (8) (596) (16) (16) (564) Notional amount (£m) – – 533 – 533 Foreign exchange forward contracts and swaps – Average hedge rate (EUR/GBP) – – 1.1264 – fair value through profit or loss Inflow – 51 45 6 – – Outflow (1) (52) (46) (6) – – (1,963) (2,089) (1,247) (106) (644) (92) * Undiscounted expected future payments depending on performance of acquisitions
212 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 213 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Undiscounted financial liabilities Timing profile of hedging instrument S T A T Keeping The Group is required to disclose the expected timings of cash outflows for each of Keeping The Group is required to provide a breakdown that discloses a profile of the timing E its financial liabilities (including derivatives). The amounts disclosed in the table are of the nominal amount of the hedging instrument and if applicable, the average M it simple it simple E the contractual undiscounted cash flows (including interest), so will not always price or rate (for example strike or forward prices etc.) of the hedging instrument. N T reconcile with the amounts disclosed on the Statement of Financial Position. S The Group is holding the following foreign exchange and cross-currency interest rate swap contracts: Total Between Between Less than Between Between Greater than Carrying contractual Less than 1 and 2 2 and 5 Over At 31 December 2023 1 year 1 to 2 years 2 to 5 years 5 years Total value cash flows 1 year years years 5 years Foreign exchange forward contracts and swaps At 31 December 2023 £m £m £m £m £m £m Non-derivative financial liabilities Notional amount (£m) (5) – – – (5) Borrowings (763) (785) (12) (8) (763) (2) Average forward rate (AUD/EUR) 1.6933 – – – Lease liabilities (115) (140) (18) (19) (52) (51) Foreign exchange forward contracts and swaps Trade and other payables (931) (931) (906) (25) – – Notional amount (£m) (1) (11) – – (12) Other payables – non-current (33) (33) – (33) – – Average forward rate (AUD/GBP) 1.2773 1.7559 – – * Foreign exchange forward contracts and swaps Other payables – commitments on acquisitions (78) (105) (47) – (55) (3) Derivative financial instruments Notional amount (£m) 9 2 – – 11 Foreign exchange forward contracts and swaps – Average forward rate (CAD/GBP) 1.7711 1.6594 – – cash flow hedges Foreign exchange forward contracts and swaps Inflow 4 195 150 45 – – Notional amount (£m) (1) – – – (1) Outflow (2) (193) (149) (44) – – Average forward rate (DKK/GBP) 8.6515 – – – Cross-currency swaps – cash flow hedges Foreign exchange forward contracts and swaps Inflow – 542 7 7 528 – Notional amount (£m) 1 8 – – 9 Outflow (15) (580) (16) (16) (548) – Average forward rate (EUR/GBP) 1.1278 1.1272 – – Foreign exchange forward contracts and swaps – Foreign exchange forward contracts and swaps fair value through profit or loss Notional amount (£m) 1 – – – 1 Inflow 1 177 171 6 – – Average forward rate (ILS/GBP) 4.6398 – – – Outflow – (176) (170) (6) – – Foreign exchange forward contracts and swaps (1,932) (2,029) (990) (93) (890) (56) Notional amount (£m) (1) – – – (1) Average forward rate (SEK/GBP) 12.9636 – – – Foreign exchange forward contracts and swaps Total Between Between Notional amount (£m) 4 – – – 4 Carrying contractual Less than 1 and 2 2 and 5 Over value cash flows 1 year years years 5 years Average forward rate (NOK/GBP) 13.2027 – – – At 31 December 2022 £m £m £m £m £m £m Non-derivative financial liabilities Foreign exchange forward contracts and swaps Borrowings (830) (865) (302) (8) (550) (5) Notional amount (£m) (4) – – – (4) Lease liabilities (132) (149) (21) (26) (37) (65) Average forward rate (ZAR/AUD) 12.6830 – – – Trade and other payables (915) (915) (898) (14) (3) – Foreign exchange forward contracts and swaps Other payables – non-current (28) (28) – (25) (3) – Notional amount (£m) (56) 20 – – (36) * Average forward rate (USD/GBP) 1.3431 1.2188 – – Other payables – commitments on acquisitions (47) (89) (8) (26) (33) (22) Foreign exchange forward contracts and swaps Derivative financial instruments Notional amount (£m) (5) – – – (5) Foreign exchange forward contracts and swaps – Average forward rate (ZAR/EUR) 20.6262 – – – cash flow hedges Inflow 4 480 401 63 16 – Foreign exchange forward contracts and swaps Outflow (6) (486) (409) (61) (16) – Notional amount (£m) (1) – – – (1) Cross-currency swaps – cash flow hedges Average forward rate (ZAR/GBP) 23.0200 – – – Inflow – 560 7 7 546 – Cross-currency interest rate swaps Outflow (8) (596) (16) (16) (564) Notional amount (£m) – – 533 – 533 Foreign exchange forward contracts and swaps – Average hedge rate (EUR/GBP) – – 1.1264 – fair value through profit or loss Inflow – 51 45 6 – – Outflow (1) (52) (46) (6) – – (1,963) (2,089) (1,247) (106) (644) (92) * Undiscounted expected future payments depending on performance of acquisitions
214 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 215 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Less than Between Between Greater than Impact of hedged items on Consolidated Statement of Financial Position, S At 31 December 2022 1 year 1 to 2 years 2 to 5 years 5 years Total T A Consolidated Statement of Other Comprehensive Income and Consolidated Statement T Foreign exchange forward contracts and swaps E of Changes in Equity M Notional amount (£m) (5) – – – (5) E N Average forward rate (AUD/EUR) 1.5688 – – – Keeping This table provides the following details in relation to cash flow hedge and net T Foreign exchange forward contracts and swaps investment hedge: S it simple Notional amount (£m) (4) (12) (16) – (32) • The change in value of the hedged item used as the basis for recognising hedge Average forward rate (AUD/GBP) 1.7205 1.7967 1.7909 – ineffectiveness for the year Foreign exchange forward contracts and swaps • The balances in the cash flow hedge reserve and the foreign currency translation Notional amount (£m) 7 3 – – 10 reserve for continuing hedges and Average forward rate (CAD/GBP) 1.7155 1.6446 – – • The balances remaining in the cash flow hedge reserve and the foreign currency Foreign exchange forward contracts and swaps translation reserve from any hedging relationships for which hedge accounting is Notional amount (£m) (2) – – – (2) no longer applied Average forward rate (CAD/USD) 1.2400 – – – The impact of hedged items on the Consolidated Statement of Financial Position is as follows: Foreign exchange forward contracts and swaps Notional amount (£m) (1) – – – (1) Cash flow hedge Average forward rate (DKK/GBP) 8.3506 – – – 2023 2022 Foreign exchange forward contracts and swaps Pre-tax Pre-tax Notional amount (£m) (241) (14) – – (255) Change in fair Pre-tax closing Change in fair Pre-tax closing Average forward rate (EUR/GBP) 1.1097 1.1485 – – value used for closing cash cost of value used for closing cash cost of measuring flow hedge hedging measuring flow hedge hedging Foreign exchange forward contracts and swaps ineffectiveness reserve reserve ineffectiveness reserve reserve At 31 December £m £m £m £m £m £m Notional amount (£m) (6) – – – (6) Highly probable/firm commitment Average forward rate (EUR/USD) 0.8859 – – – forecast transactions 1 3 – 3 2 (1) Foreign exchange forward contracts and swaps Borrowings 11 1 (2) (5) (4) (8) Notional amount (£m) 8 – – – 8 Average forward rate (NOK/GBP) 12.0018 – – – The hedging gain recognised in the Consolidated Statement of Changes in Equity before tax is equal to the change Foreign exchange forward contracts and swaps in fair value used for measuring effectiveness. There is £7 million of ineffectiveness recognised in the Consolidated Notional amount (£m) (4) – – – (4) Income Statement. Average forward rate (ZAR/AUD) 11.7780 – – – This table details the effect of the cash flow hedge in the Consolidated Income Keeping Foreign exchange forward contracts and swaps Statement and Consolidated Statement of Comprehensive Income. it simple Notional amount (£m) 67 16 – – 83 Average forward rate (USD/GBP) 1.2627 1.1389 – – Foreign exchange forward contracts and swaps The effect of the cash flow hedge in the Consolidated Income Statement and Consolidated Statement of Notional amount (£m) (1) – – – (1) Comprehensive Income is as follows: Average forward rate (ZAR/GBP) 20.8998 – – – Cross-currency interest rate swaps Amounts Total hedging Ineffectiveness Cost of reclassified Notional amount (£m) – – 539 – 539 gain/(loss) recognised in hedging from OCI to Average hedge rate (EUR/GBP) – – 1.1253 – recognised in Income Line item in recognised Income Line item in OCI Statement the Income in OCI Statement the Income At 31 December 2023 £m £m Statement £m £m Statement Highly probable/firm commitment forecast Cost of sales/ transactions 1 – 4 2 overheads Net financing Net financing Borrowings 11 7 cost 2 26 cost Amounts Total hedging Ineffectiveness Cost of reclassified gain/(loss) recognised in hedging from OCI to recognised in Income Line item in recognised Income Line item in OCI Statement the Income in OCI Statement the Income At 31 December 2022 £m £m Statement £m £m Statement Highly probable/firm Overheads/ commitment forecast Work in transactions progress 3 – (4) 11 Net financing Net financing Borrowings (5) 3 cost 4 (37) cost
214 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 215 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Less than Between Between Greater than Impact of hedged items on Consolidated Statement of Financial Position, S At 31 December 2022 1 year 1 to 2 years 2 to 5 years 5 years Total T A Consolidated Statement of Other Comprehensive Income and Consolidated Statement T Foreign exchange forward contracts and swaps E of Changes in Equity M Notional amount (£m) (5) – – – (5) E N Average forward rate (AUD/EUR) 1.5688 – – – Keeping This table provides the following details in relation to cash flow hedge and net T Foreign exchange forward contracts and swaps investment hedge: S it simple Notional amount (£m) (4) (12) (16) – (32) • The change in value of the hedged item used as the basis for recognising hedge Average forward rate (AUD/GBP) 1.7205 1.7967 1.7909 – ineffectiveness for the year Foreign exchange forward contracts and swaps • The balances in the cash flow hedge reserve and the foreign currency translation Notional amount (£m) 7 3 – – 10 reserve for continuing hedges and Average forward rate (CAD/GBP) 1.7155 1.6446 – – • The balances remaining in the cash flow hedge reserve and the foreign currency Foreign exchange forward contracts and swaps translation reserve from any hedging relationships for which hedge accounting is Notional amount (£m) (2) – – – (2) no longer applied Average forward rate (CAD/USD) 1.2400 – – – The impact of hedged items on the Consolidated Statement of Financial Position is as follows: Foreign exchange forward contracts and swaps Notional amount (£m) (1) – – – (1) Cash flow hedge Average forward rate (DKK/GBP) 8.3506 – – – 2023 2022 Foreign exchange forward contracts and swaps Pre-tax Pre-tax Notional amount (£m) (241) (14) – – (255) Change in fair Pre-tax closing Change in fair Pre-tax closing Average forward rate (EUR/GBP) 1.1097 1.1485 – – value used for closing cash cost of value used for closing cash cost of measuring flow hedge hedging measuring flow hedge hedging Foreign exchange forward contracts and swaps ineffectiveness reserve reserve ineffectiveness reserve reserve At 31 December £m £m £m £m £m £m Notional amount (£m) (6) – – – (6) Highly probable/firm commitment Average forward rate (EUR/USD) 0.8859 – – – forecast transactions 1 3 – 3 2 (1) Foreign exchange forward contracts and swaps Borrowings 11 1 (2) (5) (4) (8) Notional amount (£m) 8 – – – 8 Average forward rate (NOK/GBP) 12.0018 – – – The hedging gain recognised in the Consolidated Statement of Changes in Equity before tax is equal to the change Foreign exchange forward contracts and swaps in fair value used for measuring effectiveness. There is £7 million of ineffectiveness recognised in the Consolidated Notional amount (£m) (4) – – – (4) Income Statement. Average forward rate (ZAR/AUD) 11.7780 – – – This table details the effect of the cash flow hedge in the Consolidated Income Keeping Foreign exchange forward contracts and swaps Statement and Consolidated Statement of Comprehensive Income. it simple Notional amount (£m) 67 16 – – 83 Average forward rate (USD/GBP) 1.2627 1.1389 – – Foreign exchange forward contracts and swaps The effect of the cash flow hedge in the Consolidated Income Statement and Consolidated Statement of Notional amount (£m) (1) – – – (1) Comprehensive Income is as follows: Average forward rate (ZAR/GBP) 20.8998 – – – Cross-currency interest rate swaps Amounts Total hedging Ineffectiveness Cost of reclassified Notional amount (£m) – – 539 – 539 gain/(loss) recognised in hedging from OCI to Average hedge rate (EUR/GBP) – – 1.1253 – recognised in Income Line item in recognised Income Line item in OCI Statement the Income in OCI Statement the Income At 31 December 2023 £m £m Statement £m £m Statement Highly probable/firm commitment forecast Cost of sales/ transactions 1 – 4 2 overheads Net financing Net financing Borrowings 11 7 cost 2 26 cost Amounts Total hedging Ineffectiveness Cost of reclassified gain/(loss) recognised in hedging from OCI to recognised in Income Line item in recognised Income Line item in OCI Statement the Income in OCI Statement the Income At 31 December 2022 £m £m Statement £m £m Statement Highly probable/firm Overheads/ commitment forecast Work in transactions progress 3 – (4) 11 Net financing Net financing Borrowings (5) 3 cost 4 (37) cost
216 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 217 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Keeping This table provides a reconciliation of each component of the translation reserve Netting arrangements of financial instruments S T reported within equity and an analysis of other comprehensive income in A it simple T accordance with IAS 1. Keeping This section details the Group’s financial assets and financial liabilities that are E subject to netting and set-off arrangements. Financial assets and liabilities that are M it simple E subject to set-off arrangements and disclosed on a net basis in the Group’s N T Set out below is the reconciliation of each component of the translation reserve reported in the Consolidated Statement of Financial Position relate to cash pooling arrangements. Amounts which S Statement of Changes in Equity and the analysis of other comprehensive income: do not meet the criteria for offsetting on the Consolidated Statement of Financial Position but could be settled net in certain circumstances principally relate to Cash Cost of Foreign derivative transactions executed under ISDA agreements where each party has the flow hedge hedge currency Translation option to settle amounts on a net basis in the event of default of the other party. reserve reserve reserve reserve £m £m £m £m As at 1 January 2022 3 (7) 45 41 Effective portion of changes in fair value arising from: Net financial Foreign exchange forward contracts (1) (4) – (5) Gross collateral assets/liabilities Related amounts Gross financial assets/liabilities per balance not set-off in the Cross-currency interest rate swaps – borrowings: assets/ liabilities set-off sheet balance sheet Net • Change in fair value from the effective hedge instrument 25 4 – 29 At 31 December 2023 £m £m £m £m £m Assets Amount reclassified to Income Statement Derivative financial instruments 5 – 5 (2) 3 • FX forward reclassified to cost of sales/overheads 4 – – 4 Cash and cash equivalents 340 – 340 – 340 • FX forward and swaps reclassified to finance costs (10) – – (10) • Amounts reclassified to work in progress 7 – – 7 Liabilities • CCIRS reclassified to finance costs (27) – – (27) Derivative financial instruments (17) – (17) 2 (15) Net loss on cash flow hedges and cost of hedging (2) – – (2) Loans and facilities (763) – (763) – (763) Foreign currency revaluation of the net foreign operations – – 67 67 Exchange differences on translation of foreign operations – – 67 67 Income tax credit on other comprehensive income/(expense) 1 – – 1 Gross collateral Net financial Related amounts Gross financial assets/liabilities assets/liabilities not set-off in the As at 31 December 2022 2 (7) 112 107 assets/liabilities set-off per balance sheet balance sheet Net At 31 December 2022 £m £m £m £m £m Effective portion of changes in fair value arising from: Assets Foreign exchange forward contracts (13) 4 – (9) Derivative financial instruments 4 – 4 (4) – Cross-currency interest rate swaps – borrowings: Cash and cash equivalents 348 – 348 – 348 • Change in fair value from the effective hedge instrument (9) 2 – (7) Amount reclassified to Income Statement Liabilities • FX forward reclassified to cost of sales/overheads 2 – – 2 Derivative financial instruments (15) – (15) 4 (11) • FX forward and swaps reclassified to finance costs 15 – – 15 Loans and facilities (830) – (830) – (830) • CCIRS reclassified to finance costs 11 – – 11 Net gain on cash flow hedges and cost of hedging 6 6 – 12 Foreign currency revaluation of the net foreign operations – – (38) (38) Exchange differences on translation of foreign operations – – (38) (38) Income tax charge on other comprehensive income/(expense) (1) (2) – (3) As at 31 December 2023 7 (3) 74 78
216 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 217 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Keeping This table provides a reconciliation of each component of the translation reserve Netting arrangements of financial instruments S T reported within equity and an analysis of other comprehensive income in A it simple T accordance with IAS 1. Keeping This section details the Group’s financial assets and financial liabilities that are E subject to netting and set-off arrangements. Financial assets and liabilities that are M it simple E subject to set-off arrangements and disclosed on a net basis in the Group’s N T Set out below is the reconciliation of each component of the translation reserve reported in the Consolidated Statement of Financial Position relate to cash pooling arrangements. Amounts which S Statement of Changes in Equity and the analysis of other comprehensive income: do not meet the criteria for offsetting on the Consolidated Statement of Financial Position but could be settled net in certain circumstances principally relate to Cash Cost of Foreign derivative transactions executed under ISDA agreements where each party has the flow hedge hedge currency Translation option to settle amounts on a net basis in the event of default of the other party. reserve reserve reserve reserve £m £m £m £m As at 1 January 2022 3 (7) 45 41 Effective portion of changes in fair value arising from: Net financial Foreign exchange forward contracts (1) (4) – (5) Gross collateral assets/liabilities Related amounts Gross financial assets/liabilities per balance not set-off in the Cross-currency interest rate swaps – borrowings: assets/ liabilities set-off sheet balance sheet Net • Change in fair value from the effective hedge instrument 25 4 – 29 At 31 December 2023 £m £m £m £m £m Assets Amount reclassified to Income Statement Derivative financial instruments 5 – 5 (2) 3 • FX forward reclassified to cost of sales/overheads 4 – – 4 Cash and cash equivalents 340 – 340 – 340 • FX forward and swaps reclassified to finance costs (10) – – (10) • Amounts reclassified to work in progress 7 – – 7 Liabilities • CCIRS reclassified to finance costs (27) – – (27) Derivative financial instruments (17) – (17) 2 (15) Net loss on cash flow hedges and cost of hedging (2) – – (2) Loans and facilities (763) – (763) – (763) Foreign currency revaluation of the net foreign operations – – 67 67 Exchange differences on translation of foreign operations – – 67 67 Income tax credit on other comprehensive income/(expense) 1 – – 1 Gross collateral Net financial Related amounts Gross financial assets/liabilities assets/liabilities not set-off in the As at 31 December 2022 2 (7) 112 107 assets/liabilities set-off per balance sheet balance sheet Net At 31 December 2022 £m £m £m £m £m Effective portion of changes in fair value arising from: Assets Foreign exchange forward contracts (13) 4 – (9) Derivative financial instruments 4 – 4 (4) – Cross-currency interest rate swaps – borrowings: Cash and cash equivalents 348 – 348 – 348 • Change in fair value from the effective hedge instrument (9) 2 – (7) Amount reclassified to Income Statement Liabilities • FX forward reclassified to cost of sales/overheads 2 – – 2 Derivative financial instruments (15) – (15) 4 (11) • FX forward and swaps reclassified to finance costs 15 – – 15 Loans and facilities (830) – (830) – (830) • CCIRS reclassified to finance costs 11 – – 11 Net gain on cash flow hedges and cost of hedging 6 6 – 12 Foreign currency revaluation of the net foreign operations – – (38) (38) Exchange differences on translation of foreign operations – – (38) (38) Income tax charge on other comprehensive income/(expense) (1) (2) – (3) As at 31 December 2023 7 (3) 74 78
218 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 219 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL 4.4 Keeping This section details the interest income generated on the Group’s cash and other 4.5 Keeping The financial instruments included in the Consolidated Statement of Financial S T it simple financial assets and the interest expense incurred on borrowings and other it simple Position are measured at either fair value or amortised cost. The measurement of A Net financing Fair value T financial liabilities. this fair value can in some cases be subjective, and can depend on the inputs used in E costs hierarchy M the calculations. The Group generally uses external valuations using market inputs or E In reporting ‘adjusted profit’, the Group adjusts net financing costs to exclude N market values (e.g. external share prices). The different valuation methods are called T unrealised mark-to-market movements on interest rate and foreign exchange ‘hierarchies’ and are described below. S derivatives, gains/losses on bond buybacks, net pension interest, interest and fair value movements in acquisition-related liabilities and other financing costs. Level 1 Our rationale for adjustments made to financing costs is set out in the Fair values are measured using quoted prices (unadjusted) in active markets for Finance Review. identical assets or liabilities. Level 2 Accounting policies Fair values are measured using inputs, other than quoted prices included within Net financing costs comprise interest income on funds invested, gains/losses on the disposal of financial instruments, Level 1, which are observable for the asset or liability either directly or indirectly. changes in the fair value of financial instruments, interest expense on borrowings, unwinding of the discount on Interest rate swaps and options are accounted for at their fair value based upon exit provisions, unwinding of the discount on liabilities to non-controlling interest, foreign exchange gain/losses, and prices at the current reporting period. Forward foreign exchange contracts are imputed interest on pension assets and liabilities. Interest income and expense is recognised as it accrues in profit accounted for at the difference between the contract exchange rate and the quoted or loss, using the effective interest method. forward exchange rate at the reporting date. Net financing costs Level 3 Net financing costs can be analysed as follows: Fair values are measured using inputs for the asset or liability that are not based on observable market data. 2023 2022 £m £m The tables below set out the financial instruments included on the Consolidated Statement of Financial Position at Financing income fair value: Interest income 14 9 Foreign exchange gain 2 3 Fair value Level 1 Level 2 Level 3 31 December 31 December 31 December 31 December Pension interest income (see note 3.7) 9 – 2023 2023 2023 2023 Other finance income – 1 £m £m £m £m 25 13 Assets measured at fair value Financial instruments at fair value through reserves Financing costs Other pension assets – gilts (see note 3.7) 48 48 – – Pension interest expense (see note 3.7) (1) – Financial instruments at fair value through profit or loss Interest expense on financial liabilities measured at amortised cost (15) (18) Money market funds 125 125 – – Foreign exchange loss (7) (1) Equity investments (see note 3.5) 21 – – 21 Other finance expense (47) (20) Financial assets at fair value through profit or loss (70) (39) Foreign exchange forward contracts and swaps 1 – 1 – Net financing costs (45) (26) Convertible loan receivable 2 – – 2 Financial assets at fair value through reserves Other finance expense includes lease interest payments, finance costs including fair value adjustments on Cash flow hedges 4 – 4 – acquisition-related liabilities and bank charges. 201 173 5 23 Fair value Level 1 Level 2 Level 3 31 December 31 December 31 December 31 December 2023 2023 2023 2023 £m £m £m £m Liabilities measured at fair value Financial liabilities at fair value through profit or loss Acquisition-related liabilities – payable to sellers under put options agreed on acquisition (see notes 3.1.4 and 3.1.5) (63) – – (63) Financial liabilities at fair value through reserves Cash flow hedges (17) – (17) – (80) – (17) (63) There have been no changes in the classification of assets and liabilities and there have been no movements within levels. Information on the fair value measurements of level 3 assets and liabilities is detailed in the relevant notes referenced above.
218 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 219 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL 4.4 Keeping This section details the interest income generated on the Group’s cash and other 4.5 Keeping The financial instruments included in the Consolidated Statement of Financial S T it simple financial assets and the interest expense incurred on borrowings and other it simple Position are measured at either fair value or amortised cost. The measurement of A Net financing Fair value T financial liabilities. this fair value can in some cases be subjective, and can depend on the inputs used in E costs hierarchy M the calculations. The Group generally uses external valuations using market inputs or E In reporting ‘adjusted profit’, the Group adjusts net financing costs to exclude N market values (e.g. external share prices). The different valuation methods are called T unrealised mark-to-market movements on interest rate and foreign exchange ‘hierarchies’ and are described below. S derivatives, gains/losses on bond buybacks, net pension interest, interest and fair value movements in acquisition-related liabilities and other financing costs. Level 1 Our rationale for adjustments made to financing costs is set out in the Fair values are measured using quoted prices (unadjusted) in active markets for Finance Review. identical assets or liabilities. Level 2 Accounting policies Fair values are measured using inputs, other than quoted prices included within Net financing costs comprise interest income on funds invested, gains/losses on the disposal of financial instruments, Level 1, which are observable for the asset or liability either directly or indirectly. changes in the fair value of financial instruments, interest expense on borrowings, unwinding of the discount on Interest rate swaps and options are accounted for at their fair value based upon exit provisions, unwinding of the discount on liabilities to non-controlling interest, foreign exchange gain/losses, and prices at the current reporting period. Forward foreign exchange contracts are imputed interest on pension assets and liabilities. Interest income and expense is recognised as it accrues in profit accounted for at the difference between the contract exchange rate and the quoted or loss, using the effective interest method. forward exchange rate at the reporting date. Net financing costs Level 3 Net financing costs can be analysed as follows: Fair values are measured using inputs for the asset or liability that are not based on observable market data. 2023 2022 £m £m The tables below set out the financial instruments included on the Consolidated Statement of Financial Position at Financing income fair value: Interest income 14 9 Foreign exchange gain 2 3 Fair value Level 1 Level 2 Level 3 31 December 31 December 31 December 31 December Pension interest income (see note 3.7) 9 – 2023 2023 2023 2023 Other finance income – 1 £m £m £m £m 25 13 Assets measured at fair value Financial instruments at fair value through reserves Financing costs Other pension assets – gilts (see note 3.7) 48 48 – – Pension interest expense (see note 3.7) (1) – Financial instruments at fair value through profit or loss Interest expense on financial liabilities measured at amortised cost (15) (18) Money market funds 125 125 – – Foreign exchange loss (7) (1) Equity investments (see note 3.5) 21 – – 21 Other finance expense (47) (20) Financial assets at fair value through profit or loss (70) (39) Foreign exchange forward contracts and swaps 1 – 1 – Net financing costs (45) (26) Convertible loan receivable 2 – – 2 Financial assets at fair value through reserves Other finance expense includes lease interest payments, finance costs including fair value adjustments on Cash flow hedges 4 – 4 – acquisition-related liabilities and bank charges. 201 173 5 23 Fair value Level 1 Level 2 Level 3 31 December 31 December 31 December 31 December 2023 2023 2023 2023 £m £m £m £m Liabilities measured at fair value Financial liabilities at fair value through profit or loss Acquisition-related liabilities – payable to sellers under put options agreed on acquisition (see notes 3.1.4 and 3.1.5) (63) – – (63) Financial liabilities at fair value through reserves Cash flow hedges (17) – (17) – (80) – (17) (63) There have been no changes in the classification of assets and liabilities and there have been no movements within levels. Information on the fair value measurements of level 3 assets and liabilities is detailed in the relevant notes referenced above.
220 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 221 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Fair value Level 1 Level 2 Level 3 4.6 Keeping The Group accounts for operating leases under IFRS 16 ‘Leases’. Lease liabilities S 31 December 31 December 31 December 31 December T it simple representing the discounted future lease payments and right of use assets A 2022 2022 2022 2022 Lease T £m £m £m £m are recognised in the Consolidated Statement of Financial Position. Lease costs E liabilities M such as property rent are now recognised in the form of depreciation and interest in E Assets measured at fair value N the Consolidated Income Statement. T Financial instruments at fair value through reserves S Other pension assets – gilts (see note 3.7) 47 47 – – Financial instruments at fair value through profit or loss Accounting policies Money market funds 91 91 – – Lease liabilities represent the discounted future lease payments. Discount rates are calculated for similar assets, Equity investments (see note 3.5) 11 – – 11 in similar economic environments, taking into account the length of the lease. The unwinding of the discounting is Financial assets at fair value through profit or loss recognised in net financing costs in the Consolidated Income Statement. The following table outlines the maturity analysis of the lease liabilities: Convertible loan receivable 3 – – 3 Financial assets at fair value through reserves 2023 2022 Cash flow hedges 4 – 4 – £m £m 156 138 4 14 Contractual discounted cash flows Less than one year 18 21 Fair value Level 1 Level 2 Level 3 Two to five years 57 55 31 December 31 December 31 December 31 December More than five years 40 56 2022 2022 2022 2022 £m £m £m £m Liabilities measured at fair value Lease liabilities at 31 December 115 132 Financial liabilities at fair value through profit or loss Foreign exchange forward contracts and swaps (1) – (1) – Acquisition-related liabilities – payable to sellers under Currency and put options agreed on acquisition (see notes 3.1.4 1 January non-cash 31 December 2023 Net cash flow movements 2023 and 3.1.5) (39) – – (39) £m £m £m £m Financial liabilities at fair value through reserves Lease liabilities (132) 26 (9) (115) Cash flow hedges (14) – (14) – Total lease liabilities (132) 26 (9) (115) (54) – (15) (39) Refer to note 4.3 for how we value interest rate swaps and forward foreign currency contracts. Currency and 1 January non-cash 31 December 2022 Net cash flow movements 2022 £m £m £m £m Lease liabilities (92) 26 (66) (132) Total lease liabilities (92) 26 (66) (132) The following amounts have been included in the Consolidated Income Statement: 2023 2022 £m £m Interest expense on lease liabilities (4) (4) Amounts recognised in the Consolidated Income Statement (4) (4) The Group has elected not to recognise right of use assets and lease liabilities for short-term leases (i.e. lease term less than 12 months) or low-value assets (i.e. under £5,000). The Group will continue to expense the lease payments associated with these leases on a straight-line basis over the lease term. At 31 December 2023, this was less than £1 million (2022: less than £1 million). Variable lease payments that depend on an index or a rate are also less than £1 million (2022: less than £1 million). Some property leases contain extension options beyond the non-cancellable period. The Group assesses at the lease commencement date whether it is reasonably certain to exercise the extension options. The lease liability at 31 December 2023 includes one such extension which resulted in an increase in the lease liability of £2 million. There are no other significant extension options. The Group signed a subleasing arrangement, which is classified as a finance lease in accordance with IFRS 16 ‘Leases’. In accordance with the standard, the right of use asset with a net book value of £8 million was derecognised and replaced by a net investment in the sublease which has been recognised within other receivables. See note 3.2. This arrangement does not impact the lease liabilities arising from the original lease which have been included in this note.
220 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 221 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL Fair value Level 1 Level 2 Level 3 4.6 Keeping The Group accounts for operating leases under IFRS 16 ‘Leases’. Lease liabilities S 31 December 31 December 31 December 31 December T it simple representing the discounted future lease payments and right of use assets A 2022 2022 2022 2022 Lease T £m £m £m £m are recognised in the Consolidated Statement of Financial Position. Lease costs E liabilities M such as property rent are now recognised in the form of depreciation and interest in E Assets measured at fair value N the Consolidated Income Statement. T Financial instruments at fair value through reserves S Other pension assets – gilts (see note 3.7) 47 47 – – Financial instruments at fair value through profit or loss Accounting policies Money market funds 91 91 – – Lease liabilities represent the discounted future lease payments. Discount rates are calculated for similar assets, Equity investments (see note 3.5) 11 – – 11 in similar economic environments, taking into account the length of the lease. The unwinding of the discounting is Financial assets at fair value through profit or loss recognised in net financing costs in the Consolidated Income Statement. The following table outlines the maturity analysis of the lease liabilities: Convertible loan receivable 3 – – 3 Financial assets at fair value through reserves 2023 2022 Cash flow hedges 4 – 4 – £m £m 156 138 4 14 Contractual discounted cash flows Less than one year 18 21 Fair value Level 1 Level 2 Level 3 Two to five years 57 55 31 December 31 December 31 December 31 December More than five years 40 56 2022 2022 2022 2022 £m £m £m £m Liabilities measured at fair value Lease liabilities at 31 December 115 132 Financial liabilities at fair value through profit or loss Foreign exchange forward contracts and swaps (1) – (1) – Acquisition-related liabilities – payable to sellers under Currency and put options agreed on acquisition (see notes 3.1.4 1 January non-cash 31 December 2023 Net cash flow movements 2023 and 3.1.5) (39) – – (39) £m £m £m £m Financial liabilities at fair value through reserves Lease liabilities (132) 26 (9) (115) Cash flow hedges (14) – (14) – Total lease liabilities (132) 26 (9) (115) (54) – (15) (39) Refer to note 4.3 for how we value interest rate swaps and forward foreign currency contracts. Currency and 1 January non-cash 31 December 2022 Net cash flow movements 2022 £m £m £m £m Lease liabilities (92) 26 (66) (132) Total lease liabilities (92) 26 (66) (132) The following amounts have been included in the Consolidated Income Statement: 2023 2022 £m £m Interest expense on lease liabilities (4) (4) Amounts recognised in the Consolidated Income Statement (4) (4) The Group has elected not to recognise right of use assets and lease liabilities for short-term leases (i.e. lease term less than 12 months) or low-value assets (i.e. under £5,000). The Group will continue to expense the lease payments associated with these leases on a straight-line basis over the lease term. At 31 December 2023, this was less than £1 million (2022: less than £1 million). Variable lease payments that depend on an index or a rate are also less than £1 million (2022: less than £1 million). Some property leases contain extension options beyond the non-cancellable period. The Group assesses at the lease commencement date whether it is reasonably certain to exercise the extension options. The lease liability at 31 December 2023 includes one such extension which resulted in an increase in the lease liability of £2 million. There are no other significant extension options. The Group signed a subleasing arrangement, which is classified as a finance lease in accordance with IFRS 16 ‘Leases’. In accordance with the standard, the right of use asset with a net book value of £8 million was derecognised and replaced by a net investment in the sublease which has been recognised within other receivables. See note 3.2. This arrangement does not impact the lease liabilities arising from the original lease which have been included in this note.
222 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 223 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL 4.7 Keeping This section explains material movements recorded in shareholders’ equity, 4.8 Keeping The Group utilises share award schemes as part of its employee remuneration S T it simple presented in the Consolidated Statement of Changes in Equity, which are not it simple packages, and therefore operates a number of share-based compensation A Equity Share-based T explained elsewhere in the financial statements. schemes, namely the Deferred Share Award (DSA), Executive Share Plan (ESP), E compensation M Performance Share Plan (PSP), Long Term Incentive Plan (LTIP) and Save As You E N Earn (SAYE) schemes. The share-based compensation is not pensionable. T Accounting policies S Fair value reserve A transaction will be classed as share-based compensation where the Group Financial assets are stated at fair value, with any gain or loss recognised directly in the fair value reserve in equity, receives services from employees and pays for these in shares or similar equity unless the loss is a permanent impairment, when it is then recorded in the Consolidated Income Statement. instruments. If the Group incurs a liability linked to the price or value of the Group’s shares, this will also fall under a share-based transaction. Dividends Dividends are recognised through equity on the earlier of their approval by the Company’s shareholders or their Accounting policies payment. Dividends are distributed based on the realised distributable reserves (within retained earnings) of ITV plc For each of the Group’s share-based compensation schemes, the fair value of the equity instrument granted is (the Company) and not based on the Group’s retained earnings. measured at grant date and spread over the vesting period via a charge to the Consolidated Income Statement with 4.7.1 Share capital and share premium a corresponding increase in equity. The Group’s share capital at 31 December 2023 of £406 million (2022: £403 million) and share premium of £174 million The fair value of the share options and awards is measured using either market price at grant date or, for the SAYE scheme, (2022: £174 million) is the same as that of ITV plc. Details of this are given in the ITV plc Company financial statements a Black–Scholes model, taking into account the terms and conditions of the individual scheme. Expected volatility is based section of this Annual Report. on the historical volatility of ITV plc shares over a three or five year period, based on the life of the options. 4.7.2 Merger and other reserves Vesting conditions are limited to service conditions and performance conditions. For performance-based schemes, Merger and other reserves at 31 December include the following reserves: the relevant Group performance measures are projected to the end of the performance period in order to determine 2023 2022 the number of options expected to vest. This estimate of the performance measures is used to determine the option £m £m fair value, discounted to present value. The Group revises the number of options that are expected to vest, including Merger reserves 95 95 an estimate of forfeitures at each reporting date based on forecast performance measures. The impact of the Capital reserves 112 112 revision to original estimates, if any, is recognised in the Consolidated Income Statement, with a corresponding Capital redemption reserves 36 36 adjustment to equity. Revaluation reserves 2 2 Exercises of share options granted to employees can be satisfied by market purchase or issue of new shares. No new Put option liabilities arising on acquisition of subsidiaries (34) (34) shares may be issued to satisfy exercises under the terms of the DSA. During the year, exercises were satisfied by Total 211 211 using shares purchased in the market and held in the ITV Employees’ Benefit Trust as well as the issue of new shares. Merger reserves, Capital reserves and Capital redemption reserves relate primarily to balances arising on previous Share-based compensation charges totalled £16 million in 2023 (2022: £19 million). mergers and acquisitions, including the merger of Granada and Carlton in 2003. Put option liabilities arising on Share options outstanding acquisition of subsidiaries relates to options and forwards contracts over shares relating to non-controlling interests. The table below summarises the movements in the number of share options outstanding for the Group and their 4.7.3 Translation reserve weighted average exercise price: The translation reserve comprises: • All foreign exchange differences arising on the translation of the accounts of, and investments in, foreign operations 2023 2022 • The gains or losses on the portion of cash flow hedges that have been deemed effective and costs of hedging Weighted Weighted Number average Number average under IFRS 9 (see note 4.3) of options exercise price of options exercise price • The net movement in the cash flow hedge reserve was a gain of £5 million (2022: loss of £1 million). This is made (‘000) (pence) (‘000) (pence) up of a gain on cash flow hedges in the year of £6 million (2022: loss of £2 million) and a related tax charge of Outstanding at 1 January 104,729 24.74 98,934 24.98 £1 million (2022: credit of £1 million) Granted during the year – nil priced 20,993 – 17,238 – • The net movement in the cost of hedging reserve was a gain of £4 million (2022: £nil). This is made up of a gain on Granted during the year – other 16,395 59.21 13,814 62.85 the cost of hedging in the year of £6 million (2022: £nil) and a related tax charge of £2 million (2022: £nil) Forfeited during the year (4,210) 68.61 (3,095) 56.49 4.7.4 Fair value reserve Exercised during the year – nil priced (15,551) – (6,201) – The fair value reserve comprises all movements arising on the revaluation of gilts accounted for at fair value through Exercised during the year – other (12,954) 49.31 (110) 50.61 OCI. The movement in 2023 is a £1 million loss on revaluation (2022: loss of £19 million) and a related tax credit of Expired during the year (19,168) 15.57 (15,851) 35.87 £nil (2022: £5 million credit). See notes 2.3 and 3.7. Outstanding at 31 December 90,234 25.88 104,729 24.74 4.7.5 Retained earnings Exercisable at 31 December 12,933 34.88 4,383 30.63 The retained earnings reserve comprises profit for the year attributable to owners of the Company of £210 million The average share price during 2023 was 73.10 pence (2022: 78.32 pence). (2022: £428 million) and other items recognised directly through equity as presented in the Consolidated Statement of Changes in Equity. Other items include the credit for the Group’s share-based compensation schemes, which are described in note 4.8. The Board recognises the importance of the ordinary dividend to ITV shareholders. Reflecting its confidence in the business and its strategy, as well as the continued strong cash generation, the Board proposes a final dividend of 3.3p (2022:3.3p), giving a full year dividend of 5.0p (2022: 5.0p) per share. £201 million of dividends were paid (2022: £201 million), representing a final 2022 dividend of 3.3p per share and an interim 2023 dividend of 1.7p per share. 4.7.6 Non-controlling interests Non-controlling interest (NCI) represents the share of non-wholly owned subsidiaries’ net assets that are not directly attributable to the shareholders of ITV. The movement for 2023 comprises: • The share of loss attributable to NCI of £1 million (2022: share of profit attributable to NCI of £7 million) • Foreign exchange losses of £4 million (2022: gains of £8 million) • The distributions made to NCI of £1 million (2022: £3 million) • The share of net assets attributable to NCI relating to subsidiaries acquired, disposed or changes in ownership interest in 2023 of £6 million (2022: £4 million)
222 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 223 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED C I AL 4.7 Keeping This section explains material movements recorded in shareholders’ equity, 4.8 Keeping The Group utilises share award schemes as part of its employee remuneration S T it simple presented in the Consolidated Statement of Changes in Equity, which are not it simple packages, and therefore operates a number of share-based compensation A Equity Share-based T explained elsewhere in the financial statements. schemes, namely the Deferred Share Award (DSA), Executive Share Plan (ESP), E compensation M Performance Share Plan (PSP), Long Term Incentive Plan (LTIP) and Save As You E N Earn (SAYE) schemes. The share-based compensation is not pensionable. T Accounting policies S Fair value reserve A transaction will be classed as share-based compensation where the Group Financial assets are stated at fair value, with any gain or loss recognised directly in the fair value reserve in equity, receives services from employees and pays for these in shares or similar equity unless the loss is a permanent impairment, when it is then recorded in the Consolidated Income Statement. instruments. If the Group incurs a liability linked to the price or value of the Group’s shares, this will also fall under a share-based transaction. Dividends Dividends are recognised through equity on the earlier of their approval by the Company’s shareholders or their Accounting policies payment. Dividends are distributed based on the realised distributable reserves (within retained earnings) of ITV plc For each of the Group’s share-based compensation schemes, the fair value of the equity instrument granted is (the Company) and not based on the Group’s retained earnings. measured at grant date and spread over the vesting period via a charge to the Consolidated Income Statement with 4.7.1 Share capital and share premium a corresponding increase in equity. The Group’s share capital at 31 December 2023 of £406 million (2022: £403 million) and share premium of £174 million The fair value of the share options and awards is measured using either market price at grant date or, for the SAYE scheme, (2022: £174 million) is the same as that of ITV plc. Details of this are given in the ITV plc Company financial statements a Black–Scholes model, taking into account the terms and conditions of the individual scheme. Expected volatility is based section of this Annual Report. on the historical volatility of ITV plc shares over a three or five year period, based on the life of the options. 4.7.2 Merger and other reserves Vesting conditions are limited to service conditions and performance conditions. For performance-based schemes, Merger and other reserves at 31 December include the following reserves: the relevant Group performance measures are projected to the end of the performance period in order to determine 2023 2022 the number of options expected to vest. This estimate of the performance measures is used to determine the option £m £m fair value, discounted to present value. The Group revises the number of options that are expected to vest, including Merger reserves 95 95 an estimate of forfeitures at each reporting date based on forecast performance measures. The impact of the Capital reserves 112 112 revision to original estimates, if any, is recognised in the Consolidated Income Statement, with a corresponding Capital redemption reserves 36 36 adjustment to equity. Revaluation reserves 2 2 Exercises of share options granted to employees can be satisfied by market purchase or issue of new shares. No new Put option liabilities arising on acquisition of subsidiaries (34) (34) shares may be issued to satisfy exercises under the terms of the DSA. During the year, exercises were satisfied by Total 211 211 using shares purchased in the market and held in the ITV Employees’ Benefit Trust as well as the issue of new shares. Merger reserves, Capital reserves and Capital redemption reserves relate primarily to balances arising on previous Share-based compensation charges totalled £16 million in 2023 (2022: £19 million). mergers and acquisitions, including the merger of Granada and Carlton in 2003. Put option liabilities arising on Share options outstanding acquisition of subsidiaries relates to options and forwards contracts over shares relating to non-controlling interests. The table below summarises the movements in the number of share options outstanding for the Group and their 4.7.3 Translation reserve weighted average exercise price: The translation reserve comprises: • All foreign exchange differences arising on the translation of the accounts of, and investments in, foreign operations 2023 2022 • The gains or losses on the portion of cash flow hedges that have been deemed effective and costs of hedging Weighted Weighted Number average Number average under IFRS 9 (see note 4.3) of options exercise price of options exercise price • The net movement in the cash flow hedge reserve was a gain of £5 million (2022: loss of £1 million). This is made (‘000) (pence) (‘000) (pence) up of a gain on cash flow hedges in the year of £6 million (2022: loss of £2 million) and a related tax charge of Outstanding at 1 January 104,729 24.74 98,934 24.98 £1 million (2022: credit of £1 million) Granted during the year – nil priced 20,993 – 17,238 – • The net movement in the cost of hedging reserve was a gain of £4 million (2022: £nil). This is made up of a gain on Granted during the year – other 16,395 59.21 13,814 62.85 the cost of hedging in the year of £6 million (2022: £nil) and a related tax charge of £2 million (2022: £nil) Forfeited during the year (4,210) 68.61 (3,095) 56.49 4.7.4 Fair value reserve Exercised during the year – nil priced (15,551) – (6,201) – The fair value reserve comprises all movements arising on the revaluation of gilts accounted for at fair value through Exercised during the year – other (12,954) 49.31 (110) 50.61 OCI. The movement in 2023 is a £1 million loss on revaluation (2022: loss of £19 million) and a related tax credit of Expired during the year (19,168) 15.57 (15,851) 35.87 £nil (2022: £5 million credit). See notes 2.3 and 3.7. Outstanding at 31 December 90,234 25.88 104,729 24.74 4.7.5 Retained earnings Exercisable at 31 December 12,933 34.88 4,383 30.63 The retained earnings reserve comprises profit for the year attributable to owners of the Company of £210 million The average share price during 2023 was 73.10 pence (2022: 78.32 pence). (2022: £428 million) and other items recognised directly through equity as presented in the Consolidated Statement of Changes in Equity. Other items include the credit for the Group’s share-based compensation schemes, which are described in note 4.8. The Board recognises the importance of the ordinary dividend to ITV shareholders. Reflecting its confidence in the business and its strategy, as well as the continued strong cash generation, the Board proposes a final dividend of 3.3p (2022:3.3p), giving a full year dividend of 5.0p (2022: 5.0p) per share. £201 million of dividends were paid (2022: £201 million), representing a final 2022 dividend of 3.3p per share and an interim 2023 dividend of 1.7p per share. 4.7.6 Non-controlling interests Non-controlling interest (NCI) represents the share of non-wholly owned subsidiaries’ net assets that are not directly attributable to the shareholders of ITV. The movement for 2023 comprises: • The share of loss attributable to NCI of £1 million (2022: share of profit attributable to NCI of £7 million) • Foreign exchange losses of £4 million (2022: gains of £8 million) • The distributions made to NCI of £1 million (2022: £3 million) • The share of net assets attributable to NCI relating to subsidiaries acquired, disposed or changes in ownership interest in 2023 of £6 million (2022: £4 million)
224 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 225 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED SECTION 5: OTHER NOTES C I AL Of the options still outstanding, the range of exercise prices and weighted average remaining contractual life of these 5.1 Keeping The related parties identified by the Directors include joint ventures, associated S T options can be analysed as follows: it simple undertakings, fixed asset investments and key management personnel. A Related T E 2023 2022 party To enable users of our financial statements to form a view about the effects of M E Weighted Weighted transactions related party relationships on the Group, we disclose the Group’s transactions with N Weighted average Weighted average T average Number remaining average Number remaining those related parties during the year and any associated year end trading balances. S exercise price of options contractual life exercise price of options contractual life Range of exercise prices (pence) (pence) (‘000) (years) (pence) (‘000) (years) Transactions with joint ventures and associated undertakings Nil – 49,386 0.33 – 59,056 0.29 20.00 – 49.99 49.17 15,330 1.17 49.17 29,225 1.81 Transactions with joint ventures and associated undertakings during the year were: 50.00 – 69.99 58.51 21,454 2.79 61.73 10,878 3.44 2023 2022 70.00 – 99.99 79.42 3,965 2.12 85.22 5,351 1.35 £m £m 100.00 – 109.99 105.98 61 0.92 105.98 90 1.46 Sales to joint ventures 60 41 120.00 – 149.99 135.20 38 0.33 130.61 129 0.94 Sales to associated undertakings 13 16 Purchases from joint ventures 33 33 Assumptions Purchases from associated undertakings 78 77 ESP, DSA, LTIP and PSP options are valued directly by reference to the share price at date of grant. The transactions with joint ventures primarily relate to sales and purchases of digital multiplex services with The options granted in the current and prior year for the HMRC approved SAYE scheme, are valued using the Black– Digital 3&4 Limited and distribution revenue from BritBox LLC, BritBox International Limited and BritBox Australia Scholes model, using the assumptions below: Management Pty Limited. Sales to associated undertakings include airtime sales to DTV Services Limited. Purchases from associated undertakings primarily relate to the purchase of news services from ITN Limited. Gross Share price Exercise Expected Expected dividend Risk-free All transactions with associated undertakings and joint ventures arise in the normal course of business on an arm’s at grant price volatility life yield rate Fair value length basis. The amounts owed by and to these related parties at 31 December were: Scheme name Date of grant (pence) (pence) % (years) % % (pence) 3 Year 12 April 2022 79.08 67.72 47.00 3.25 – 1.55 21.19 2023 2022 5 Year 12 April 2022 79.08 67.72 40.05 5.25 – 1.58 18.45 £m £m 3 Year 5 September 2022 62.74 57.73 47.80 3.25 – 2.97 14.95 Amounts owed by joint ventures 41 12 5 Year 5 September 2022 62.74 57.73 41.03 5.25 – 2.85 12.63 Amounts owed by associated undertakings 10 19 3 Year 5 April 2023 79.78 70.12 45.43 3.25 – 3.40 21.53 Amounts owed to joint ventures 6 5 5 Year 5 April 2023 79.78 70.12 42.41 5.25 – 3.28 20.99 Amounts owed to associated undertakings 8 17 3 Year 13 September 2023 72.34 56.37 40.60 3.25 – 4.47 20.17 None of the balances are secured. 5 Year 13 September 2023 72.34 56.37 42.27 5.25 – 4.29 20.57 Employees’ Benefit Trust Amounts owed by joint ventures primarily relate to trading with BritBox LLC and BritBox Australia Management Pty Limited. Balances owed by associated undertakings largely relate to Bedrock Entertainment LLC and Southrock The Group has investments in its own shares as a result of shares purchased by the ITV Employees’ Benefit Trust Productions LLC. Balances owed to associated undertakings primarily relate to trading with ITN Limited and amounts (EBT). Transactions with the Group-sponsored EBT are included in these financial statements and consist of the owed to Bedrock Entertainment LLC. EBT’s purchases of shares in ITV plc, which is accounted for as a reduction to retained earnings. Amounts paid to the Group’s retirement benefit plans are set out in note 3.7. The table below shows the number of ITV plc shares held in the EBT at 31 December 2023 and the releases from the EBT made in the year to satisfy awards under the Group’s share schemes: Transactions with key management personnel Key management consists of ITV plc Executive and Non-executive Directors and the other members of the ITV Number of shares Nominal value Management Board. Key management personnel compensation is as follows: Scheme Shares held at (released)/purchased £ 1 January 2023 14,587,379 1,458,738 2023 2022 LTIP releases (93,835) £m £m DSA releases (3,115,726) Short-term employee benefits 11 11 ESP releases (226,277) Share-based compensation 6 6 PSP releases (5,995,984) 17 17 SAYE releases (13,150,667) Market purchased shares 9,510,276 Newly issued shares 27,000,000 31 December 2023 28,515,166 2,851,517 The total number of shares held by the EBT at 31 December 2023 represents 0.77% (2022: 0.36%) of ITV’s issued share capital. The market value of own shares held at 31 December 2023 is £18 million (2022: £11 million). The shares will be held in the EBT until such time as they may be transferred to participants of the various Group share schemes. Rights to dividends have been waived by the EBT in respect of shares held that do not relate to restricted shares under the DSA. In accordance with the Trust Deed, the Trustees of the EBT have the power to exercise all voting rights in relation to any investment (including shares) held within that trust. The Trust is accounted for as a separate entity and therefore is only accounted for in the consolidated financial statements and not included in the ITV plc Company financial statements.
224 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 225 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 4: CAPITAL STRUCTURE AND FINANCING COSTS CONTINUED SECTION 5: OTHER NOTES C I AL Of the options still outstanding, the range of exercise prices and weighted average remaining contractual life of these 5.1 Keeping The related parties identified by the Directors include joint ventures, associated S T options can be analysed as follows: it simple undertakings, fixed asset investments and key management personnel. A Related T E 2023 2022 party To enable users of our financial statements to form a view about the effects of M E Weighted Weighted transactions related party relationships on the Group, we disclose the Group’s transactions with N Weighted average Weighted average T average Number remaining average Number remaining those related parties during the year and any associated year end trading balances. S exercise price of options contractual life exercise price of options contractual life Range of exercise prices (pence) (pence) (‘000) (years) (pence) (‘000) (years) Transactions with joint ventures and associated undertakings Nil – 49,386 0.33 – 59,056 0.29 20.00 – 49.99 49.17 15,330 1.17 49.17 29,225 1.81 Transactions with joint ventures and associated undertakings during the year were: 50.00 – 69.99 58.51 21,454 2.79 61.73 10,878 3.44 2023 2022 70.00 – 99.99 79.42 3,965 2.12 85.22 5,351 1.35 £m £m 100.00 – 109.99 105.98 61 0.92 105.98 90 1.46 Sales to joint ventures 60 41 120.00 – 149.99 135.20 38 0.33 130.61 129 0.94 Sales to associated undertakings 13 16 Purchases from joint ventures 33 33 Assumptions Purchases from associated undertakings 78 77 ESP, DSA, LTIP and PSP options are valued directly by reference to the share price at date of grant. The transactions with joint ventures primarily relate to sales and purchases of digital multiplex services with The options granted in the current and prior year for the HMRC approved SAYE scheme, are valued using the Black–Digital 3&4 Limited and distribution revenue from BritBox LLC, BritBox International Limited and BritBox Australia Scholes model, using the assumptions below: Management Pty Limited. Sales to associated undertakings include airtime sales to DTV Services Limited. Purchases from associated undertakings primarily relate to the purchase of news services from ITN Limited. Gross Share price Exercise Expected Expected dividend Risk-free All transactions with associated undertakings and joint ventures arise in the normal course of business on an arm’s at grant price volatility life yield rate Fair value length basis. The amounts owed by and to these related parties at 31 December were: Scheme name Date of grant (pence) (pence) % (years) % % (pence) 3 Year 12 April 2022 79.08 67.72 47.00 3.25 – 1.55 21.19 2023 2022 5 Year 12 April 2022 79.08 67.72 40.05 5.25 – 1.58 18.45 £m £m 3 Year 5 September 2022 62.74 57.73 47.80 3.25 – 2.97 14.95 Amounts owed by joint ventures 41 12 5 Year 5 September 2022 62.74 57.73 41.03 5.25 – 2.85 12.63 Amounts owed by associated undertakings 10 19 3 Year 5 April 2023 79.78 70.12 45.43 3.25 – 3.40 21.53 Amounts owed to joint ventures 6 5 5 Year 5 April 2023 79.78 70.12 42.41 5.25 – 3.28 20.99 Amounts owed to associated undertakings 8 17 3 Year 13 September 2023 72.34 56.37 40.60 3.25 – 4.47 20.17 None of the balances are secured. 5 Year 13 September 2023 72.34 56.37 42.27 5.25 – 4.29 20.57 Employees’ Benefit Trust Amounts owed by joint ventures primarily relate to trading with BritBox LLC and BritBox Australia Management Pty Limited. Balances owed by associated undertakings largely relate to Bedrock Entertainment LLC and Southrock The Group has investments in its own shares as a result of shares purchased by the ITV Employees’ Benefit Trust Productions LLC. Balances owed to associated undertakings primarily relate to trading with ITN Limited and amounts (EBT). Transactions with the Group-sponsored EBT are included in these financial statements and consist of the owed to Bedrock Entertainment LLC. EBT’s purchases of shares in ITV plc, which is accounted for as a reduction to retained earnings. Amounts paid to the Group’s retirement benefit plans are set out in note 3.7. The table below shows the number of ITV plc shares held in the EBT at 31 December 2023 and the releases from the EBT made in the year to satisfy awards under the Group’s share schemes: Transactions with key management personnel Key management consists of ITV plc Executive and Non-executive Directors and the other members of the ITV Number of shares Nominal value Management Board. Key management personnel compensation is as follows: Scheme Shares held at (released)/purchased £ 1 January 2023 14,587,379 1,458,738 2023 2022 LTIP releases (93,835) £m £m DSA releases (3,115,726) Short-term employee benefits 11 11 ESP releases (226,277) Share-based compensation 6 6 PSP releases (5,995,984) 17 17 SAYE releases (13,150,667) Market purchased shares 9,510,276 Newly issued shares 27,000,000 31 December 2023 28,515,166 2,851,517 The total number of shares held by the EBT at 31 December 2023 represents 0.77% (2022: 0.36%) of ITV’s issued share capital. The market value of own shares held at 31 December 2023 is £18 million (2022: £11 million). The shares will be held in the EBT until such time as they may be transferred to participants of the various Group share schemes. Rights to dividends have been waived by the EBT in respect of shares held that do not relate to restricted shares under the DSA. In accordance with the Trust Deed, the Trustees of the EBT have the power to exercise all voting rights in relation to any investment (including shares) held within that trust. The Trust is accounted for as a separate entity and therefore is only accounted for in the consolidated financial statements and not included in the ITV plc Company financial statements.
226 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 227 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 5: OTHER NOTES CONTINUED C I AL 5.2 Keeping A contingent asset or liability is a liability that is not sufficiently certain to qualify for 5.4 Keeping Certain subsidiaries of the Group can take an exemption from having an audit. Strict S T it simple recognition as an asset or provision where uncertainty may exist regarding the it simple criteria must be met for this exemption to be taken, and it must be agreed by the A Contingent Subsidiaries T outcome of future events. Directors of that subsidiary entity. E assets and exempt M E liabilities from audit N T S Contingent liabilities There are contingent liabilities in respect of certain litigation and guarantees, broadcasting issues, and in respect of Listed below are subsidiaries controlled and consolidated by the Group, where the Directors have taken the warranties given in connection with certain disposals of businesses. In addition, the determination of employment exemption from having an audit of its financial statements. This exemption is taken in accordance with the tax status of some individuals contracted by ITV is complex and a future liability could arise in relation to this. None Companies Act 2006 s479A. of these items are expected to have a material effect on the Group’s results or financial position. Company number Company name Company number Company name As previously reported, on 12 July 2022, the UK Competition and Markets Authority (CMA) opened an investigation 04195187 12 Yard Productions (Investments) Limited 03089273 ITV Ventures Limited into certain conduct of ITV and other named companies in the sector relating to the production and broadcasting of 04145307 12 Yard Productions Limited 11107431 ITV Vera Limited sports content in the United Kingdom. The investigation is at an early stage and the CMA has confirmed it is currently 10058419 Back Productions Limited 14460676 ITV WKOW Limited undertaking further investigation until at least March 2024, subsequent to which ITV anticipates it will receive 13087812 Big Talk Alone Limited 13087699 ITV Y&M Limited 10496857 Big Talk Cold Feet Limited 05518785 Juice Music UK Limited additional detail regarding any future steps. 12092620 Big Talk Friday Limited 05976348 Mammoth Screen Limited 11109596 Big Talk Goes Wrong Limited 09355455 Mammoth Screen (End) Limited On 11 October 2023, the CMA opened an investigation into certain conduct of ITV and other named companies 13087733 Big Talk Horseface Limited 08546227 Mammoth Screen (End2) Limited in the sector relating to the production and broadcasting of television content in the UK, excluding sports content. 13087735 Big Talk I Hate You Limited 10528827 Mammoth Screen (End9) Limited The investigation remains at an early stage and it is not currently possible to reliably quantify any liability that might 07037447 Big Talk Investments Limited 11109917 Mammoth Screen (End6) Limited result from the investigation. ITV is committed to complying with competition law, and is cooperating with the CMA's 10528952 Big Talk Living the Dream Limited 11908267 Mammoth Screen (End7) Limited 13813181 Big Talk Ludwig Limited 12368766 Mammoth Screen (End8) Limited enquiries in relation to both investigations. 11723899 Big Talk Offenders Limited 13087685 Mammoth Screen (Evans) Limited 11109572 Big Talk Peacock Limited 12368661 Mammoth Screen (FS) Limited 02897434 Big Talk Pictures Limited 13989267 Mammoth Screen (GK) Limited Where the Group receives information in the period between 31 December 2023 06567813 Big Talk Studios Limited 11995990 Mammoth Screen (MD) Limited 5.3 Keeping 02936337 Boom Cymru TV Ltd 12735978 Mammoth Screen (MD2) Limited and the date of this report about conditions related to certain events that existed at Subsequent it simple 07922831 Boom Pictures Limited 13989179 Mammoth Screen (MIE) Limited events 31 December 2023, we update our disclosures that relate to those conditions in light 03866274 Box Clever Technology Limited 11062257 Mammoth Screen (NC) Limited of the new information. Such events can be categorised as adjusting or non- 04192851 Box Clever Trustees Limited 09660486 Mammoth Screen (Pol2) Limited adjusting depending on whether the condition existed at 31 December 2023. If non- 11801341 BritBox SVOD Limited 10031005 Mammoth Screen (Pol3) Limited adjusting events are material, non-disclosure could influence the economic 01891539 Broad Street Films Limited 10528763 Mammoth Screen (Pol4) Limited decisions that users make on the basis of the financial statements. Accordingly, for 02285229 Campania Limited 11108289 Mammoth Screen (Pol5) Limited 04159249 Carlton Content Holdings Limited 08799982 Mammoth Screen (Poldark) Limited each material category of non-adjusting event after the reporting period we 00301188 Carlton Film Distributors Limited 09646520 Mammoth Screen (QV) Limited disclose in this section the nature of the event and an estimate of its financial 01692483 Carlton Finance Limited 11108327 Mammoth Screen (Serpent) Limited effect, or a statement that such an estimate cannot be made. 03984490 Carlton Food Network Limited 11204836 Mammoth Screen (SG) Limited 03053908 Carlton Programmes Development Limited NI678277 Mammoth Screen (TJ) Limited 03210452 Carlton Screen Advertising (Holdings) Limited 13087656 Mammoth Screen (Tower) Limited Disposal of the Group’s Interests in BritBox International 03210363 Carltonco Ninety-Six 10528702 Mammoth Screen (VF) Limited On 1 March 2024, the Group announced the sale of its entire 50% interest in digital streaming service, BritBox 02280048 Castlefield Properties Limited 11108322 Mammoth Screen (Vic3) Limited 06409013 Cat’s on the Roof Media Limited 11108320 Mammoth Screen (WOF) Limited International to its joint venture partner BBC Studios for a cash consideration of £255 million. The transaction has 04257248 Channel Television Holdings Limited NI687412 Mammoth Screen (WOF2) Limited been effected by the disposal of the Group’s 50% interests in BritBox LLC, BB Rights LLC, Denipurna Limited and 08195508 Cirkus Limited 10973979 Mammoth Screen (WOTW) Limited BritBox International Limited and the 100% interest in ITV SVOD Australia Pty Ltd, which holds the 50% interest in 10240192 Cloth Cat LBB Limited 13412337 Metavision Limited BritBox Australia Management Pty Limited. 02852812 Cosgrove Hall Films Limited 09477931 Monumental Television Limited 09366309 Crook Productions Limited 04201477 Morning TV Limited 05421502 Cynhyrchiadau Boomerang Cyfyngedig 12368748 MT Ghosts Limited At 31 December 2023, the Group included these interests at their carrying value of £66 million, as held for sale in the 08479545 Double Double Limited 14764613 MT Marlow Murder Club Limited Consolidated Statement of Financial Position. See notes 3.4 and 3.5. 07821062 EQ Pictures Limited 13813329 MT Mrs Sidhu Limited 09366308 Gameface Productions Limited 13989060 MT Maryland Limited 05946785 Gorilla TV Group Limited 13087117 MT Murder in Provence Limited 03776018 Gorilla TV Limited 14763338 Output Productions Limited 00290076 Granada Group Limited 07473151 Oxford Scientific Films Limited 03962410 Granada Limited 13506403 Planet Woo Limited 03106798 Granada Media Limited 15175627 Planet V Limited 05344772 Granada Screen (2005) Limited 09020906 Possessed Limited 00733063 Granada Television Overseas Limited 14163547 QSP ATF Limited 00250311 Granada UK Rental and Retail Limited 14784655 QSP Buried Limited 04842712 Interactive Telephony Limited 14163654 QSP FMO Limited 00608490 ITC Entertainment Group Limited 14460916 QSP Ghosted Limited SC375274 ITV (Scotland) Limited 14496123 QSP Men Up Limited 11516620 ITV 112 Limited 14458573 QSP MU Limited 12956892 ITV AdVentures Limited 14462220 QSP MY Limited 13087805 ITV Alder Limited 14460933 QSP PD Limited 14047839 ITV Archie Limited 14460663 QSP TRK Limited 11667230 ITV Barking Limited 13714204 QSP Nolly Limited 02578005 ITV Breakfast Limited 14048037 QSP SO limited 02937518 ITV Consumer Limited 12350991 Second Act (Grace) Limited 13087759 ITV Duneen Limited 09366311 Second Act Productions Limited 10494684 ITV Enterprises Limited 07714999 Sightseers Film Limited 04159210 ITV Holdings Limited 03991026 So Television Limited 14133299 ITV Grace Limited 11423826 The Addressable Platform Limited 04159213 ITV International Channels Limited 07155077 The Garden Productions Limited 14846610 ITV JCDM Limited 02351132 TwoFour Broadcast Limited SC473179 ITV LTVC (Scotland) Limited 08602993 TwoFour Group Holdings Limited 14863612 ITV Mandrake Limited 05493388 TwoFour Group Limited 13989147 ITV Maternal Limited 11109744 WP Anne Limited 00603893 ITV Network Limited 10796122 WP Bodyguard Limited 11723842 ITV Nightingale Limited 14360979 WP Delia Limited 00603471 ITV Pension Scheme Limited 12368643 WP Diplomat Limited 14461569 ITV POS Limited 13988864 WP Fifteen Limited
226 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 227 F I NOTES TO THE FINANCIAL STATEMENTS NAN SECTION 5: OTHER NOTES CONTINUED C I AL 5.2 Keeping A contingent asset or liability is a liability that is not sufficiently certain to qualify for 5.4 Keeping Certain subsidiaries of the Group can take an exemption from having an audit. Strict S T it simple recognition as an asset or provision where uncertainty may exist regarding the it simple criteria must be met for this exemption to be taken, and it must be agreed by the A Contingent Subsidiaries T outcome of future events. Directors of that subsidiary entity. E assets and exempt M E liabilities from audit N T S Contingent liabilities There are contingent liabilities in respect of certain litigation and guarantees, broadcasting issues, and in respect of Listed below are subsidiaries controlled and consolidated by the Group, where the Directors have taken the warranties given in connection with certain disposals of businesses. In addition, the determination of employment exemption from having an audit of its financial statements. This exemption is taken in accordance with the tax status of some individuals contracted by ITV is complex and a future liability could arise in relation to this. None Companies Act 2006 s479A. of these items are expected to have a material effect on the Group’s results or financial position. Company number Company name Company number Company name As previously reported, on 12 July 2022, the UK Competition and Markets Authority (CMA) opened an investigation 04195187 12 Yard Productions (Investments) Limited 03089273 ITV Ventures Limited into certain conduct of ITV and other named companies in the sector relating to the production and broadcasting of 04145307 12 Yard Productions Limited 11107431 ITV Vera Limited sports content in the United Kingdom. The investigation is at an early stage and the CMA has confirmed it is currently 10058419 Back Productions Limited 14460676 ITV WKOW Limited undertaking further investigation until at least March 2024, subsequent to which ITV anticipates it will receive 13087812 Big Talk Alone Limited 13087699 ITV Y&M Limited 10496857 Big Talk Cold Feet Limited 05518785 Juice Music UK Limited additional detail regarding any future steps. 12092620 Big Talk Friday Limited 05976348 Mammoth Screen Limited 11109596 Big Talk Goes Wrong Limited 09355455 Mammoth Screen (End) Limited On 11 October 2023, the CMA opened an investigation into certain conduct of ITV and other named companies 13087733 Big Talk Horseface Limited 08546227 Mammoth Screen (End2) Limited in the sector relating to the production and broadcasting of television content in the UK, excluding sports content. 13087735 Big Talk I Hate You Limited 10528827 Mammoth Screen (End9) Limited The investigation remains at an early stage and it is not currently possible to reliably quantify any liability that might 07037447 Big Talk Investments Limited 11109917 Mammoth Screen (End6) Limited result from the investigation. ITV is committed to complying with competition law, and is cooperating with the CMA's 10528952 Big Talk Living the Dream Limited 11908267 Mammoth Screen (End7) Limited 13813181 Big Talk Ludwig Limited 12368766 Mammoth Screen (End8) Limited enquiries in relation to both investigations. 11723899 Big Talk Offenders Limited 13087685 Mammoth Screen (Evans) Limited 11109572 Big Talk Peacock Limited 12368661 Mammoth Screen (FS) Limited 02897434 Big Talk Pictures Limited 13989267 Mammoth Screen (GK) Limited Where the Group receives information in the period between 31 December 2023 06567813 Big Talk Studios Limited 11995990 Mammoth Screen (MD) Limited 5.3 Keeping 02936337 Boom Cymru TV Ltd 12735978 Mammoth Screen (MD2) Limited and the date of this report about conditions related to certain events that existed at Subsequent it simple 07922831 Boom Pictures Limited 13989179 Mammoth Screen (MIE) Limited events 31 December 2023, we update our disclosures that relate to those conditions in light 03866274 Box Clever Technology Limited 11062257 Mammoth Screen (NC) Limited of the new information. Such events can be categorised as adjusting or non-04192851 Box Clever Trustees Limited 09660486 Mammoth Screen (Pol2) Limited adjusting depending on whether the condition existed at 31 December 2023. If non-11801341 BritBox SVOD Limited 10031005 Mammoth Screen (Pol3) Limited adjusting events are material, non-disclosure could influence the economic 01891539 Broad Street Films Limited 10528763 Mammoth Screen (Pol4) Limited decisions that users make on the basis of the financial statements. Accordingly, for 02285229 Campania Limited 11108289 Mammoth Screen (Pol5) Limited 04159249 Carlton Content Holdings Limited 08799982 Mammoth Screen (Poldark) Limited each material category of non-adjusting event after the reporting period we 00301188 Carlton Film Distributors Limited 09646520 Mammoth Screen (QV) Limited disclose in this section the nature of the event and an estimate of its financial 01692483 Carlton Finance Limited 11108327 Mammoth Screen (Serpent) Limited effect, or a statement that such an estimate cannot be made. 03984490 Carlton Food Network Limited 11204836 Mammoth Screen (SG) Limited 03053908 Carlton Programmes Development Limited NI678277 Mammoth Screen (TJ) Limited 03210452 Carlton Screen Advertising (Holdings) Limited 13087656 Mammoth Screen (Tower) Limited Disposal of the Group’s Interests in BritBox International 03210363 Carltonco Ninety-Six 10528702 Mammoth Screen (VF) Limited On 1 March 2024, the Group announced the sale of its entire 50% interest in digital streaming service, BritBox 02280048 Castlefield Properties Limited 11108322 Mammoth Screen (Vic3) Limited 06409013 Cat’s on the Roof Media Limited 11108320 Mammoth Screen (WOF) Limited International to its joint venture partner BBC Studios for a cash consideration of £255 million. The transaction has 04257248 Channel Television Holdings Limited NI687412 Mammoth Screen (WOF2) Limited been effected by the disposal of the Group’s 50% interests in BritBox LLC, BB Rights LLC, Denipurna Limited and 08195508 Cirkus Limited 10973979 Mammoth Screen (WOTW) Limited BritBox International Limited and the 100% interest in ITV SVOD Australia Pty Ltd, which holds the 50% interest in 10240192 Cloth Cat LBB Limited 13412337 Metavision Limited BritBox Australia Management Pty Limited. 02852812 Cosgrove Hall Films Limited 09477931 Monumental Television Limited 09366309 Crook Productions Limited 04201477 Morning TV Limited 05421502 Cynhyrchiadau Boomerang Cyfyngedig 12368748 MT Ghosts Limited At 31 December 2023, the Group included these interests at their carrying value of £66 million, as held for sale in the 08479545 Double Double Limited 14764613 MT Marlow Murder Club Limited Consolidated Statement of Financial Position. See notes 3.4 and 3.5. 07821062 EQ Pictures Limited 13813329 MT Mrs Sidhu Limited 09366308 Gameface Productions Limited 13989060 MT Maryland Limited 05946785 Gorilla TV Group Limited 13087117 MT Murder in Provence Limited 03776018 Gorilla TV Limited 14763338 Output Productions Limited 00290076 Granada Group Limited 07473151 Oxford Scientific Films Limited 03962410 Granada Limited 13506403 Planet Woo Limited 03106798 Granada Media Limited 15175627 Planet V Limited 05344772 Granada Screen (2005) Limited 09020906 Possessed Limited 00733063 Granada Television Overseas Limited 14163547 QSP ATF Limited 00250311 Granada UK Rental and Retail Limited 14784655 QSP Buried Limited 04842712 Interactive Telephony Limited 14163654 QSP FMO Limited 00608490 ITC Entertainment Group Limited 14460916 QSP Ghosted Limited SC375274 ITV (Scotland) Limited 14496123 QSP Men Up Limited 11516620 ITV 112 Limited 14458573 QSP MU Limited 12956892 ITV AdVentures Limited 14462220 QSP MY Limited 13087805 ITV Alder Limited 14460933 QSP PD Limited 14047839 ITV Archie Limited 14460663 QSP TRK Limited 11667230 ITV Barking Limited 13714204 QSP Nolly Limited 02578005 ITV Breakfast Limited 14048037 QSP SO limited 02937518 ITV Consumer Limited 12350991 Second Act (Grace) Limited 13087759 ITV Duneen Limited 09366311 Second Act Productions Limited 10494684 ITV Enterprises Limited 07714999 Sightseers Film Limited 04159210 ITV Holdings Limited 03991026 So Television Limited 14133299 ITV Grace Limited 11423826 The Addressable Platform Limited 04159213 ITV International Channels Limited 07155077 The Garden Productions Limited 14846610 ITV JCDM Limited 02351132 TwoFour Broadcast Limited SC473179 ITV LTVC (Scotland) Limited 08602993 TwoFour Group Holdings Limited 14863612 ITV Mandrake Limited 05493388 TwoFour Group Limited 13989147 ITV Maternal Limited 11109744 WP Anne Limited 00603893 ITV Network Limited 10796122 WP Bodyguard Limited 11723842 ITV Nightingale Limited 14360979 WP Delia Limited 00603471 ITV Pension Scheme Limited 12368643 WP Diplomat Limited 14461569 ITV POS Limited 13988864 WP Fifteen Limited
228 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 229 F I NOTES TO THE FINANCIAL STATEMENTS ITV PLC COMPANY FINANCIAL STATEMENTS NAN SECTION 5: OTHER NOTES CONTINUED C I AL Company number Company name Company number Company name Statement of Financial Position S T 01565625 ITV Properties (Developments) Limited 12116627 WP Karen Pirie Limited A 13087782 ITV Ralph and Katie Limited 14988579 WP Lockerbie Limited 2023 2022 T E 14460328 ITV RE Limited 11109287 WP LOD5 Limited As at 31 December Note £m £m M E 08554937 ITV Shetland Limited 12116457 WP LOD6 Limited Non-current assets N 11723826 ITV Spy Limited 13087865 WP Malpractice Limited T 02203983 ITV Studios Global Distribution Limited 12116461 WP Pembrokeshire Limited Investments in subsidiary undertakings iii 3,224 3,224 S 09498877 ITV TFG Holdings Limited 13087860 WP RM Limited Derivative financial instruments vi 2 2 11107934 ITV The Bay Limited 11109929 WP Save Me 2 Limited Other receivables 4 – 13087693 ITV The Reckoning Limited 12368475 WP Showtrial Limited Deferred tax asset 2 3 12368504 ITV TLC Limited 14653603 WP The Gathering Limited 09498177 ITV Top Class Limited 12368477 WP The Suspect Limited 3,232 3,229 14048049 ITV Venturer Limited 11109437 WP Vigil Limited Current assets ITV Properties (Jersey) Limited is exempt from audit under article 113 of the Companies Act (Jersey) Law 1991. Amounts owed by subsidiary undertakings due within one year iv 3,569 2,954 Amounts owed by subsidiary undertakings due after more than one year iv 97 96 Amounts owed by subsidiary undertakings iv 3,666 3,050 Derivative financial instruments vi 5 7 Other receivables 28 17 Cash and cash equivalents v 226 197 3,925 3,271 Borrowings – (279) Amounts owed to subsidiary undertakings iv (3,563) (2,681) Accruals (9) (8) Derivative financial instruments vi (5) (8) Current liabilities (3,577) (2,976) Net current assets 348 295 Borrowings v (750) (531) Derivative financial instruments vi (16) (10) Non-current liabilities (766) (541) Net assets 2,814 2,983 Share capital vii 406 403 Share premium viii 174 174 Other reserves viii 34 29 Retained earnings viii 2,200 2,377 Total shareholders’ funds 2,814 2,983 The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the parent company Income Statement. The Company’s profit for the year was £7 million (2022: profit of £800 million). The financial statements on pages 229 to 242 were approved by the Board of Directors on 7 March 2024 and signed on its behalf by Chris Kennedy Director
228 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 229 F I NOTES TO THE FINANCIAL STATEMENTS ITV PLC COMPANY FINANCIAL STATEMENTS NAN SECTION 5: OTHER NOTES CONTINUED C I AL Company number Company name Company number Company name Statement of Financial Position S T 01565625 ITV Properties (Developments) Limited 12116627 WP Karen Pirie Limited A 13087782 ITV Ralph and Katie Limited 14988579 WP Lockerbie Limited 2023 2022 T E 14460328 ITV RE Limited 11109287 WP LOD5 Limited As at 31 December Note £m £m M E 08554937 ITV Shetland Limited 12116457 WP LOD6 Limited Non-current assets N 11723826 ITV Spy Limited 13087865 WP Malpractice Limited T 02203983 ITV Studios Global Distribution Limited 12116461 WP Pembrokeshire Limited Investments in subsidiary undertakings iii 3,224 3,224 S 09498877 ITV TFG Holdings Limited 13087860 WP RM Limited Derivative financial instruments vi 2 2 11107934 ITV The Bay Limited 11109929 WP Save Me 2 Limited Other receivables 4 – 13087693 ITV The Reckoning Limited 12368475 WP Showtrial Limited Deferred tax asset 2 3 12368504 ITV TLC Limited 14653603 WP The Gathering Limited 09498177 ITV Top Class Limited 12368477 WP The Suspect Limited 3,232 3,229 14048049 ITV Venturer Limited 11109437 WP Vigil Limited Current assets ITV Properties (Jersey) Limited is exempt from audit under article 113 of the Companies Act (Jersey) Law 1991. Amounts owed by subsidiary undertakings due within one year iv 3,569 2,954 Amounts owed by subsidiary undertakings due after more than one year iv 97 96 Amounts owed by subsidiary undertakings iv 3,666 3,050 Derivative financial instruments vi 5 7 Other receivables 28 17 Cash and cash equivalents v 226 197 3,925 3,271 Borrowings – (279) Amounts owed to subsidiary undertakings iv (3,563) (2,681) Accruals (9) (8) Derivative financial instruments vi (5) (8) Current liabilities (3,577) (2,976) Net current assets 348 295 Borrowings v (750) (531) Derivative financial instruments vi (16) (10) Non-current liabilities (766) (541) Net assets 2,814 2,983 Share capital vii 406 403 Share premium viii 174 174 Other reserves viii 34 29 Retained earnings viii 2,200 2,377 Total shareholders’ funds 2,814 2,983 The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the parent company Income Statement. The Company’s profit for the year was £7 million (2022: profit of £800 million). The financial statements on pages 229 to 242 were approved by the Board of Directors on 7 March 2024 and signed on its behalf by Chris Kennedy Director
230 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 231 F I ITV PLC COMPANY FINANCIAL STATEMENTS CONTINUED NOTES TO THE ITV PLC COMPANY FINANCIAL STATEMENTS NAN C I AL Company Statement of Changes in Equity Note i In this This section sets out the notes to the ITV plc Company only financial S T section statements. Those statements form the basis of the dividend decisions made by A Share Share Other Retained Accounting T the Directors, as explained in detail in note viii below. The notes form part of the E capital premium reserves earnings Total policies M Note £m £m £m £m £m financial statements. E N Balance at 1 January 2023 vii/viii 403 174 29 2,377 2,983 T Total comprehensive income for the year S Profit for the year – – – 7 7 Basis of preparation Net gain on cash flow hedges and cost of hedging – – 5 – 5 The Company is a qualifying entity as it is a member of the ITV plc Group where ITV plc, the ultimate parent prepares publicly available consolidated financial statements. These financial statements were prepared in accordance with Total comprehensive income for the year – – 5 7 12 Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (‘FRS 101’). The Company is registered in England Transactions with owners recorded directly in equity and Wales. Contributions by and distributions to owners In preparing these financial statements, the Company applies the recognition, measurement and disclosure Issue of shares 3 – – – 3 requirements of international accounting standards in conformity with the requirements of the Companies Act 2006 Equity dividends – – – (201) (201) (‘Adopted IFRSs’), but makes amendments where necessary in order to comply with Companies Act 2006 and has Movements due to share-based compensation – – – 16 16 set out below where advantage of the FRS 101 disclosure exemptions has been taken. Tax on items taken directly to equity – – – 1 1 Total transactions with owners 3 – – (184) (181) Exemptions applied Balance at 31 December 2023 406 174 34 2,200 2,814 The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with FRS 101: Share Share Other Retained • Presentation of a Statement of Cash Flows and related notes capital premium reserves earnings Total • Disclosure in respect of capital management Note £m £m £m £m £m • Disclosure of related party transactions between wholly-owned subsidiaries and parents within a group Balance at 1 January 2022 403 174 31 1,760 2,368 • Disclosures required under IFRS 2 ‘Share Based Payments’ in respect of group settled share-based compensation Total comprehensive income for the year • Disclosures required by IFRS 7 ‘Financial Instruments: Disclosure’ Profit for the year – – – 800 800 • Certain disclosures required under IFRS 13 ‘Fair Value Measurement’ Net loss on cash flow hedges and cost of hedging – – (2) – (2) • Disclosure of information in relation to new standards not yet applied Total comprehensive income for the year – – (2) 800 798 The Company proposes to continue to apply the reduced disclosure framework of FRS 101 in its next financial statements. Transactions with owners recorded directly in equity Contributions by and distributions to owners The financial statements have been prepared on a going concern basis. Equity dividends – – – (201) (201) Changes in accounting policy Movements due to share-based compensation – – – 19 19 New accounting standards, interpretations and amendments that are effective from 1 January 2023 have not had Tax on items taken directly to equity – – – (1) (1) significant impact on the Company’s results or Statement of Financial Position. Total transactions with owners – – – (183) (183) Accounting standards effective in future periods Balance at 31 December 2022 vii/viii 403 174 29 2,377 2,983 The Directors have considered the impact on the Company of new and revised accounting standards, interpretations or amendments that are not yet effective and do not expect them to have a significant impact on the Company’s results and Statement of Financial Position. Accounting judgements and estimates The preparation of financial statements requires management to exercise judgement in applying the Company’s accounting policies. It also requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Expected credit losses on amounts due from subsidiary undertakings is considered a key source of estimation uncertainty. Subsidiaries Subsidiaries are entities that are directly or indirectly controlled by the Company. Control exists where the Company has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. The investment in the Company’s subsidiaries is recorded at cost. Foreign currency transactions Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Foreign currency monetary assets and liabilities at the balance sheet date are translated into sterling at the rate of exchange ruling at that date. Foreign exchange differences arising on translation are recognised in the profit and loss account. Non-monetary assets and liabilities measured at historical cost are translated into sterling at the rate of exchange on the date of the transaction. Borrowings Borrowings are recognised initially at fair value including directly attributable transaction costs, with subsequent measurement at amortised cost using the effective interest rate method. The difference between initial fair value and the redemption value is recorded in the profit and loss account over the period of the liability on an effective interest basis.
230 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 231 F I ITV PLC COMPANY FINANCIAL STATEMENTS CONTINUED NOTES TO THE ITV PLC COMPANY FINANCIAL STATEMENTS NAN C I AL Company Statement of Changes in Equity Note i In this This section sets out the notes to the ITV plc Company only financial S T section statements. Those statements form the basis of the dividend decisions made by A Share Share Other Retained Accounting T the Directors, as explained in detail in note viii below. The notes form part of the E capital premium reserves earnings Total policies M Note £m £m £m £m £m financial statements. E N Balance at 1 January 2023 vii/viii 403 174 29 2,377 2,983 T Total comprehensive income for the year S Profit for the year – – – 7 7 Basis of preparation Net gain on cash flow hedges and cost of hedging – – 5 – 5 The Company is a qualifying entity as it is a member of the ITV plc Group where ITV plc, the ultimate parent prepares publicly available consolidated financial statements. These financial statements were prepared in accordance with Total comprehensive income for the year – – 5 7 12 Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (‘FRS 101’). The Company is registered in England Transactions with owners recorded directly in equity and Wales. Contributions by and distributions to owners In preparing these financial statements, the Company applies the recognition, measurement and disclosure Issue of shares 3 – – – 3 requirements of international accounting standards in conformity with the requirements of the Companies Act 2006 Equity dividends – – – (201) (201) (‘Adopted IFRSs’), but makes amendments where necessary in order to comply with Companies Act 2006 and has Movements due to share-based compensation – – – 16 16 set out below where advantage of the FRS 101 disclosure exemptions has been taken. Tax on items taken directly to equity – – – 1 1 Total transactions with owners 3 – – (184) (181) Exemptions applied Balance at 31 December 2023 406 174 34 2,200 2,814 The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with FRS 101: Share Share Other Retained • Presentation of a Statement of Cash Flows and related notes capital premium reserves earnings Total • Disclosure in respect of capital management Note £m £m £m £m £m • Disclosure of related party transactions between wholly-owned subsidiaries and parents within a group Balance at 1 January 2022 403 174 31 1,760 2,368 • Disclosures required under IFRS 2 ‘Share Based Payments’ in respect of group settled share-based compensation Total comprehensive income for the year • Disclosures required by IFRS 7 ‘Financial Instruments: Disclosure’ Profit for the year – – – 800 800 • Certain disclosures required under IFRS 13 ‘Fair Value Measurement’ Net loss on cash flow hedges and cost of hedging – – (2) – (2) • Disclosure of information in relation to new standards not yet applied Total comprehensive income for the year – – (2) 800 798 The Company proposes to continue to apply the reduced disclosure framework of FRS 101 in its next financial statements. Transactions with owners recorded directly in equity Contributions by and distributions to owners The financial statements have been prepared on a going concern basis. Equity dividends – – – (201) (201) Changes in accounting policy Movements due to share-based compensation – – – 19 19 New accounting standards, interpretations and amendments that are effective from 1 January 2023 have not had Tax on items taken directly to equity – – – (1) (1) significant impact on the Company’s results or Statement of Financial Position. Total transactions with owners – – – (183) (183) Accounting standards effective in future periods Balance at 31 December 2022 vii/viii 403 174 29 2,377 2,983 The Directors have considered the impact on the Company of new and revised accounting standards, interpretations or amendments that are not yet effective and do not expect them to have a significant impact on the Company’s results and Statement of Financial Position. Accounting judgements and estimates The preparation of financial statements requires management to exercise judgement in applying the Company’s accounting policies. It also requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Expected credit losses on amounts due from subsidiary undertakings is considered a key source of estimation uncertainty. Subsidiaries Subsidiaries are entities that are directly or indirectly controlled by the Company. Control exists where the Company has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. The investment in the Company’s subsidiaries is recorded at cost. Foreign currency transactions Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Foreign currency monetary assets and liabilities at the balance sheet date are translated into sterling at the rate of exchange ruling at that date. Foreign exchange differences arising on translation are recognised in the profit and loss account. Non-monetary assets and liabilities measured at historical cost are translated into sterling at the rate of exchange on the date of the transaction. Borrowings Borrowings are recognised initially at fair value including directly attributable transaction costs, with subsequent measurement at amortised cost using the effective interest rate method. The difference between initial fair value and the redemption value is recorded in the profit and loss account over the period of the liability on an effective interest basis.
232 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 233 F I NOTES TO THE ITV PLC COMPANY FINANCIAL STATEMENTS CONTINUED NAN C I AL Derivatives and other financial instruments Exercises of share options granted to employees can be satisfied by market purchase or issue of new shares. No new S T nstruments to hedge its exposure to fluctuations in shares may be issued to satisfy exercises under the terms of the DSA. A The Company uses a limited number of derivative financial i T E interest and other foreign exchange rates. The Company does not hold or issue derivative instruments for During the year, all exercises were satisfied by using shares held in the ITV Employees’ Benefit Trust. The Trust is M speculative purposes. E accounted for as a separate entity and therefore is only accounted for in the consolidated ITV financial statements. N T Derivative financial instruments are initially recognised at fair value and are subsequently remeasured at fair value S with the movement recorded in the profit and loss account within net financing costs, except where derivatives Dividends to shareholders qualify for cash flow hedge accounting. In this case, the effective portion of cash flow hedge is recognised in other Dividends payable to shareholders are recognised through equity on the earlier of their approval by the Company’s reserves within equity. The cumulative gain or loss is later reclassified to the profit and loss account in the same shareholders or their payment. Dividends are distributed based on the realised distributable reserves (within period as the relevant hedged transaction is realised. Derivatives with positive fair values are recorded as assets retained earnings) of ITV plc (Company) and not based on the Group’s retained earnings. and negative fair values as liabilities. The fair value of foreign currency forward contracts is determined by using the difference between the contract Note ii Employees ctors) were employees of the Company during the year, exchange rate and the quoted forward exchange rate at the balance sheet date. Employees and Two (2022: two) Directors of ITV plc (i.e. the Executive Dire share-based both of whom remain employed at the year end. The costs relating to these Directors are disclosed in the The fair value of interest rate swaps is the estimated amount that the Company would receive or pay to terminate compensation Remuneration Report. the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of swap counterparties. Share-based compensation Third-party valuations are used to fair value the Company’s derivatives. The valuation techniques use inputs such as The weighted average share price of share options exercised during the year was 49.3 pence (2022: 50.6 pence) interest rate yield curves and currency prices/yields, volatilities of underlying instruments and correlations between (excluding nil priced share options). The options outstanding at the year end have an exercise price in the range of nil inputs. For financial assets and liabilities classified at fair value through profit or loss, the fair value change and to 135.20 pence (2022: nil to 130.61 pence) and a weighted average contractual life of one year (2022: two years) for interest income/expense are not separated. all the schemes in place for the Group. Current tax Note iii The carrying value of the Company’s investments in subsidiary undertakings at 31 December 2023 was £3,224 million Investments (2022: £3,224 million). Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any adjustment in in subsidiary respect of previous years. The carrying value of the Company’s investments in subsidiary undertakings is assessed for impairment on an annual undertakings basis. Determining whether the carrying amount has any indication of impairment requires judgement. In testing The Company recognises liabilities for anticipated tax issues based on estimates of the additional taxes that are for impairment, estimates are used in deriving cash flows and the discount rates. The estimation process is complex likely to become due, which require judgement. Amounts are accrued based on management’s interpretation of due to the inherent risks and uncertainties associated with long-term forecasting. The outcome of the value in use specific tax law and the likelihood of settlement. Where the final tax outcome of these matters is different from the calculation including borrowings supports the carrying value of the investments in subsidiary undertakings. amounts that were initially recorded, such differences will impact the current tax and deferred tax provisions in the period in which such determination is made. Due to the significant headroom, there is no reasonably possible scenario that would result in a material adjustment to the amounts reported in the financial statements. Deferred tax The tax charge for the year is recognised in the Income Statement or directly in equity according to the accounting The Company’s review resulted in no impairment for 2023 (2022: no impairment). treatment of the related transaction. The listing of subsidiary undertakings and investments is listed on page 238 to 242. Deferred tax arises due to certain temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and those for taxation purposes. The amount of deferred tax provided is based on the Note iv The Company operates an intra-group cash pool policy with certain 100% owned UK subsidiaries. The pool applies expected manner of realisation or settlement of the carrying amount of assets and liabilities. A deferred tax asset is Amounts to bank accounts where there is an unconditional right of set off and involves the daily closing cash position for recognised only to the extent that it is probable that sufficient taxable profit will be available to utilise the temporary owed (to)/from participating subsidiaries whether positive or negative, being cleared to £nil via daily bank transfers to/from ITV plc. difference. Recognition of deferred tax assets therefore involves judgement regarding timing and level of future subsidiary These daily transactions create a corresponding intercompany creditor or debtor, which can result in significant taxable income. movements in amounts owed to and from subsidiary undertakings in the Company balance sheet. Interest is payable undertakings on intra-group cash pool balances at 0.5% above base rate per annum and the balances are repayable on demand. Share-based compensation Other loans to subsidiary undertakings are repayable according to contractual terms. The classification of balances s employee remuneration packages, and therefore operates as due after more than one year is based on the intention of when the balances are expected to be settled rather The Company utilises share award schemes as part of it than the contractual terms. a number of share-based compensation schemes, namely the Deferred Share Award (DSA), Executive Share Plan (ESP) Performance Share Plan (PSP), Long Term Incentive Plan (LTIP) and Save As You Earn (SAYE) schemes. The credit risk management practices of the Company include internal review and reporting of the historical credit losses A transaction will be classed as share-based compensation where the Company receives services from employees and forward-looking data. The Company applies the IFRS 9 simplified approach in measuring expected credit losses, and pays for these in shares or similar equity instruments. If the Company incurs a liability based on the price or value which use a lifetime expected credit loss allowance for amounts due from subsidiary undertakings, and other receivables. of the shares, this will also fall under a share-based transaction. The Company recognises the retained earnings To measure expected credit losses, amounts due from subsidiary undertakings, and other receivables have been impact of the share-based compensation for the Group as awards are settled in ITV plc shares. The cost of providing grouped by shared credit risk characteristics. In addition to the expected credit losses, the Company may make those awards is recognised as a cost of investment to the subsidiaries that receive the service from employees. additional provisions for the particular receivables if the deterioration of financial position is observed. The fair value of the equity instrument granted is measured at grant date and spread over the vesting period via a During the year, the Company provided for £22 million (2022: £192 million) of doubtful debts for amounts owed by its charge to the Income Statement with a corresponding increase in equity. The fair value of the share options and subsidiary undertakings. £2 million (2022: £11 million) was written back to the Income Statement for provisions of awards is measured using either market price at grant date or, for the SAYE scheme, a Black–Scholes model, taking doubtful debts no longer required. into account the terms and conditions of the individual scheme. Vesting conditions are limited to service conditions and performance conditions. For performance-based schemes, The recoverability of the amounts owed by subsidiary undertakings is assessed on an annual basis or more the relevant performance measures are projected to the end of the performance period in order to determine the frequently when an indication of impairment exists. Determining whether there is an indication of impairment requires number of options expected to vest. The estimate is then used to determine the option fair value, discounted to judgement as the assessment is based on either net assets of the undertaking or forecast future performance. present value. The Company revises its estimates of the number of options that are expected to vest, including an estimate of forfeitures at each reporting date. The impact of the revision to original estimates, if any, is recognised in the Income Statement, with a corresponding adjustment to equity.
232 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 233 F I NOTES TO THE ITV PLC COMPANY FINANCIAL STATEMENTS CONTINUED NAN C I AL Derivatives and other financial instruments Exercises of share options granted to employees can be satisfied by market purchase or issue of new shares. No new S T nstruments to hedge its exposure to fluctuations in shares may be issued to satisfy exercises under the terms of the DSA. A The Company uses a limited number of derivative financial i T E interest and other foreign exchange rates. The Company does not hold or issue derivative instruments for During the year, all exercises were satisfied by using shares held in the ITV Employees’ Benefit Trust. The Trust is M speculative purposes. E accounted for as a separate entity and therefore is only accounted for in the consolidated ITV financial statements. N T Derivative financial instruments are initially recognised at fair value and are subsequently remeasured at fair value S with the movement recorded in the profit and loss account within net financing costs, except where derivatives Dividends to shareholders qualify for cash flow hedge accounting. In this case, the effective portion of cash flow hedge is recognised in other Dividends payable to shareholders are recognised through equity on the earlier of their approval by the Company’s reserves within equity. The cumulative gain or loss is later reclassified to the profit and loss account in the same shareholders or their payment. Dividends are distributed based on the realised distributable reserves (within period as the relevant hedged transaction is realised. Derivatives with positive fair values are recorded as assets retained earnings) of ITV plc (Company) and not based on the Group’s retained earnings. and negative fair values as liabilities. The fair value of foreign currency forward contracts is determined by using the difference between the contract Note ii Employees ctors) were employees of the Company during the year, exchange rate and the quoted forward exchange rate at the balance sheet date. Employees and Two (2022: two) Directors of ITV plc (i.e. the Executive Dire share-based both of whom remain employed at the year end. The costs relating to these Directors are disclosed in the The fair value of interest rate swaps is the estimated amount that the Company would receive or pay to terminate compensation Remuneration Report. the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of swap counterparties. Share-based compensation Third-party valuations are used to fair value the Company’s derivatives. The valuation techniques use inputs such as The weighted average share price of share options exercised during the year was 49.3 pence (2022: 50.6 pence) interest rate yield curves and currency prices/yields, volatilities of underlying instruments and correlations between (excluding nil priced share options). The options outstanding at the year end have an exercise price in the range of nil inputs. For financial assets and liabilities classified at fair value through profit or loss, the fair value change and to 135.20 pence (2022: nil to 130.61 pence) and a weighted average contractual life of one year (2022: two years) for interest income/expense are not separated. all the schemes in place for the Group. Current tax Note iii The carrying value of the Company’s investments in subsidiary undertakings at 31 December 2023 was £3,224 million Investments (2022: £3,224 million). Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any adjustment in in subsidiary respect of previous years. The carrying value of the Company’s investments in subsidiary undertakings is assessed for impairment on an annual undertakings basis. Determining whether the carrying amount has any indication of impairment requires judgement. In testing The Company recognises liabilities for anticipated tax issues based on estimates of the additional taxes that are for impairment, estimates are used in deriving cash flows and the discount rates. The estimation process is complex likely to become due, which require judgement. Amounts are accrued based on management’s interpretation of due to the inherent risks and uncertainties associated with long-term forecasting. The outcome of the value in use specific tax law and the likelihood of settlement. Where the final tax outcome of these matters is different from the calculation including borrowings supports the carrying value of the investments in subsidiary undertakings. amounts that were initially recorded, such differences will impact the current tax and deferred tax provisions in the period in which such determination is made. Due to the significant headroom, there is no reasonably possible scenario that would result in a material adjustment to the amounts reported in the financial statements. Deferred tax The tax charge for the year is recognised in the Income Statement or directly in equity according to the accounting The Company’s review resulted in no impairment for 2023 (2022: no impairment). treatment of the related transaction. The listing of subsidiary undertakings and investments is listed on page 238 to 242. Deferred tax arises due to certain temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and those for taxation purposes. The amount of deferred tax provided is based on the Note iv The Company operates an intra-group cash pool policy with certain 100% owned UK subsidiaries. The pool applies expected manner of realisation or settlement of the carrying amount of assets and liabilities. A deferred tax asset is Amounts to bank accounts where there is an unconditional right of set off and involves the daily closing cash position for recognised only to the extent that it is probable that sufficient taxable profit will be available to utilise the temporary owed (to)/from participating subsidiaries whether positive or negative, being cleared to £nil via daily bank transfers to/from ITV plc. difference. Recognition of deferred tax assets therefore involves judgement regarding timing and level of future subsidiary These daily transactions create a corresponding intercompany creditor or debtor, which can result in significant taxable income. movements in amounts owed to and from subsidiary undertakings in the Company balance sheet. Interest is payable undertakings on intra-group cash pool balances at 0.5% above base rate per annum and the balances are repayable on demand. Share-based compensation Other loans to subsidiary undertakings are repayable according to contractual terms. The classification of balances s employee remuneration packages, and therefore operates as due after more than one year is based on the intention of when the balances are expected to be settled rather The Company utilises share award schemes as part of it than the contractual terms. a number of share-based compensation schemes, namely the Deferred Share Award (DSA), Executive Share Plan (ESP) Performance Share Plan (PSP), Long Term Incentive Plan (LTIP) and Save As You Earn (SAYE) schemes. The credit risk management practices of the Company include internal review and reporting of the historical credit losses A transaction will be classed as share-based compensation where the Company receives services from employees and forward-looking data. The Company applies the IFRS 9 simplified approach in measuring expected credit losses, and pays for these in shares or similar equity instruments. If the Company incurs a liability based on the price or value which use a lifetime expected credit loss allowance for amounts due from subsidiary undertakings, and other receivables. of the shares, this will also fall under a share-based transaction. The Company recognises the retained earnings To measure expected credit losses, amounts due from subsidiary undertakings, and other receivables have been impact of the share-based compensation for the Group as awards are settled in ITV plc shares. The cost of providing grouped by shared credit risk characteristics. In addition to the expected credit losses, the Company may make those awards is recognised as a cost of investment to the subsidiaries that receive the service from employees. additional provisions for the particular receivables if the deterioration of financial position is observed. The fair value of the equity instrument granted is measured at grant date and spread over the vesting period via a During the year, the Company provided for £22 million (2022: £192 million) of doubtful debts for amounts owed by its charge to the Income Statement with a corresponding increase in equity. The fair value of the share options and subsidiary undertakings. £2 million (2022: £11 million) was written back to the Income Statement for provisions of awards is measured using either market price at grant date or, for the SAYE scheme, a Black–Scholes model, taking doubtful debts no longer required. into account the terms and conditions of the individual scheme. Vesting conditions are limited to service conditions and performance conditions. For performance-based schemes, The recoverability of the amounts owed by subsidiary undertakings is assessed on an annual basis or more the relevant performance measures are projected to the end of the performance period in order to determine the frequently when an indication of impairment exists. Determining whether there is an indication of impairment requires number of options expected to vest. The estimate is then used to determine the option fair value, discounted to judgement as the assessment is based on either net assets of the undertaking or forecast future performance. present value. The Company revises its estimates of the number of options that are expected to vest, including an estimate of forfeitures at each reporting date. The impact of the revision to original estimates, if any, is recognised in the Income Statement, with a corresponding adjustment to equity.
234 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 235 F I NOTES TO THE ITV PLC COMPANY FINANCIAL STATEMENTS CONTINUED NAN C I AL The Directors manage the Group’s capital structure as disclosed in section 4 to ch which allows the recognition of the value of S Under IFRS 9, the Company has adopted the ‘cost of hedging’ approa Note v Keeping T it simple the consolidated financial statements. Borrowings, cash and derivative financial the currency basis at inception of the hedge to be recorded on the Statement of Financial Position and amortised A Net debt T instruments are mainly held by ITV plc and disclosed in these Company through net financing costs in the Income Statement over the life of the bond. Any mark-to-market change in fair E M financial statements. value of the currency basis is recognised in ‘cost of hedging’ in the Statement of Comprehensive Income. E N T Undiscounted financial liabilities S Cash and cash equivalents The Company is required to disclose the expected timings of cash outflows for each of its derivative financial liabilities. At 31 December 2023, the Company has a cash position of £226 million (2022: £197 million). The amounts disclosed in the table are the contractual undiscounted cash flows (including interest), so will not always reconcile with the amounts disclosed on the Statement of Financial Position. Loans and facilities due within one year Total In January 2022, the Company entered into a new syndicated £500 million Revolving Credit Facility (RCF) to meet Carrying contractual Less than Between Between short-term funding requirements which was undrawn at 31 December 2023. The original terms of the RCF ran until value cash flows 1 year 1 and 2 years 2 and 5 years Over 5 years January 2027; however, the Group took the opportunity to request an extension for one year on the first and second At 31 December 2023* £m £m £m £m £m £m anniversary of the facility. As a result, £83 million of the RCF is committed until January 2028 and £417 million is Non-current and current committed until January 2029. The RCF was undrawn as at 31 December 2023 (2022: drawn-down by £50 million). Cross-currency swaps – cash flow hedges The €259 million Eurobond was repaid in December 2023. The sterling-equivalent repayment value, totalling £233 million, Inflow – 542 7 7 528 – had been hedged using FX forward rate agreements. Outflow (15) (580) (16) (16) (548) – Loans and loan notes due after one year Foreign exchange forward contracts The Company has a €600 million Eurobond in issue at a fixed coupon of 1.375%, which matures in September 2026 and swaps – fair value through profit and has been swapped back to sterling (£533 million) using a number of cross-currency interest rate swaps. or loss The resulting fixed rate payable in sterling is c.2.9%. Inflow 7 614 514 100 – – Outflow (6) (614) (514) (100) – – A new £230 million term loan was taken out in the year, and was fully drawn-down in December 2023 in order to (14) (38) (9) (9) (20) – repay the €259 million Eurobond. The term loan matures in July 2027. Interest on the loan is determined as an aggregate of compounded SONIA plus a margin. See section 4.1 of the Group Notes for further details of borrowings and available facilities. Total Carrying contractual Less than Between Between value cash flows 1 year 1 and 2 years 2 and 5 years Over 5 years Note vi What is the value of our derivative financial instruments? At 31 December 2022* £m £m £m £m £m £m Managing Non-current and current Assets Liabilities Foreign exchange forward contracts market risks: 2023 2023 and swaps – cash flow hedges derivative £m £m financial Current Inflow – 233 233 – – – instruments Foreign exchange forward contracts and swaps – fair value through profit or loss 5 (5) Outflow (1) (236) (236) – – – Non-current Cross-currency swaps – cash flow Cross-currency interest swaps – cash flow hedges – (15) hedges Foreign exchange forward contracts and swaps – fair value through profit or loss 2 (1) Inflow – 560 7 7 546 – 7 (21) Outflow (8) (596) (16) (16) (564) – Foreign exchange forward contracts and swaps – fair value through profit Assets Liabilities 2022 2022 or loss £m £m Inflow 9 570 403 136 31 – Current Outflow (9) (570) (403) (136) (31) – Foreign exchange forward contracts and swaps – fair value through profit or loss 7 (7) (9) (39) (12) (9) (18) – Foreign exchange forward contracts and swaps – cash flow hedges – (1) Non-current * The Company is jointly and severally liable for VAT at 31 December 2023 of £43 million (31 December 2022: £35 million) Cross-currency interest swaps – cash flow hedges – (8) Foreign exchange forward contracts and swaps – fair value through profit or loss 2 (2) Allotted, issued Allotted, issued 9 (18) Note vii and fully paid and fully paid Share capital 2023 2022 The Company employs cross-currency interest rate swaps to exchange the principal and interest coupons in a debt £m £m instrument from one currency to another. Allotted, issued and fully paid ordinary shares of 10 pence each 406 403 Currency risk Total 406 403 The Company’s foreign exchange policy is to use forward foreign exchange contracts and cross-currency interest The Company’s ordinary shares give shareholders equal rights to vote, receive dividends and to the repayment of capital. rate swaps both to manage foreign currency cash flow timing differences and to hedge foreign currency denominated monetary items. The Company issued 27 million ordinary shares in the year to the ITV Employees’ Benefit Trust (EBT) to satisfy the share-based compensation awards. See note 4.8 for further details. Cash flow hedges In order to fix the sterling cash outflows associated with the commitments and interest payments – which are mainly denominated in euros – the Company has taken out forward foreign exchange contracts and cross-currency interest rate swaps for the same foreign currency amount and maturity date as the expected foreign currency outflow. The amount recognised in other comprehensive income during the year all relates to the effective portion of the revaluation loss associated with these contracts. A cumulative loss of £26 million (2022: £37 million of cumulative gain) was recycled to the Consolidated Income statement to off-set movements on the hedged item, a residual £7 million loss (2022: £3 million loss) remained on the income statement which was not offset.
234 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 235 F I NOTES TO THE ITV PLC COMPANY FINANCIAL STATEMENTS CONTINUED NAN C I AL The Directors manage the Group’s capital structure as disclosed in section 4 to ch which allows the recognition of the value of S Under IFRS 9, the Company has adopted the ‘cost of hedging’ approa Note v Keeping T it simple the consolidated financial statements. Borrowings, cash and derivative financial the currency basis at inception of the hedge to be recorded on the Statement of Financial Position and amortised A Net debt T instruments are mainly held by ITV plc and disclosed in these Company through net financing costs in the Income Statement over the life of the bond. Any mark-to-market change in fair E M financial statements. value of the currency basis is recognised in ‘cost of hedging’ in the Statement of Comprehensive Income. E N T Undiscounted financial liabilities S Cash and cash equivalents The Company is required to disclose the expected timings of cash outflows for each of its derivative financial liabilities. At 31 December 2023, the Company has a cash position of £226 million (2022: £197 million). The amounts disclosed in the table are the contractual undiscounted cash flows (including interest), so will not always reconcile with the amounts disclosed on the Statement of Financial Position. Loans and facilities due within one year Total In January 2022, the Company entered into a new syndicated £500 million Revolving Credit Facility (RCF) to meet Carrying contractual Less than Between Between short-term funding requirements which was undrawn at 31 December 2023. The original terms of the RCF ran until value cash flows 1 year 1 and 2 years 2 and 5 years Over 5 years January 2027; however, the Group took the opportunity to request an extension for one year on the first and second At 31 December 2023* £m £m £m £m £m £m anniversary of the facility. As a result, £83 million of the RCF is committed until January 2028 and £417 million is Non-current and current committed until January 2029. The RCF was undrawn as at 31 December 2023 (2022: drawn-down by £50 million). Cross-currency swaps – cash flow hedges The €259 million Eurobond was repaid in December 2023. The sterling-equivalent repayment value, totalling £233 million, Inflow – 542 7 7 528 – had been hedged using FX forward rate agreements. Outflow (15) (580) (16) (16) (548) – Loans and loan notes due after one year Foreign exchange forward contracts The Company has a €600 million Eurobond in issue at a fixed coupon of 1.375%, which matures in September 2026 and swaps – fair value through profit and has been swapped back to sterling (£533 million) using a number of cross-currency interest rate swaps. or loss The resulting fixed rate payable in sterling is c.2.9%. Inflow 7 614 514 100 – – Outflow (6) (614) (514) (100) – – A new £230 million term loan was taken out in the year, and was fully drawn-down in December 2023 in order to (14) (38) (9) (9) (20) – repay the €259 million Eurobond. The term loan matures in July 2027. Interest on the loan is determined as an aggregate of compounded SONIA plus a margin. See section 4.1 of the Group Notes for further details of borrowings and available facilities. Total Carrying contractual Less than Between Between value cash flows 1 year 1 and 2 years 2 and 5 years Over 5 years Note vi What is the value of our derivative financial instruments? At 31 December 2022* £m £m £m £m £m £m Managing Non-current and current Assets Liabilities Foreign exchange forward contracts market risks: 2023 2023 and swaps – cash flow hedges derivative £m £m financial Current Inflow – 233 233 – – – instruments Foreign exchange forward contracts and swaps – fair value through profit or loss 5 (5) Outflow (1) (236) (236) – – – Non-current Cross-currency swaps – cash flow Cross-currency interest swaps – cash flow hedges – (15) hedges Foreign exchange forward contracts and swaps – fair value through profit or loss 2 (1) Inflow – 560 7 7 546 – 7 (21) Outflow (8) (596) (16) (16) (564) – Foreign exchange forward contracts and swaps – fair value through profit Assets Liabilities 2022 2022 or loss £m £m Inflow 9 570 403 136 31 – Current Outflow (9) (570) (403) (136) (31) – Foreign exchange forward contracts and swaps – fair value through profit or loss 7 (7) (9) (39) (12) (9) (18) – Foreign exchange forward contracts and swaps – cash flow hedges – (1) Non-current * The Company is jointly and severally liable for VAT at 31 December 2023 of £43 million (31 December 2022: £35 million) Cross-currency interest swaps – cash flow hedges – (8) Foreign exchange forward contracts and swaps – fair value through profit or loss 2 (2) Allotted, issued Allotted, issued 9 (18) Note vii and fully paid and fully paid Share capital 2023 2022 The Company employs cross-currency interest rate swaps to exchange the principal and interest coupons in a debt £m £m instrument from one currency to another. Allotted, issued and fully paid ordinary shares of 10 pence each 406 403 Currency risk Total 406 403 The Company’s foreign exchange policy is to use forward foreign exchange contracts and cross-currency interest The Company’s ordinary shares give shareholders equal rights to vote, receive dividends and to the repayment of capital. rate swaps both to manage foreign currency cash flow timing differences and to hedge foreign currency denominated monetary items. The Company issued 27 million ordinary shares in the year to the ITV Employees’ Benefit Trust (EBT) to satisfy the share-based compensation awards. See note 4.8 for further details. Cash flow hedges In order to fix the sterling cash outflows associated with the commitments and interest payments – which are mainly denominated in euros – the Company has taken out forward foreign exchange contracts and cross-currency interest rate swaps for the same foreign currency amount and maturity date as the expected foreign currency outflow. The amount recognised in other comprehensive income during the year all relates to the effective portion of the revaluation loss associated with these contracts. A cumulative loss of £26 million (2022: £37 million of cumulative gain) was recycled to the Consolidated Income statement to off-set movements on the hedged item, a residual £7 million loss (2022: £3 million loss) remained on the income statement which was not offset.
236 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 237 F I NOTES TO THE ITV PLC COMPANY FINANCIAL STATEMENTS CONTINUED NAN C I AL Note viii Keeping ITV plc is a non-trading investment holding company and derives its profits from Note x There are contingent liabilities in respect of certain litigation and guarantees, broadcasting issues, and in respect S T dividends paid by subsidiary companies. of warranties given in connection with certain disposals of businesses. None of these items is expected to have a A Equity and it simple Capital and T material effect on the Company’s results or financial position. E dividends The Directors consider the Company’s capital structure and dividend policy at other M E least twice a year ahead of announcing results and do so in the context of its commitments N The Company enters into guarantee contracts to guarantee the performance and/or financial obligations of other T ability to continue as a going concern, to execute the strategy and to invest in companies within the Group. In this respect, the Company treats these guarantee contracts as contingent liabilities S opportunities to grow the business and enhance shareholder value. until it becomes probable that the Company will be required to make a payment under the relevant guarantee. The dividend policy is influenced by a number of the principal risks as identified The Company has a £300 million bilateral loan facility which matures on 30 June 2026. Utilisation requests are on pages 57 to 64 that could have a negative impact on the performance subject to the lender’s ability to source ITV Credit Default Swaps (CDS) in the market at the time the utilisation of the Company. request is made. The facility remains free of financial covenants. At 31 December 2023, the facility was undrawn. In determining the level of dividend in any year, the Directors follow the dividend During 2023, the Group secured £100 million of committed funding via a new bilateral RCF, which matures in policy and also consider a number of other factors that influence the proposed December 2028. The terms and conditions, including financial covenants but not emissions targets, are aligned dividend and dividend policy, including: to the £500 million RCF facility. The facility is currently undrawn. • The level of retained distributable reserves in ITV plc the Company • Availability of cash resources (as disclosed in note 4.1 to the consolidated There are no capital commitments at 31 December 2023 (2022: none). financial statements) and The related parties identified by the Directors include amounts owed to and from • Future cash commitments and investment plans, to deliver the Company’s Note xi Keeping subsidiary undertakings that are not wholly owned within the Group as well as long-term strategic plan Related party it simple • Consideration of the factors underlying the Directors’ viability assessment and transactions transactions with key management. The Company is a holding company with no • The future availability of funds required to meet longer-term obligations commercial activity. including pension commitments. To enable the users of the financial statements to form a view about the effects of related party relationships on the Company, we disclose the Company’s Equity transactions with those during the year. The retained earnings reserve includes profit after tax for the year of £7 million (2022: £800 million), which includes Transactions with subsidiary undertakings that are not wholly owned dividends of £nil from subsidiaries in 2023 (2022: £980 million). The amounts owed by and to these related parties at the year end were: During the year, the Company provided for £22 million (2022: £192 million) of doubtful debts for amounts owed by its subsidiary undertakings. £2 million (2022: £11 million) was written back to the Income Statement for provisions of 2023 2022 doubtful debts no longer required. £m £m Amounts owed by subsidiary undertakings that are not wholly owned 42 55 The recoverability of the amounts owed by subsidiary undertakings is assessed on an annual basis or more Amounts owed to subsidiary undertakings that are not wholly owned (24) (4) frequently when circumstances indicate that the carrying value may be impaired. Determining whether there is an indication of impairment requires judgement as the assessment is based on either net assets of the undertaking or Amounts owed by subsidiary undertakings that are not wholly owned relate mainly to funding provided to production forecast future performance. companies in our Studios division. The share premium of £174 million remains unchanged in the year. Other reserves of £34 million (2022: £29 million) Amounts owed to subsidiary undertakings that are not wholly owned, relate mainly to amounts owed to 3sixtymedia comprises Merger reserves of £36 million (2022: £36 million) which relate to share buybacks in prior years and Translation Limited and World Productions Limited. reserves with net losses of £2 million (net losses of £7 million) which relate to cash flow hedges and cost of hedging. Transactions with key management personnel Dividends Key management consists of ITV plc Executive Directors. The Board recognises the importance of the ordinary dividend to ITV shareholders. Reflecting its confidence in the Key management personnel compensation, on an accounting basis, is as follows: business and its strategy, as well as the continued strong cash generation, the Board proposes a final dividend of 3.3p (2022:3.3p), giving a full year dividend of 5.0p (2022: 5.0p) per share. In 2023, £201 million of dividends were paid 2023 2022 (2022: £201 million), representing a final 2022 dividend of 3.3p per share and an interim 2023 dividend of 1.7p per share. £m £m A contingent liability is a liability that is not sufficiently certain to qualify for Short-term employee benefits 3 3 Note ix Keeping Share-based compensation 2 3 recognition as a provision where uncertainty may exist regarding the outcome of Contingent it simple 5 6 liabilities future events. Total emoluments and gains on share options received by key management personnel in the year were: As previously reported, on 12 July 2022, the UK Competition and Markets Authority (CMA) opened an investigation 2023 2022 into certain conduct of ITV and other named companies in the sector relating to the production and broadcasting of £m £m sports content in the United Kingdom. The investigation is at an early stage and the CMA has confirmed it is currently Emoluments 2 3 undertaking further investigation until at least March 2024, subsequent to which ITV anticipates it will receive Gains on exercise of share options 1 – additional detail regarding any future steps. 3 3 On 11 October 2023, the CMA opened an investigation into certain conduct of ITV and other named companies in the sector relating to the production and broadcasting of television content in the UK, excluding sports content. The investigation remains at an early stage and it is not currently possible to reliably quantify any liability that might result from the investigation. ITV is committed to complying with competition law, and is cooperating with the CMA's enquiries in relation to both investigations. There are contingent liabilities in respect of certain litigation and guarantees, broadcasting issues, and in respect of warranties given in connection with certain disposals of businesses. None of these items are expected to have a material effect on the Group’s results or financial position. Under a Group registration, the Company is jointly and severally liable for VAT at 31 December 2023 of £43 million (31 December 2022: £35 million). The Company has guaranteed certain performance and financial obligations of subsidiary undertakings.
236 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 237 F I NOTES TO THE ITV PLC COMPANY FINANCIAL STATEMENTS CONTINUED NAN C I AL Note viii Keeping ITV plc is a non-trading investment holding company and derives its profits from Note x There are contingent liabilities in respect of certain litigation and guarantees, broadcasting issues, and in respect S T dividends paid by subsidiary companies. of warranties given in connection with certain disposals of businesses. None of these items is expected to have a A Equity and it simple Capital and T material effect on the Company’s results or financial position. E dividends The Directors consider the Company’s capital structure and dividend policy at other M E least twice a year ahead of announcing results and do so in the context of its commitments N The Company enters into guarantee contracts to guarantee the performance and/or financial obligations of other T ability to continue as a going concern, to execute the strategy and to invest in companies within the Group. In this respect, the Company treats these guarantee contracts as contingent liabilities S opportunities to grow the business and enhance shareholder value. until it becomes probable that the Company will be required to make a payment under the relevant guarantee. The dividend policy is influenced by a number of the principal risks as identified The Company has a £300 million bilateral loan facility which matures on 30 June 2026. Utilisation requests are on pages 57 to 64 that could have a negative impact on the performance subject to the lender’s ability to source ITV Credit Default Swaps (CDS) in the market at the time the utilisation of the Company. request is made. The facility remains free of financial covenants. At 31 December 2023, the facility was undrawn. In determining the level of dividend in any year, the Directors follow the dividend During 2023, the Group secured £100 million of committed funding via a new bilateral RCF, which matures in policy and also consider a number of other factors that influence the proposed December 2028. The terms and conditions, including financial covenants but not emissions targets, are aligned dividend and dividend policy, including: to the £500 million RCF facility. The facility is currently undrawn. • The level of retained distributable reserves in ITV plc the Company • Availability of cash resources (as disclosed in note 4.1 to the consolidated There are no capital commitments at 31 December 2023 (2022: none). financial statements) and The related parties identified by the Directors include amounts owed to and from • Future cash commitments and investment plans, to deliver the Company’s Note xi Keeping subsidiary undertakings that are not wholly owned within the Group as well as long-term strategic plan Related party it simple • Consideration of the factors underlying the Directors’ viability assessment and transactions transactions with key management. The Company is a holding company with no • The future availability of funds required to meet longer-term obligations commercial activity. including pension commitments. To enable the users of the financial statements to form a view about the effects of related party relationships on the Company, we disclose the Company’s Equity transactions with those during the year. The retained earnings reserve includes profit after tax for the year of £7 million (2022: £800 million), which includes Transactions with subsidiary undertakings that are not wholly owned dividends of £nil from subsidiaries in 2023 (2022: £980 million). The amounts owed by and to these related parties at the year end were: During the year, the Company provided for £22 million (2022: £192 million) of doubtful debts for amounts owed by its subsidiary undertakings. £2 million (2022: £11 million) was written back to the Income Statement for provisions of 2023 2022 doubtful debts no longer required. £m £m Amounts owed by subsidiary undertakings that are not wholly owned 42 55 The recoverability of the amounts owed by subsidiary undertakings is assessed on an annual basis or more Amounts owed to subsidiary undertakings that are not wholly owned (24) (4) frequently when circumstances indicate that the carrying value may be impaired. Determining whether there is an indication of impairment requires judgement as the assessment is based on either net assets of the undertaking or Amounts owed by subsidiary undertakings that are not wholly owned relate mainly to funding provided to production forecast future performance. companies in our Studios division. The share premium of £174 million remains unchanged in the year. Other reserves of £34 million (2022: £29 million) Amounts owed to subsidiary undertakings that are not wholly owned, relate mainly to amounts owed to 3sixtymedia comprises Merger reserves of £36 million (2022: £36 million) which relate to share buybacks in prior years and Translation Limited and World Productions Limited. reserves with net losses of £2 million (net losses of £7 million) which relate to cash flow hedges and cost of hedging. Transactions with key management personnel Dividends Key management consists of ITV plc Executive Directors. The Board recognises the importance of the ordinary dividend to ITV shareholders. Reflecting its confidence in the Key management personnel compensation, on an accounting basis, is as follows: business and its strategy, as well as the continued strong cash generation, the Board proposes a final dividend of 3.3p (2022:3.3p), giving a full year dividend of 5.0p (2022: 5.0p) per share. In 2023, £201 million of dividends were paid 2023 2022 (2022: £201 million), representing a final 2022 dividend of 3.3p per share and an interim 2023 dividend of 1.7p per share. £m £m A contingent liability is a liability that is not sufficiently certain to qualify for Short-term employee benefits 3 3 Note ix Keeping Share-based compensation 2 3 recognition as a provision where uncertainty may exist regarding the outcome of Contingent it simple 5 6 liabilities future events. Total emoluments and gains on share options received by key management personnel in the year were: As previously reported, on 12 July 2022, the UK Competition and Markets Authority (CMA) opened an investigation 2023 2022 into certain conduct of ITV and other named companies in the sector relating to the production and broadcasting of £m £m sports content in the United Kingdom. The investigation is at an early stage and the CMA has confirmed it is currently Emoluments 2 3 undertaking further investigation until at least March 2024, subsequent to which ITV anticipates it will receive Gains on exercise of share options 1 – additional detail regarding any future steps. 3 3 On 11 October 2023, the CMA opened an investigation into certain conduct of ITV and other named companies in the sector relating to the production and broadcasting of television content in the UK, excluding sports content. The investigation remains at an early stage and it is not currently possible to reliably quantify any liability that might result from the investigation. ITV is committed to complying with competition law, and is cooperating with the CMA's enquiries in relation to both investigations. There are contingent liabilities in respect of certain litigation and guarantees, broadcasting issues, and in respect of warranties given in connection with certain disposals of businesses. None of these items are expected to have a material effect on the Group’s results or financial position. Under a Group registration, the Company is jointly and severally liable for VAT at 31 December 2023 of £43 million (31 December 2022: £35 million). The Company has guaranteed certain performance and financial obligations of subsidiary undertakings.
238 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 239 F I SUBSIDIARY UNDERTAKINGS AND INVESTMENTS NAN C I AL Wholly-owned subsidiary undertakings of the Company at 31 December 2023, all of which are wholly owned (directly or indirectly) Company Name Country % Holding Company Name Country % Holding S T and incorporated and registered where stated. Mammoth Screen (MD) Limited (1)(a) UK 100 ITV Services Pty Ltd (26)(a) Australia 100 A T Mammoth Screen (MD2) Limited (1)(a) UK 100 ITV Studios Australia Pty Limited (26)(a) Australia 100 E M Company Name Country % Holding Company Name Country % Holding Mammoth Screen (MIE) Limited (1)(a) UK 100 ITV Studios Global Distribution Pty Limited (26)(a) Australia 100 E N 12 Yard Productions (Investments) Limited (1)(a) UK 100 International Television Enterprises London Limited (1)(a)(d) UK 100 Mammoth Screen (NC) Limited (1)(a) UK 100 ITV SVOD Australia Pty Limited (26)(a) Australia 100 T 12 Yard Productions Limited (1)(a) UK 100 ITC Distribution (1)(a) UK 100 Mammoth Screen (Pol2) Limited (1)(a) UK 100 Totally Full Frontal Productions Pty Limited (26)(a) Australia 100 S A.C.E. (1988) Limited (1)(a) UK 100 ITC Entertainment Group Limited (1)(a) UK 100 Mammoth Screen (Pol3) Limited (1)(a) UK 100 ITV Holdings (Cayman) Limited (27)(a) Cayman 100 Back Productions Limited (7)(a) UK 100 ITC Entertainment Holdings Limited (1)(a) UK 100 Mammoth Screen (Pol4) Limited (1)(a) UK 100 Islands Big Talk Alone Limited (1)(a) UK 100 ITV (Scotland) Limited (20)(a) UK 100 Mammoth Screen (Pol5) Limited (1)(a) UK 100 ITV Studios Denmark Holdings Aps (73)(a) Denmark 100 Big Talk Cold Feet Limited (1)(a) UK 100 ITV 112 Limited (9)(a) UK 100 Mammoth Screen (Poldark) Limited (1)(a) UK 100 United Productions ApS (74)(a) Denmark 100 Big Talk Friday Limited (1)(a) UK 100 ITV AdVentures Limited (1)(a) UK 100 Mammoth Screen (QV) Limited (1)(a) UK 100 ITV Studios Finland Oy (40)(a) Finland 100 Big Talk Goes Wrong Limited (1)(a) UK 100 ITV Alder Limited (1)(a) UK 100 Mammoth Screen (Serpent) Limited (1)(a) UK 100 Granada (Fiji) Pte Ltd. (48)(a) Fiji 100 Big Talk Horseface (1)(a) UK 100 ITV Archie Limited (1)(a) UK 100 Mammoth Screen (TJ) Limited (25)(a) UK 100 ITV Studios France Holdings SAS (64)(a) France 100 Big Talk I Hate You Limited (1)(a) UK 100 ITV Barking Limited (1)(a) UK 100 Mammoth Screen (Tower) Limited (1)(a) UK 100 ITV Studios TV France (64)(a) France 100 Big Talk Investments Limited (1)(a) UK 100 ITV Breakfast Broadcasting Limited (1)(a) UK 100 Mammoth Screen (VF) Limited (1)(a) UK 100 ITV Studios France SAS (64)(a) France 100 Big Talk Living the Dream Limited (1)(a) UK 100 ITV Breakfast Limited (1)(a) UK 100 Mammoth Screen (Vic3) Limited (1)(a) UK 100 Tangaro (51)(a) France 100 Big Talk Ludwig Limited (1)(a) UK 100 ITV Broadcasting Limited (1)(a) UK 100 Mammoth Screen (WOF) Limited (1)(a) UK 100 Phara Prod International (51)(a) France 100 Big Talk Offenders Limited (1)(a) UK 100 ITV Central Limited (1)(a) UK 100 Mammoth Screen (WOF2) Limited (25)(a) UK 100 Tetra Media Studios SAS (51)(a) France 100 Big Talk Peacock Limited (1)(a) UK 100 ITV Consumer Limited (1)(a) UK 100 Mammoth Screen (WOTW) Limited (1)(a) UK 100 Bildergarten Entertainment GmbH (55)(a) Germany 100 Big Talk Pictures Limited (1)(a) UK 100 ITV DC Trustee Limited (1)(a) UK 100 ITV Studios Germany GmbH (28)(a) Germany 100 Mammoth Screen Ltd (1)(a) UK 100 Big Talk Studios Limited (1)(a) UK 100 ITV Digital Channels Limited (1)(a) UK 100 ITV Studios Germany Holdings GmbH (28)(a) Germany 100 Metavision Limited (1)(a) UK 100 Boom Cymru TV Ltd (5)(a) UK 100 ITV Duneen Limited (1)(a) UK 100 ITV Studios Germany Fiction GmbH (55)(a) Germany 100 Millbank Studios (1)(a) UK 100 Boom Pictures Limited (1)(a) UK 100 ITV Enterprises Limited (1)(a) UK 100 Oystercatcher GmbH (55)(a) Germany 100 Monumental Television Limited (1)(a) UK 100 Box Clever Technology Limited (1)(a) UK 100 ITV Grace Limited (1)(a) UK 100 Windlight Pictures GmbH (44)(a) Germany 100 Morning TV Limited (1)(a) UK 100 Box Clever Trustees Limited (83)(a) UK 100 ITV Holdings Limited (1)(a) UK 100 Elecrent Insurance Limited (21)(a) Guernsey 100 Moving Picture Company Films Limited (1)(a) UK 100 BritBox SVOD Limited (1)(a) UK 100 ITV International Channels Limited (1)(a) UK 100 ITV Studios Global Distribution (Hong Kong) Limited (58)(a) Hong Kong 100 MT Ghosts Limited (1)(a) UK 100 Broad Street Films Limited (1)(a) UK 100 ITV Investments Limited* (1)(a) UK 100 Talpa China Limited (57)(a) Hong Kong 100 MT Marlow Murder Club Limited (1)(a) UK 100 Campania Limited (1)(a)(k) UK 100 ITV JCDM Limited (1)(a) UK 100 Armoza International Media Ltd (56)(a) Israel 100 MT Mrs Sidhu Limited (1)(a) UK 100 Carbon Media Limited (1)(a) UK 100 ITV LTVC (Scotland) Limited (20)(a) UK 100 Channel Television Limited (22)(a) Jersey 100 MT Maryland Limited (1)(a) UK 100 Carlton Active Limited (1)(a) UK 100 ITV Mandrake Limited (1)(a) UK 100 ITV London Properties Limited (23)(a) Jersey 100 MT Murder in Provence Limited (1)(a) UK 100 Carlton Cinema Limited (1)(a) UK 100 ITV Maternal Limited (1)(a) UK 100 ITV Properties (Jersey) Limited (23)(a) Jersey 100 New Providence Productions Limited (1)(a) UK 100 Carlton Communications Limited* (1)(a)(d) UK 100 ITV Meridian Limited (1)(a) UK 100 Global Music & Talent Agency B.V. (41)(a) Netherlands 100 Output Productions Limited (3)(a) UK 100 Carlton Content Holdings Limited (1)(a) UK 100 ITV Nightingale Limited (1)(a) UK 100 ITV (Europe) Holdings B.V.* (41)(a) Netherlands 100 Oxford Scientific Films Limited (5)(a) UK 100 Carlton Film Distributors Limited (1)(a) UK 100 ITV Pension Scheme Limited (1)(a)(b) UK 100 ITV Studios Global Entertainment B.V. (41)(a) Netherlands 100 Pickwick Packaging Limited (1)(a) UK 100 Carlton Finance Limited (1)(a) UK 100 ITV POS Limited (1)(a) UK 100 ITV Studios Holding B.V.* (41)(a) Netherlands 100 Planet Woo Limited UK 100 Carlton Food Network Limited (1)(a) UK 100 ITV Properties (Developments) Limited (1)(a) UK 100 ITV Studios Netherlands B.V. (42)(a) Netherlands 100 Planet V Limited (1)(a) UK 100 Carlton Programmes Development Limited (1)(a) UK 100 ITV Ralph and Katie Limited (1)(a) UK 100 ITV Studios Netherlands Content B.V. (42)(a) Netherlands 100 Possessed Limited (1)(a) UK 100 Carlton Screen Advertising (Holdings) Limited (1)(a) UK 100 ITV RE Limited (1)(a) UK 100 ITV Studios Netherlands Drama B.V. (43)(a) Netherlands 100 QSP ATF Limited (1)(a) UK 100 Carltonco 99 Limited (1)(a) UK 100 ITV Rights Limited (1)(a) UK 100 ITV Studios Netherlands Holding B.V. (43)(a) Netherlands 100 QSP Buried Limited (1)(a) UK 100 Carltonco Eighty-One Limited (1)(a)(b) UK 100 ITV Services Limited (1)(a)(e) UK 100 ITV Studios Norway AS (70)(a) Norway 100 QSP FMO Limited (1)(a) UK 100 Carltonco Fifty Limited (1)(a)(k) UK 100 ITV Shetland Limited (1)(a) UK 100 ITV Studios Norway Vest AS (70)(a) Norway 100 QSP Ghosted Limited (1)(a) UK 100 Carltonco Forty-Five Limited (1)(a) UK 100 ITV Spy Limited (1)(a) UK 100 ITV GE (Asia) Pte Limited (77)(a) Singapore 100 QSP Men Up Limited (5)(a) UK 100 Carltonco Ninety-Six (1)(a)(f) UK 100 ITV Studios Limited (1)(a) UK 100 ITV Studios Spain SL (78)(a) Spain 100 QSP MU Limited (1)(a) UK 100 Carltonco Seventeen Limited (1)(a) UK 100 ITV Studios Global Distribution Limited (1)(a) UK 100 ITV Studios Netherlands Servicios SL (84)(a) Spain 100 QSP MY Limited (1)(a) UK 100 Castlefield Properties Limited (1)(a) UK 100 ITV Studios (Israel) Limited (1)(a) UK 100 ITV Studios Sweden Drama AB (59)(a) Sweden 100 QSP PD Limited (1)(a) UK 100 Cat’s on the Roof Media Limited (1)(a) UK 100 ITV Supplementary Pension Scheme Limited (1)(a) UK 100 ITV Studios Scandinavia Holdings AB (59)(a) Sweden 100 QSP TRK Limited (1)(a) UK 100 Central Television Limited (1)(a) UK 100 ITV TFG Holdings Limited (1)(a) UK 100 ITV Studios Germany GmbH, Köln, Zweigniederlassung Zürich Switzerland 100 QSP Nolly Limited (1)(a) UK 100 (60)(m) Channel Television Holdings Limited (1)(a) UK 100 ITV The Bay Limited (1)(a) UK 100 QSP SO limited (1)(a) UK 100 Cirkus Limited (1)(a) UK 100 ALB1819 Productions Inc. (30)(j) USA 100 ITV The Reckoning Limited (1)(a) UK 100 SDN Limited (1)(a) UK 100 Cloth Cat LBB Limited (5)(a) UK 100 Bertha Productions LLC (30)(h) USA 100 ITV TLC Limited (1)(a) UK 100 Second Act (Grace) Limited (1)(a) UK 100 Cosgrove Hall Films Limited (1)(a) UK 100 Big Return Productions LLC (30)(h) USA 100 ITV Top Class Limited (1)(a) UK 100 Second Act Productions Limited (1)(a) UK 100 Crook Productions Limited (1)(a) UK 100 Cardinal Productions of Ohio, Inc. (30)(j) USA 100 ITV Venturer Limited (1)(a) UK 100 Sightseers Film Limited (1)(a) UK 100 Cynhyrchiadau Boomerang Cyf (5)(a) UK 100 Carlton Media Company, Inc. (30)(j) USA 100 ITV Ventures Limited (1)(a) UK 100 So Television Limited (1)(a) UK 100 Double Double Limited (1)(a) UK 100 Cranktown Productions Inc. (30)(j) USA 100 ITV Vera Limited (1)(a) UK 100 The Addressable Platform Limited UK 100 Electronic Rentals Group (1)(a) UK 100 Critical Productions Inc (30)(j) USA 100 ITV Wales & West Limited (1)(a) UK 100 The Garden Productions Limited (1)(a) UK 100 EQ Pictures Limited (1)(a) UK 100 Electric Farm Entertainment Holdings Inc. (30)(j) USA 100 ITV WKOW Limited (1)(a) UK 100 TwoFour Broadcast Limited (3)(a) UK 100 Gameface Productions Limited (1)(a) UK 100 Feeding Time Productions, LLC (34)(h) USA 100 ITV Y&M Limited (1)(a) UK 100 TwoFour Group Holdings Limited (1)(a) UK 100 GIL Limited (1)(a) UK 100 Fourth State Productions Inc (35) (j) USA 100 ITV2 Limited (1)(a) UK 100 TwoFour Group Limited (3)(a) UK 100 Gorilla TV Group Limited (5)(a) UK 100 Gear Shop Inc. (30)(j) USA 100 Juice Music UK Limited (1)(a) UK 100 UTV Limited (24)(a) UK 100 Gorilla TV Limited (5)(a) UK 100 Got A Text Inc. (30(j) USA 100 London News Network (1)(a) UK 100 UTV Pension Scheme Limited (24)(a) UK 100 Granada AV Solutions Limited (1)(a) UK 100 Granada Cracker US Productions (32)(j) USA 100 London Weekend Television Limited (1)(a) UK 100 Westcountry Television Limited (1)(a) UK 100 Granada Film (1)(a) UK 100 Granada Television International, Inc. (30)(j) USA 100 LWT (Holdings) Limited (1)(a)(c) UK 100 World of Sport Wrestling Limited (1)(a) UK 100 Granada Film Productions Limited (1)(a) UK 100 Grafting 101, Inc. (30)(h) USA 100 Mammoth Screen (End) Limited (1)(a) UK 100 Yorkshire Television Limited (1)(a) UK 100 Granada Group Limited (1)(a) UK 100 Gurney Productions, LLC (32)(h) USA 100 Mammoth Screen (End2) Limited (1)(a) UK 100 Zebedee Productions Limited (1)(a) UK 100 Granada Limited (1)(a) UK 100 GWC Enterprises Inc. (30)(j) USA 100 Mammoth Screen (End9)Limited (1)(a) UK 100 Artist Services Cable Pty Ltd (26)(a) Australia 100 Granada Media Limited (1)(a)(l) UK 100 Hamdon Entertainment, Inc. (30)(j) USA 100 Mammoth Screen (End6) Limited (1)(a) UK 100 Artist Services Investments Pty Limited (26)(a) Australia 100 Granada Screen (2005) Limited (1)(a) UK 100 High Noon Group, LLC (33)(h) USA 100 Mammoth Screen (End7) Limited (1)(a) UK 100 Artist Services Productions Pty Ltd (26)(a) Australia 100 Granada Television Limited (1)(a) UK 100 High Noon Productions, LLC (33)(h) USA 100 Mammoth Screen (End8) Limited (1)(a) UK 100 Granada Media International (Australia) Pty Ltd (26)(a) Australia 100 Granada Television Overseas Limited (1)(a) UK 100 ITC Distribution, LLC (30)(h) USA 100 Mammoth Screen (Evans) Limited (1)(a) UK 100 Granada Media Investments (Australia) Pty Ltd (26)(a) Australia 100 Granada UK Rental and Retail Limited (1)(a)(e) UK 100 ITC Entertainment Group, Inc (30)(j) USA 100 Mammoth Screen (BHR) Limited (1)(a) UK 100 Granada Productions Pty Ltd (26)(a) Australia 100 Interactive Telephony Limited (1)(a) UK 100 ITC Films, LLC (30)(h) USA 100 Mammoth Screen (GK) Limited (1)(a) UK 100
238 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 239 F I SUBSIDIARY UNDERTAKINGS AND INVESTMENTS NAN C I AL Wholly-owned subsidiary undertakings of the Company at 31 December 2023, all of which are wholly owned (directly or indirectly) Company Name Country % Holding Company Name Country % Holding S T and incorporated and registered where stated.Mammoth Screen (MD) Limited (1)(a) UK 100 ITV Services Pty Ltd (26)(a) Australia 100 A T Mammoth Screen (MD2) Limited (1)(a) UK 100 ITV Studios Australia Pty Limited (26)(a) Australia 100 E M Company NameCountry% HoldingCompany NameCountry% HoldingMammoth Screen (MIE) Limited (1)(a) UK 100 ITV Studios Global Distribution Pty Limited (26)(a) Australia 100 E N 12 Yard Productions (Investments) Limited (1)(a)UK100International Television Enterprises London Limited (1)(a)(d)UK100Mammoth Screen (NC) Limited (1)(a)UK100ITV SVOD Australia Pty Limited (26)(a)Australia 100 T 12 Yard Productions Limited (1)(a)UK100ITC Distribution (1)(a)UK100Mammoth Screen (Pol2) Limited (1)(a)UK 100 Totally Full Frontal Productions Pty Limited (26)(a) Australia 100 S A.C.E. (1988) Limited (1)(a)UK100ITC Entertainment Group Limited (1)(a)UK100Mammoth Screen (Pol3) Limited (1)(a)UK100 ITV Holdings (Cayman) Limited (27)(a) Cayman 100 Back Productions Limited (7)(a)UK100ITC Entertainment Holdings Limited (1)(a)UK100Mammoth Screen (Pol4) Limited (1)(a)UK100 Islands Big Talk Alone Limited (1)(a)UK100ITV (Scotland) Limited (20)(a)UK100Mammoth Screen (Pol5) Limited (1)(a)UK 100 ITV Studios Denmark Holdings Aps (73)(a) Denmark 100 Big Talk Cold Feet Limited (1)(a)UK100ITV 112 Limited (9)(a)UK100Mammoth Screen (Poldark) Limited (1)(a)UK 100 United Productions ApS (74)(a) Denmark 100 Big Talk Friday Limited (1)(a)UK100ITV AdVentures Limited (1)(a)UK100Mammoth Screen (QV) Limited (1)(a)UK 100 ITV Studios Finland Oy (40)(a) Finland 100 Big Talk Goes Wrong Limited (1)(a)UK100ITV Alder Limited (1)(a)UK100Mammoth Screen (Serpent) Limited (1)(a)UK100 Granada (Fiji) Pte Ltd. (48)(a) Fiji 100 Big Talk Horseface (1)(a)UK100ITV Archie Limited (1)(a)UK100Mammoth Screen (TJ) Limited (25)(a) UK 100 ITV Studios France Holdings SAS (64)(a) France 100 Big Talk I Hate You Limited (1)(a)UK100ITV Barking Limited (1)(a)UK100Mammoth Screen (Tower) Limited (1)(a)UK100 ITV Studios TV France (64)(a) France 100 Big Talk Investments Limited (1)(a)UK100ITV Breakfast Broadcasting Limited (1)(a)UK100Mammoth Screen (VF) Limited (1)(a) UK100ITV Studios France SAS (64)(a) France 100 Big Talk Living the Dream Limited (1)(a)UK100ITV Breakfast Limited (1)(a)UK100Mammoth Screen (Vic3) Limited (1)(a)UK100Tangaro (51)(a) France 100 Big Talk Ludwig Limited (1)(a)UK100ITV Broadcasting Limited (1)(a)UK100Mammoth Screen (WOF) Limited (1)(a)UK 100 Phara Prod International (51)(a) France 100 Big Talk Offenders Limited (1)(a)UK100ITV Central Limited (1)(a)UK100Mammoth Screen (WOF2) Limited (25)(a)UK 100 Tetra Media Studios SAS (51)(a) France 100 Big Talk Peacock Limited (1)(a)UK100ITV Consumer Limited (1)(a)UK100Mammoth Screen (WOTW) Limited (1)(a)UK 100 Bildergarten Entertainment GmbH (55)(a) Germany 100 Big Talk Pictures Limited (1)(a)UK100ITV DC Trustee Limited (1)(a)UK100 ITV Studios Germany GmbH (28)(a) Germany 100 Mammoth Screen Ltd (1)(a) UK 100 Big Talk Studios Limited (1)(a)UK100ITV Digital Channels Limited (1)(a)UK100 ITV Studios Germany Holdings GmbH (28)(a) Germany 100 Metavision Limited (1)(a) UK 100 Boom Cymru TV Ltd (5)(a)UK100ITV Duneen Limited (1)(a)UK100 ITV Studios Germany Fiction GmbH (55)(a) Germany 100 Millbank Studios (1)(a) UK 100 Boom Pictures Limited (1)(a)UK100ITV Enterprises Limited (1)(a)UK100 Oystercatcher GmbH (55)(a) Germany 100 Monumental Television Limited (1)(a) UK 100 Box Clever Technology Limited (1)(a)UK100ITV Grace Limited (1)(a)UK100 Windlight Pictures GmbH (44)(a) Germany 100 Morning TV Limited (1)(a) UK 100 Box Clever Trustees Limited (83)(a)UK100ITV Holdings Limited (1)(a)UK100 Elecrent Insurance Limited (21)(a) Guernsey 100 Moving Picture Company Films Limited (1)(a) UK 100 BritBox SVOD Limited (1)(a)UK100ITV International Channels Limited (1)(a)UK100 ITV Studios Global Distribution (Hong Kong) Limited (58)(a) Hong Kong 100 MT Ghosts Limited (1)(a) UK 100 Broad Street Films Limited (1)(a)UK100ITV Investments Limited* (1)(a)UK100 Talpa China Limited (57)(a) Hong Kong 100 MT Marlow Murder Club Limited (1)(a) UK 100 Campania Limited (1)(a)(k)UK100ITV JCDM Limited (1)(a)UK100 Armoza International Media Ltd (56)(a) Israel 100 MT Mrs Sidhu Limited (1)(a) UK 100 Carbon Media Limited (1)(a)UK100ITV LTVC (Scotland) Limited (20)(a)UK100 Channel Television Limited (22)(a) Jersey 100 MT Maryland Limited (1)(a) UK 100 Carlton Active Limited (1)(a)UK100ITV Mandrake Limited (1)(a)UK100 ITV London Properties Limited (23)(a) Jersey 100 MT Murder in Provence Limited (1)(a) UK 100 Carlton Cinema Limited (1)(a)UK100ITV Maternal Limited (1)(a)UK100 ITV Properties (Jersey) Limited (23)(a) Jersey 100 New Providence Productions Limited (1)(a) UK 100 Carlton Communications Limited* (1)(a)(d)UK100ITV Meridian Limited (1)(a)UK100 Global Music & Talent Agency B.V. (41)(a) Netherlands 100 Output Productions Limited (3)(a) UK 100 Carlton Content Holdings Limited (1)(a)UK100ITV Nightingale Limited (1)(a)UK100 ITV (Europe) Holdings B.V.* (41)(a) Netherlands 100 Oxford Scientific Films Limited (5)(a) UK 100 Carlton Film Distributors Limited (1)(a) UK100ITV Pension Scheme Limited (1)(a)(b)UK100 ITV Studios Global Entertainment B.V. (41)(a) Netherlands 100 Pickwick Packaging Limited (1)(a) UK 100 Carlton Finance Limited (1)(a)UK100ITV POS Limited (1)(a)UK100 ITV Studios Holding B.V.* (41)(a) Netherlands 100 Planet Woo Limited UK 100 Carlton Food Network Limited (1)(a)UK100ITV Properties (Developments) Limited (1)(a)UK100 ITV Studios Netherlands B.V. (42)(a) Netherlands 100 Planet V Limited (1)(a) UK 100 Carlton Programmes Development Limited (1)(a)UK100ITV Ralph and Katie Limited (1)(a)UK100 ITV Studios Netherlands Content B.V. (42)(a) Netherlands 100 Possessed Limited (1)(a) UK 100 Carlton Screen Advertising (Holdings) Limited (1)(a)UK100ITV RE Limited (1)(a)UK100 ITV Studios Netherlands Drama B.V. (43)(a) Netherlands 100 QSP ATF Limited (1)(a) UK 100 Carltonco 99 Limited (1)(a)UK100ITV Rights Limited (1)(a)UK100 ITV Studios Netherlands Holding B.V. (43)(a) Netherlands 100 QSP Buried Limited (1)(a) UK 100 Carltonco Eighty-One Limited (1)(a)(b)UK100ITV Services Limited (1)(a)(e)UK100 ITV Studios Norway AS (70)(a) Norway 100 QSP FMO Limited (1)(a) UK 100 Carltonco Fifty Limited (1)(a)(k)UK100ITV Shetland Limited (1)(a)UK100 ITV Studios Norway Vest AS (70)(a) Norway 100 QSP Ghosted Limited (1)(a) UK 100 Carltonco Forty-Five Limited (1)(a)UK100ITV Spy Limited (1)(a)UK100 ITV GE (Asia) Pte Limited (77)(a) Singapore 100 QSP Men Up Limited (5)(a) UK 100 Carltonco Ninety-Six (1)(a)(f)UK100ITV Studios Limited (1)(a)UK100 ITV Studios Spain SL (78)(a) Spain 100 QSP MU Limited (1)(a) UK 100 Carltonco Seventeen Limited (1)(a)UK100ITV Studios Global Distribution Limited (1)(a)UK100 ITV Studios Netherlands Servicios SL (84)(a) Spain 100 QSP MY Limited (1)(a) UK 100 Castlefield Properties Limited (1)(a)UK100ITV Studios (Israel) Limited (1)(a)UK100 ITV Studios Sweden Drama AB (59)(a) Sweden 100 QSP PD Limited (1)(a) UK 100 Cat’s on the Roof Media Limited (1)(a)UK100ITV Supplementary Pension Scheme Limited (1)(a)UK100 ITV Studios Scandinavia Holdings AB (59)(a) Sweden 100 QSP TRK Limited (1)(a) UK 100 Central Television Limited (1)(a)UK100ITV TFG Holdings Limited (1)(a)UK100 ITV Studios Germany GmbH, Köln, Zweigniederlassung Zürich Switzerland 100 QSP Nolly Limited (1)(a) UK 100 (60)(m) Channel Television Holdings Limited (1)(a)UK100ITV The Bay Limited (1)(a)UK100QSP SO limited (1)(a)UK 100 Cirkus Limited (1)(a)UK100 ALB1819 Productions Inc. (30)(j) USA 100 ITV The Reckoning Limited (1)(a)UK100SDN Limited (1)(a) UK 100 Cloth Cat LBB Limited (5)(a)UK100 Bertha Productions LLC (30)(h) USA 100 ITV TLC Limited (1)(a)UK100Second Act (Grace) Limited (1)(a) UK 100 Cosgrove Hall Films Limited (1)(a)UK100 Big Return Productions LLC (30)(h) USA 100 ITV Top Class Limited (1)(a)UK100Second Act Productions Limited (1)(a) UK 100 Crook Productions Limited (1)(a)UK100 Cardinal Productions of Ohio, Inc. (30)(j) USA 100 ITV Venturer Limited (1)(a)UK100Sightseers Film Limited (1)(a) UK 100 Cynhyrchiadau Boomerang Cyf (5)(a)UK100 Carlton Media Company, Inc. (30)(j) USA 100 ITV Ventures Limited (1)(a)UK100So Television Limited (1)(a) UK 100 Double Double Limited (1)(a)UK100 Cranktown Productions Inc. (30)(j) USA 100 ITV Vera Limited (1)(a)UK100The Addressable Platform Limited UK 100 Electronic Rentals Group (1)(a)UK100 Critical Productions Inc (30)(j) USA 100 ITV Wales & West Limited (1)(a)UK100The Garden Productions Limited (1)(a) UK 100 EQ Pictures Limited (1)(a)UK100 Electric Farm Entertainment Holdings Inc. (30)(j) USA 100 ITV WKOW Limited (1)(a)UK100TwoFour Broadcast Limited (3)(a) UK 100 Gameface Productions Limited (1)(a)UK100 Feeding Time Productions, LLC (34)(h) USA 100 ITV Y&M Limited (1)(a)UK100TwoFour Group Holdings Limited (1)(a) UK 100 GIL Limited (1)(a)UK100 Fourth State Productions Inc (35) (j) USA 100 ITV2 Limited (1)(a)UK100TwoFour Group Limited (3)(a) UK 100 Gorilla TV Group Limited (5)(a)UK100 Gear Shop Inc. (30)(j) USA 100 Juice Music UK Limited (1)(a)UK100UTV Limited (24)(a) UK 100 Gorilla TV Limited (5)(a)UK100 Got A Text Inc. (30(j) USA 100 London News Network (1)(a)UK100UTV Pension Scheme Limited (24)(a) UK 100 Granada AV Solutions Limited (1)(a)UK100 Granada Cracker US Productions (32)(j) USA 100 London Weekend Television Limited (1)(a)UK100Westcountry Television Limited (1)(a) UK 100 Granada Film (1)(a)UK100 Granada Television International, Inc. (30)(j) USA 100 LWT (Holdings) Limited (1)(a)(c)UK100World of Sport Wrestling Limited (1)(a) UK 100 Granada Film Productions Limited (1)(a)UK100 Grafting 101, Inc. (30)(h) USA 100 Mammoth Screen (End) Limited (1)(a)UK100Yorkshire Television Limited (1)(a) UK 100 Granada Group Limited (1)(a)UK100 Gurney Productions, LLC (32)(h) USA 100 Mammoth Screen (End2) Limited (1)(a)UK100Zebedee Productions Limited (1)(a) UK 100 Granada Limited (1)(a)UK100 GWC Enterprises Inc. (30)(j) USA 100 Mammoth Screen (End9)Limited (1)(a)UK100Artist Services Cable Pty Ltd (26)(a) Australia 100 Granada Media Limited (1)(a)(l)UK100 Hamdon Entertainment, Inc. (30)(j) USA 100 Mammoth Screen (End6) Limited (1)(a)UK100Artist Services Investments Pty Limited (26)(a) Australia 100 Granada Screen (2005) Limited (1)(a)UK100 High Noon Group, LLC (33)(h) USA 100 Mammoth Screen (End7) Limited (1)(a)UK100Artist Services Productions Pty Ltd (26)(a) Australia 100 Granada Television Limited (1)(a)UK100 High Noon Productions, LLC (33)(h) USA 100 Mammoth Screen (End8) Limited (1)(a)UK100Granada Media International (Australia) Pty Ltd (26)(a)Australia 100 Granada Television Overseas Limited (1)(a)UK100 ITC Distribution, LLC (30)(h) USA 100 Mammoth Screen (Evans) Limited (1)(a)UK100Granada Media Investments (Australia) Pty Ltd (26)(a)Australia 100 Granada UK Rental and Retail Limited (1)(a)(e)UK100 ITC Entertainment Group, Inc (30)(j) USA 100 Mammoth Screen (BHR) Limited (1)(a)UK100Granada Productions Pty Ltd (26)(a) Australia 100 Interactive Telephony Limited (1)(a)UK100 ITC Films, LLC (30)(h) USA 100 Mammoth Screen (GK) Limited (1)(a)UK100
240 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 241 F SUBSIDIARY UNDERTAKINGS AND INVESTMENTS CONTINUED I NAN C I AL Company Name Country % Holding Company Name Country % Holding Company Name Country % Holding Company Name Country % Holding S T ITC Productions, LLC (30)(h) USA 100 Krewed Inc (30)(j) USA 100 Colette Productions (51)(a) France 80 Bedrock Entertainment LLC (30)(h) USA 40 A T ITV America Inc. (30)(j) USA 100 Leftfield Entertainment, LLC (30)(h) USA 100 Shoot Again Productions (51)(a) France 95 Southrock Productions LLC (30)(h) USA 40 E M ITV Bedrock Holding, Inc. (30)(h) USA 100 Leftfield Pictures of NY Holdings, LLC (30)(h) USA 100 Beaubourg Audiovisual (51)(a) France 95 BritBox, LLC (36)(h) USA 50 E N ITV Believe Holding, Inc. (30)(j) USA 100 Leftfield Pictures of NY, LLC (30)(h) USA 100 Think Cattleya Srl (37)(a) Italy 40 Blumhouse TV Holdings LLC (30)(h) USA 45 T ITV Blumhouse Holding Inc (30)(j) USA 100 Leftfield Ventures, LLC (30)(h) USA 100 Radio Cattleya Srl (37)(a) Italy 80 Work Friends LLC (30)(h) USA 45 S ITV Diga Holding, Inc (30)(j) USA 100 Loud Television, LLC (30)(h) USA 100 Cattleya Srl (37)(a) Italy 80 Circle of Confusion Television Studios LLC (30)(h) USA 51 ITV Entertainment Services Inc.( 30)(j) USA 100 LWT Enterprises Inc. (30)(j) USA 100 Cattleya International Srl (37)(a) Italy 51 South Circle Productions LLC (30)(h) USA 51 ITV Global Entertainment, Inc. (30)(j) USA 100 Marriage Boot Camp Reality Stars, LLC (30)(h) USA 100 Cattleya Producciones SL (37)(a) Spain 51 BB Rights, LLC (30)(h) USA 50 ITV Gurney Holding Inc. (30)(j) USA 100 Moving Pictures Services Inc. (30)(j) USA 100 Appletree Productions AB (59)(a) Sweden 51 Jaffe/Braunstein Entertainment, LLC (31)(h) USA 51 ITV HN Holding Inc. (30)(j) USA 100 Outpost Entertainment LLC, (30)(h) USA 100 ITV Studios Sweden AB (59)(a) Sweden 100 Tomorrow Studios LLC (30)(h) USA 60 ITV International Corporation (30)(j) USA 100 Over the Pond Productions, Inc. (30)(j) USA 100 Maximum Media Production FZ-LLC (63)(a) UAE 100 Next Steps Productions, LLC (30)(h) USA 60 ITV Leftfield Holding Inc. (30)(j) USA 100 Poison Pen Studios Inc. (30)(j) USA 100 ITV Studios Arabia Holding Ltd (63)(a) UAE 100 Plimsoll Productions USA, Inc USA 79.5 ITV New Form Holding Inc. (30)(j) USA 100 Post 460 Inc (30)(j) USA 100 ITV Studios Middle East FZ-LLC (63)(a) UAE 90.2 Yellow Productions USA, Inc USA 79.5 ITV NewTV Holding Inc. (30)(j) USA 100 Quay Street Enterprises, Inc. (30)(j) USA 100 Tomorrow Friends LLC (30)(h) USA 45 ITV Popco Holding Inc. (30)(j) USA 100 Sandia Pictures Inc (30)(j) USA 100 ITV Southpoint Holding Inc (30)(j) USA 100 Sirens Media, LLC (30)(h) USA 100 ITV Studios America Inc. (30)(j) USA 100 Solowe Productions Inc (30)(j) USA 100 ITV Studios, Inc. (32)(j) USA 100 Southbank Studios Inc. (30)(j) USA 100 ITV Studios The Voice USA, Inc. (32)(j) USA 100 Southsquare Productions Inc. (30)(j) USA 100 MEMBERSHIPS, PARTNERSHIPS AND COMPANIES LIMITED BY GUARANTEE ITV SVOD Holding Inc. (30)(j) USA 100 The Casting Hive Inc. (30)(j) USA 100 ITV Thinkfactory Holding Inc. (30)(j) USA 100 Thinkfactory Group, LLC (30)(h) USA 100 Company Name Country % Holding Company Name Country % Holding ITV Tomorrow Holding, Inc. (30)(j) USA 100 Thinkfactory Media, LLC (30)(h) USA 100 ITV Network Limited (1)(i) UK 100 Everyone TV Limited (13)(i) UK 25 ITV US Holdings, Inc. (30)(j) USA 100 Trailer Park Productions, Inc (30)(j) USA 100 ITV LTVC Scottish Limited Partnership (68)(h)** UK 100 BritBox Australia Partnership Australia 50 JB Entertainment Holding Company, Inc. (30)(j) USA 100 Upper Ground Enterprises, Inc. (30))(j) USA 100 ITV Scottish Limited Partnership (68)(h)** UK 100 Futureflip Entertainment India LLP (69)(h) India 100 Kirkstall Road Enterprises, Inc. (30)(j) USA 100 Producers Rights Agency Limited (66)(i) UK 50 The Lab Television 2013 Limited Partnership (61)(a) Israel 50 DTT Multiplex Operators Limited (67)(i) UK 25 The Lab Television Limited (61)(a) Israel 50 OTHER SUBSIDIARIES, JOINT VENTURES, ASSOCIATES AND OTHER SIGNIFICANT HOLDINGS ADDRESS KEY Company Name Country % Holding Company Name Country % Holding Absolutely Rights Limited (6)(f) UK 20 WP Fifteen Limited (1)(a) UK 95 (1) ITV White City, 201 Wood Lane, (20) Quartermile One, 15 Lauriston Place, (38) Level 1, 35-51 Mitchell Street, McMahons That Mitchell and Webb Company Limited (7)(a) UK 20 WP Lockerbie Limited (1)(a) UK 95 London W12 7RU, United Kingdom Edinburgh, Scotland, EH3 9EP, United Point, NSW 2060, Australia BARB Audiences Limited (82)(i) UK 20.6 WP LOD6 Limited (1)(a) UK 95 (2) 218 Penarth Road, Cardiff, CF11 8NN, Kingdom (39) 39 Long Acre, London, WC2E 9LG, United Live Tech Games Limited (78)(a)(e) UK 21.21 WP Save Me 2 Limited (1)(a) UK 95 United Kingdom (21) PO Box 230, Heritage Hall, Le Merchant Kingdom Route 24 Limited (17)(a) UK 24.9 WP The Gathering Limited (1)(a) UK 95 (3) Twofour Studios, Estover, Plymouth, Street, St Peter Port, Guernsey, GY1 4JH (40) Hämeentie 15A, 00500 Helsinki, Finland DTV Services Limited (13)(a) UK 25 WP Diplomat Limited (1)(a) UK 95 Devon, PL6 7RG, United Kingdom (22) Le Capelain House, Castle Quay, St. Helier, (41) Familie de Mollaan 1, 1217 ZB, Hilversum, Clearcast Limited (11)(a) UK 25 WP Showtrial Limited (1)(a) UK 95 (4) Kingsbourne House, 229–231 High Holborn, JE2 3EH, Jersey Netherlands Genial Productions Limited (39)( a) UK 25 WP The Suspect Limited (1)(a) UK 95 London, WC1V 7DA, United Kingdom (23) Ogier House, The Esplanade, St. Helier, JE4 (42) Koos Postemalaan 8, 1217 ZC, Hilversum, Koska Limited (53)(a) UK 25 WP Pembrokeshire Limited (1)(a) UK 95 (5) Gloworks, Porth Teigr Way, Cardiff, Wales, 9WG, Jersey Netherlands South Shore Productions Limited (54) (a) UK 25 WP Karen Pirie Limited (1)(a) UK 95 CF10 4GA, United Kingdom (24) City Quays 2, 8th Floor, 2 Clarendon Road, (43) Haarlemmer Houttuinen, 21 1013 GL, Thinkbox TV Limited (16)(a) UK 28.58 WP Malpractice Limited (1)(a) UK 95 (6) 18 The Glasshouse Studios, Fryern Court Belfast, BT1 3YD, United Kingdom Amsterdam, Netherlands Independent Television News Limited (15)(a) UK 40 WP RM Limited (1)(a) UK 95 Road, Fordingbridge, Hampshire, SP6 1NG, (25) Office 306, Forsyth House, Cromac Square, (44) Rumfordstrasse 21a, Munchen, 80469, Malacara Limited (5)(a) UK 49 World Productions Limited (1)(a) UK 95 United Kingdom Belfast, Northern Ireland, BT2 8LA, United Germany British Film-Makers Limited (1)(a) UK 50 GC Films Pty Limited (26)(a) Australia 49 (7) 26 Nassau Street, London, W1W 7AQ, United Kingdom (45) Noorderweg 8, 1221 AA, Hilversum, Denipurna Limited (1)(a) UK 50 BritBox Australia Management Pty Limited (38)(a) Australia 50 Kingdom (26) Level 4, 19 Harris Street Pyrmont NSW 2009 Netherlands Digital 3 and 4 Limited (12)(a) UK 50 ATP Post Pty Ltd Australia 51 (8) 5 New Street Square, London, EC4A 3TW, (27) Ocorian Trust (Cayman) Limited, Windward 3, (46) Zevenend 45, 1251 RL, Laren, North Holland, Noho Film and Television Limited (18)(a) UK 50 ES Productions Pty Ltd Australia 51 United Kingdom Regatta Office Park, PO Box 1350, Grand Netherlands (9) Orange Tower, Media City UK, Salford M50 Cayman KY1-1108, Cayman Islands (47) Hollandse Kade 34, 1391JM, Abcoude, Standard Music Limited (19)(a) UK 50 Lingo Pictures Pty Ltd Australia 51 2HF (28) Agrippastraße, 87-93, 50676, Köln, Germany Netherlands Tell Me Everything Limited (18)(a) UK 50 Messenger Productions Pty Ltd Australia 51 BritBox International Limited (1)(a) UK 50 Prosper Productions Pty Ltd Australia 51 (10) The Met Building, 22 Percy Street, London, (29) Keplerstrasse 4-6, 10589, Berlin, Germany (48) Level 3, Pacific House, Butt Street. Suva, Fiji W1T 2BU, United Kingdom (30) The Corporation Trust Company, Corporate (49) Westersingel 108, 3015 LD Rotterdam, BritBox International Trading Limited (1)(a) UK 50 Queen of Oz Productions Pty Ltd Australia 51 (11) 4 Roger Street, 2nd Floor, London, WC1X 2JX, Trust Center, 1209 Orange Street, Netherlands 3sixtymedia Limited (1)(a) UK 80 Secrets Productions Pty Ltd Australia 51 United Kingdom Wilmington, Newcastle, DE 19801, USA Escapade Bidco Limited (1)(a) UK 79.5 Secrets 2 Productions Pty Ltd Australia 51 (50) Keizersgracht 149a, 1015CL, Amsterdam, (12) 124 Horseferry Road, London, SW1P 2TX, (31) 321 Southern Beverly Drive, Suite M, Beverly Netherlands Plimsoll Productions Limited (1)(a) UK 79.5 Upright Productions Pty Ltd Australia 51 United Kingdom Hills, CA 90212, USA Plimsoll International Ltd (1)(a) UK 79.5 Upright Productions 2 Pty Ltd Australia 51 (51) 60 rue Marcel Dassault, 92100, Boulogne- (13) Tryptych Bankside, 6th Floor, 185 Park Street, (32) CT Corporation System, 818 West Seventh Billancourt, France Year on Earth Productions Ltd (1)(a) UK 79.5 Apple Tree Productions ApS (75)(a) Denmark 51 London, SE1 9SH Street, Suite 930, Los Angeles, CA 90017, USA Titan Productions Ltd (1)(a) UK 79.5 Gedesel (52)(a) France 50 (52) 4 rue de Commaille, 75007, Paris, France (14) 23-24 Newman Street, London, W1T 1PJ, (33) The Hodson Law Firm, 1129, East 17th Avenue, (53) Europa House, Goldstone Villas, Hove, Magnify Content Media Ltd (1)(a) UK 79.5 SCI MD 60 (51)(a) France 50 United Kingdom Denver, CO 80014, USA Age Before Beauty Limited (4)(a) UK 90 15.15 Productions (71)(a) France 51 Sussex BN3 3RQ (15) 200 Gray’s Inn Road, London, WC1X 8HF, (34) CT Corporation System, 3867 Plaza Tower (54) 210 High Holborn, London, England, WC1V Gold Digger Productions Limited (4)(a) UK 90 Funny Corp (51)(a) France 51 United Kingdom Drive East Baton Rouge Parish, Baton Rouge, Mainstreet Pictures Limited (4)(a) UK 90 Macondo Productions Audiovisuels (51)(a) France 51 LA 70816, USA 7HD (16) Manning House, 22 Carlisle Place, London, (55) Genthiner Strasse 5, 10785 Berlin, Germany Unforgotten Productions Limited (4)(a) UK 90 Beaubourg Stories 2 (72)(a) France 56.01 SW1P 1JA, United Kingdom (35) CT Corporation System, 289 S. Culver Street, WP Anne Limited (1)(a) UK 95 Eldorado Fiction (51)(a) France 62.4 (17) 325-327 Oldfield Lane North, Greenford, Lawrenceville, GA, 30046-4805, USA (56) 16 Haarbaa St, Tel Aviv 6473916, Israel WP Bodyguard Limited (1)(a) UK 95 Beaubourg Stories (72)(a) France 70.01 Middlesex, United Kingdom, UB6 0FX (36) 1120 Avenue of Americas, 5th Floor, New York, (57) 11/F, Unit B, Winbase Centre, 208 Queen’s WP Delia Limited (1)(a) UK 95 Balina Films (72)(a) France 72.51 (18) 3rd Floor 20-22 Berkeley Square, London, NY10036, USA Road Central, Sheung Wan, Hong Kong WP LOD5 Limited (1)(a) UK 95 Beaubourg Fiction (72)(a) France 72.51 United Kingdom, W1J 6EQ (37) Piazzale Valerio Massimo, 7, 00162, Roma, (58) Rooms 517–520, 5th Floor, Sun Hung Kai WP Vigil Limited (1)(a) UK 95 Tetra Media Fiction (51)(a) France 78 (19) Roundhouse, 212 Regent’s Park Road, Italy Centre, 30 Harbour Road, Wan Chai, Hong London, NW1 8AW, United Kingdom Kong
240 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 241 F SUBSIDIARY UNDERTAKINGS AND INVESTMENTS CONTINUED I NAN C I AL Company NameCountry% HoldingCompany NameCountry% HoldingCompany Name Country % Holding Company Name Country % Holding S T ITC Productions, LLC (30)(h)USA100Krewed Inc (30)(j)USA100Colette Productions (51)(a)France 80 Bedrock Entertainment LLC (30)(h) USA 40 A T ITV America Inc. (30)(j)USA100Leftfield Entertainment, LLC (30)(h)USA100Shoot Again Productions (51)(a)France95Southrock Productions LLC (30)(h) USA 40 E M ITV Bedrock Holding, Inc. (30)(h)USA100Leftfield Pictures of NY Holdings, LLC (30)(h)USA100Beaubourg Audiovisual (51)(a)France95BritBox, LLC (36)(h) USA 50 E N ITV Believe Holding, Inc. (30)(j)USA100Leftfield Pictures of NY, LLC (30)(h)USA100Think Cattleya Srl (37)(a)Italy40Blumhouse TV Holdings LLC (30)(h) USA 45 T ITV Blumhouse Holding Inc (30)(j)USA100Leftfield Ventures, LLC (30)(h)USA100Radio Cattleya Srl (37)(a)Italy80Work Friends LLC (30)(h) USA 45 S ITV Diga Holding, Inc (30)(j)USA100Loud Television, LLC (30)(h)USA100Cattleya Srl (37)(a)Italy 80 Circle of Confusion Television Studios LLC (30)(h) USA 51 ITV Entertainment Services Inc.( 30)(j)USA100LWT Enterprises Inc. (30)(j)USA100Cattleya International Srl (37)(a)Italy 51South Circle Productions LLC (30)(h) USA 51 ITV Global Entertainment, Inc. (30)(j)USA100Marriage Boot Camp Reality Stars, LLC (30)(h)USA100Cattleya Producciones SL (37)(a)Spain51BB Rights, LLC (30)(h) USA 50 ITV Gurney Holding Inc. (30)(j)USA100Moving Pictures Services Inc. (30)(j)USA100Appletree Productions AB (59)(a)Sweden51Jaffe/Braunstein Entertainment, LLC (31)(h) USA 51 ITV HN Holding Inc. (30)(j)USA100Outpost Entertainment LLC, (30)(h)USA100ITV Studios Sweden AB (59)(a)Sweden100Tomorrow Studios LLC (30)(h) USA 60 ITV International Corporation (30)(j)USA100Over the Pond Productions, Inc. (30)(j)USA100Maximum Media Production FZ-LLC (63)(a)UAE100Next Steps Productions, LLC (30)(h) USA 60 ITV Leftfield Holding Inc. (30)(j)USA100Poison Pen Studios Inc. (30)(j)USA100ITV Studios Arabia Holding Ltd (63)(a)UAE100Plimsoll Productions USA, Inc USA 79.5 ITV New Form Holding Inc. (30)(j)USA100Post 460 Inc (30)(j)USA100ITV Studios Middle East FZ-LLC (63)(a)UAE90.2Yellow Productions USA, Inc USA 79.5 ITV NewTV Holding Inc. (30)(j)USA100Quay Street Enterprises, Inc. (30)(j)USA100Tomorrow Friends LLC (30)(h)USA45 ITV Popco Holding Inc. (30)(j)USA100Sandia Pictures Inc (30)(j)USA100 ITV Southpoint Holding Inc (30)(j)USA100Sirens Media, LLC (30)(h)USA100 ITV Studios America Inc. (30)(j)USA100Solowe Productions Inc (30)(j)USA100 ITV Studios, Inc. (32)(j)USA100Southbank Studios Inc. (30)(j)USA100 ITV Studios The Voice USA, Inc. (32)(j)USA100Southsquare Productions Inc. (30)(j)USA100MEMBERSHIPS, PARTNERSHIPS AND COMPANIES LIMITED BY GUARANTEE ITV SVOD Holding Inc. (30)(j)USA100The Casting Hive Inc. (30)(j)USA100 ITV Thinkfactory Holding Inc. (30)(j)USA100Thinkfactory Group, LLC (30)(h)USA100 Company Name Country % Holding Company Name Country % Holding ITV Tomorrow Holding, Inc. (30)(j)USA100Thinkfactory Media, LLC (30)(h)USA100ITV Network Limited (1)(i)UK100 Everyone TV Limited (13)(i) UK 25 ITV US Holdings, Inc. (30)(j)USA100Trailer Park Productions, Inc (30)(j)USA100ITV LTVC Scottish Limited Partnership (68)(h)**UK100 BritBox Australia Partnership Australia 50 JB Entertainment Holding Company, Inc. (30)(j)USA100Upper Ground Enterprises, Inc. (30))(j)USA100ITV Scottish Limited Partnership (68)(h)**UK100 Futureflip Entertainment India LLP (69)(h) India 100 Kirkstall Road Enterprises, Inc. (30)(j)USA100Producers Rights Agency Limited (66)(i)UK 50 The Lab Television 2013 Limited Partnership (61)(a) Israel 50 DTT Multiplex Operators Limited (67)(i) UK 25 The Lab Television Limited (61)(a) Israel 50 OTHER SUBSIDIARIES, JOINT VENTURES, ASSOCIATES AND OTHER SIGNIFICANT HOLDINGS ADDRESS KEY Company NameCountry% HoldingCompany NameCountry% Holding Absolutely Rights Limited (6)(f)UK20WP Fifteen Limited (1)(a)UK95(1) ITV White City, 201 Wood Lane, (20) Quartermile One, 15 Lauriston Place, (38) Level 1, 35-51 Mitchell Street, McMahons That Mitchell and Webb Company Limited (7)(a)UK20WP Lockerbie Limited (1)(a)UK95London W12 7RU, United KingdomEdinburgh, Scotland, EH3 9EP, United Point, NSW 2060, Australia BARB Audiences Limited (82)(i)UK20.6WP LOD6 Limited (1)(a)UK95(2) 218 Penarth Road, Cardiff, CF11 8NN, Kingdom (39) 39 Long Acre, London, WC2E 9LG, United Live Tech Games Limited (78)(a)(e)UK21.21WP Save Me 2 Limited (1)(a)UK95United Kingdom(21) PO Box 230, Heritage Hall, Le Merchant Kingdom Route 24 Limited (17)(a)UK24.9WP The Gathering Limited (1)(a)UK95(3) Twofour Studios, Estover, Plymouth, Street, St Peter Port, Guernsey, GY1 4JH(40) Hämeentie 15A, 00500 Helsinki, Finland DTV Services Limited (13)(a)UK25WP Diplomat Limited (1)(a)UK95Devon, PL6 7RG, United Kingdom(22) Le Capelain House, Castle Quay, St. Helier, (41) Familie de Mollaan 1, 1217 ZB, Hilversum, Clearcast Limited (11)(a)UK25WP Showtrial Limited (1)(a)UK95(4) Kingsbourne House, 229–231 High Holborn, JE2 3EH, Jersey Netherlands Genial Productions Limited (39)( a)UK25WP The Suspect Limited (1)(a)UK95London, WC1V 7DA, United Kingdom(23) Ogier House, The Esplanade, St. Helier, JE4 (42) Koos Postemalaan 8, 1217 ZC, Hilversum, Koska Limited (53)(a)UK25WP Pembrokeshire Limited (1)(a)UK95(5) Gloworks, Porth Teigr Way, Cardiff, Wales, 9WG, Jersey Netherlands South Shore Productions Limited (54) (a)UK25WP Karen Pirie Limited (1)(a)UK95CF10 4GA, United Kingdom(24) City Quays 2, 8th Floor, 2 Clarendon Road, (43) Haarlemmer Houttuinen, 21 1013 GL, Thinkbox TV Limited (16)(a)UK28.58WP Malpractice Limited (1)(a)UK95(6) 18 The Glasshouse Studios, Fryern Court Belfast, BT1 3YD, United KingdomAmsterdam, Netherlands Independent Television News Limited (15)(a)UK40WP RM Limited (1)(a)UK95Road, Fordingbridge, Hampshire, SP6 1NG, (25) Office 306, Forsyth House, Cromac Square, (44) Rumfordstrasse 21a, Munchen, 80469, Malacara Limited (5)(a)UK49World Productions Limited (1)(a)UK95United Kingdom Belfast, Northern Ireland, BT2 8LA, United Germany British Film-Makers Limited (1)(a)UK50GC Films Pty Limited (26)(a)Australia49(7) 26 Nassau Street, London, W1W 7AQ, United Kingdom (45) Noorderweg 8, 1221 AA, Hilversum, Denipurna Limited (1)(a)UK50BritBox Australia Management Pty Limited (38)(a)Australia50Kingdom(26) Level 4, 19 Harris Street Pyrmont NSW 2009Netherlands Digital 3 and 4 Limited (12)(a)UK50ATP Post Pty LtdAustralia51(8) 5 New Street Square, London, EC4A 3TW, (27) Ocorian Trust (Cayman) Limited, Windward 3, (46) Zevenend 45, 1251 RL, Laren, North Holland, Noho Film and Television Limited (18)(a)UK50ES Productions Pty LtdAustralia51United KingdomRegatta Office Park, PO Box 1350, Grand Netherlands (9) Orange Tower, Media City UK, Salford M50 Cayman KY1-1108, Cayman Islands (47) Hollandse Kade 34, 1391JM, Abcoude, Standard Music Limited (19)(a) UK50Lingo Pictures Pty LtdAustralia51 2HF (28) Agrippastraße, 87-93, 50676, Köln, Germany Netherlands Tell Me Everything Limited (18)(a) UK50Messenger Productions Pty LtdAustralia51 BritBox International Limited (1)(a)UK50Prosper Productions Pty LtdAustralia 51(10) The Met Building, 22 Percy Street, London, (29) Keplerstrasse 4-6, 10589, Berlin, Germany(48) Level 3, Pacific House, Butt Street. Suva, Fiji W1T 2BU, United Kingdom (30) The Corporation Trust Company, Corporate (49) Westersingel 108, 3015 LD Rotterdam, BritBox International Trading Limited (1)(a)UK50Queen of Oz Productions Pty LtdAustralia51 (11) 4 Roger Street, 2nd Floor, London, WC1X 2JX, Trust Center, 1209 Orange Street, Netherlands 3sixtymedia Limited (1)(a)UK80Secrets Productions Pty LtdAustralia51United KingdomWilmington, Newcastle, DE 19801, USA Escapade Bidco Limited (1)(a)UK79.5Secrets 2 Productions Pty LtdAustralia51 (50) Keizersgracht 149a, 1015CL, Amsterdam, (12) 124 Horseferry Road, London, SW1P 2TX, (31) 321 Southern Beverly Drive, Suite M, Beverly Netherlands Plimsoll Productions Limited (1)(a)UK79.5Upright Productions Pty LtdAustralia51United KingdomHills, CA 90212, USA Plimsoll International Ltd (1)(a)UK79.5Upright Productions 2 Pty LtdAustralia51 (51) 60 rue Marcel Dassault, 92100, Boulogne- (13) Tryptych Bankside, 6th Floor, 185 Park Street, (32) CT Corporation System, 818 West Seventh Billancourt, France Year on Earth Productions Ltd (1)(a)UK79.5Apple Tree Productions ApS (75)(a)Denmark51London, SE1 9SHStreet, Suite 930, Los Angeles, CA 90017, USA Titan Productions Ltd (1)(a)UK79.5Gedesel (52)(a)France50 (52) 4 rue de Commaille, 75007, Paris, France (14) 23-24 Newman Street, London, W1T 1PJ, (33) The Hodson Law Firm, 1129, East 17th Avenue, (53) Europa House, Goldstone Villas, Hove, Magnify Content Media Ltd (1)(a)UK79.5SCI MD 60 (51)(a)France50United Kingdom Denver, CO 80014, USA Age Before Beauty Limited (4)(a)UK9015.15 Productions (71)(a)France51 Sussex BN3 3RQ (15) 200 Gray’s Inn Road, London, WC1X 8HF, (34) CT Corporation System, 3867 Plaza Tower (54) 210 High Holborn, London, England, WC1V Gold Digger Productions Limited (4)(a)UK90Funny Corp (51)(a)France51United KingdomDrive East Baton Rouge Parish, Baton Rouge, Mainstreet Pictures Limited (4)(a)UK90Macondo Productions Audiovisuels (51)(a)France51LA 70816, USA 7HD (16) Manning House, 22 Carlisle Place, London, (55) Genthiner Strasse 5, 10785 Berlin, Germany Unforgotten Productions Limited (4)(a)UK90Beaubourg Stories 2 (72)(a)France56.01SW1P 1JA, United Kingdom(35) CT Corporation System, 289 S. Culver Street, WP Anne Limited (1)(a)UK95Eldorado Fiction (51)(a)France62.4(17) 325-327 Oldfield Lane North, Greenford, Lawrenceville, GA, 30046-4805, USA(56) 16 Haarbaa St, Tel Aviv 6473916, Israel WP Bodyguard Limited (1)(a)UK95Beaubourg Stories (72)(a)France70.01Middlesex, United Kingdom, UB6 0FX(36) 1120 Avenue of Americas, 5th Floor, New York, (57) 11/F, Unit B, Winbase Centre, 208 Queen’s WP Delia Limited (1)(a)UK95Balina Films (72)(a)France72.51(18) 3rd Floor 20-22 Berkeley Square, London, NY10036, USA Road Central, Sheung Wan, Hong Kong WP LOD5 Limited (1)(a)UK95Beaubourg Fiction (72)(a)France72.51United Kingdom, W1J 6EQ(37) Piazzale Valerio Massimo, 7, 00162, Roma, (58) Rooms 517–520, 5th Floor, Sun Hung Kai WP Vigil Limited (1)(a)UK95Tetra Media Fiction (51)(a)France78(19) Roundhouse, 212 Regent’s Park Road, Italy Centre, 30 Harbour Road, Wan Chai, Hong London, NW1 8AW, United Kingdom Kong
242 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 243 A SUBSIDIARY UNDERTAKINGS AND INVESTMENTS CONTINUED GLOSSARY DD I T ION (59) Soder Malarstrand 65, 11825, Stockholm, (69) #1302, Tower-3, Indiabulls Finance Centre, (79) 3 Kings Brook Close, Rempstone, Advertiser funded platform or channel – Impact or Commercial Impact – one Share of Viewing (SOV) – the share of the A L Sweden Senapati Bapat Road, Elphinstone Road Loughborough, England, LE12 6RR I platform or channels that include Commercial Impact is defined as one total viewing audience during a defined N (60) Scharenmoosstrasse 105, 8052, Zurich, (West), Mumbai, Mumbai City, Maharashtra (80) 9th Floor, Azar Building, Sami Solh Avenue, advertising as part of the user experience viewer watching one 30-second television period gained by a programme or channel. FOR Switzerland 40013, India Beiruit, Lebanon e.g. ITV Family of channels, ITVX commercial This measure includes viewing of BBC M (61) 23 Habarzel Street, Tel Aviv, 69710, Israel (70) Lars Hilles Gate 30, 5008, Bergan, Norway (81) 1 Television Centre, 101 Wood Lane, London, channels. Unless stated otherwise, SOV A T (63) Building 2, Dubai Media City, Dubai, UAE (71) 10 rue Maître Jacques, 92100 Boulogne, United Kingdom, W12 7FA Broadcasters’ Audience Research Board ITV Family – the ITV family of linear TV figures cited throughout this report are ION (64) 12 boulevard des Iles, 92130 Issy-les- Billancourt, France (82) 3rd Floor, 20 Orange Street, London, United (BARB) – organisation owned by channels which includes ITV1, ITV2, ITV3, based on BARB data and are based on the Moulineaux, Paris, France (72) 5–7 rue Saint-Augustin, 75002, Paris, France Kingdom, WC2H 7EF broadcasters and advertisers, providing ITV4, ITVBe, CITV (which moved onto ITVX universe of individuals (65) Avenida Cidade de Lisboa, Frente Sucupira, 2° (73) DLA Piper Denmark, Radhuspladsen 4, 1550 (83) Portwall Place, Portwall Lane, Bristol, BS1 data on linear and online television viewing in H2 2023) and all associated +1 and andar, Cidade de Praia, Cape Verde Kobenhavn V, Denmark 6NA statistics by UK households HD equivalents Share of Commercial Viewing (SOCV) – (66) Fitzrovia House, (3rd Floor), 153-157 (74) Finsensvej 6E, 2000, Frederiksberg, Denmark (84) Calle Puccini 3, San Bartolome de Tirajana, the share of total viewing of audiences Cleveland Street, London, W1T 6QW, (75) Aumento Advokatfirma, Ny Osteragde 3,4, 35109 Las Palmas, Gran Canaria, Spain Catch up viewing – non-live viewing of Linear television – television service during a defined period as a proportion of United Kingdom 1101, Kobenhavn, Denmark recently broadcast television programmes, where the viewer has to watch a scheduled all ad-supported commercial broadcaster (67) 27 Mortimer Street, London, England, (76) 120 West 3rd Avenue #201, Vancouver BC either via a recording device, often called TV programme at the particular time it is viewing in the UK. This measure excludes W1T 3JF V5Y 1E9, Canada a personal video recorder (PVR) or digital offered, and on the particular channel it is the BBC (68) C/O Dentons UK and Middle East LLP, (77) 101c Telok Ayer Street, Singapore 068574 video recorder (DVR), such as Sky or presented on Quartermile One 15 Lauriston Place, (78) Calle Velaquaz 18, 6-D, 28001 Madrid, Spain through a streaming service such as ITVX, Simulcast viewing – viewing live TV Edinburgh, EH3 9EP BBC iPlayer, Channel 4 or My5 Monthly Active User (MAU) – the average channels via a broadcaster’s streaming number of monthly registered users across service such as ITVX, at the same time as Channel 3 licences – the 15 regional a defined period who accessed ITV owned broadcast on linear TV licences and one national licence awarded and operated on-demand platforms (web, INTEREST KEY to transmit Channel 3 across the UK. All are mobile, or connected TV) Spot advertising – linear television owned by ITV except for two of the regional advertising occupying a short break during licences which are owned by STV Net Advertising Revenue (NAR) – the or between programmes (a) Ordinary (f) Cumulative redeemable preference (k) Preference amount of money received by a broadcaster (b) Deferred (g) Convertible preference (l) Part Preference Digital revenue – includes revenue from as payment for television spot advertising Streaming service – online provider of (c) Special deferred (h) Membership / Partnership (m) Branch digital advertising, subscription, linear net of any commission paid to agencies unlimited, on-demand streaming of (d) Redeemable preference (i) Guarantee addressable advertising, digital content such as TV shows, films and (e) Cumulative preference (j) Common sponsorship and commercial partnerships, Non-consolidated licensees – the two original programming over the internet to a ITV Win (digital competitions platform) regional channel 3 licences that ITV does TV, computer, or mobile device and other revenues from digital not own. These licences are owned by STV business ventures and revenues received from these licences Subscriptions – users of ITVX’s premium for ITV programming content are referred tier, which includes those who pay ITV FAST channels – Free Ad-supported to as minority revenues directly, those who are paid for by an Streaming TV services – curated, operator, and free trialists data-driven channels that are always on Ofcom – communications regulator in the with content that evolves and changes UK who regulate the TV, radio and Subscription streaming service – a depending on viewer preferences video-on-demand sectors, fixed-line paid-for, subscription streaming service telecoms (phones), mobiles and postal available to subscribers on demand but Free-to-air (FTA) television – viewing of services, plus the airwaves over which for a fee e.g. ITVX premium television through devices not requiring wireless devices operate a subscription such as the Freeview or Total Advertising Revenue (TAR) – this Freesat services SDN – multiplex operator owned by ITV, includes ITV Family NAR, advertising via which operates one of the eight national ITVX, programme sponsorship revenue Intellectual Property (IP) – intangible multiplex licences in the UK on Freeview and other affiliated advertising revenue property that is the result of creativity streams Share of Commercial Impacts (SOCI) – Inventory – advertising inventory is the the term used to define the share of total Total ITV Streaming Hours – the total number of advertisements or amount of UK television commercial impacts number of hours viewers spent watching advertising space, which we have available delivered by one channel or group of ITV across all streaming platforms. This to sell to advertisers channels. This measure excludes viewing figure includes both advertiser-funded of BBC channels as they do not generate and subscription streaming commercial impacts. Unless stated otherwise, SOCI figures cited throughout YouView – a joint venture (with the this report are based on BARB data and BBC, Channel 4, Channel 5, BT, TalkTalk, are based on the universe of Adults (16+) and Arqiva) to operate and promote a hybrid television platform combining Freeview channels with catch up and on-demand service * Direct subsidiary ** Having met the criteria under Regulation 7 of the Partnership (Account) Regulations 2008 (SI 2008/569) these Limited Partnerships have taken the exemption to deliver accounts to the Registrar of Companies
242 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 243 A SUBSIDIARY UNDERTAKINGS AND INVESTMENTS CONTINUEDGLOSSARY DD I T ION (59) Soder Malarstrand 65, 11825, Stockholm, (69) #1302, Tower-3, Indiabulls Finance Centre, (79) 3 Kings Brook Close, Rempstone, Advertiser funded platform or channel – Impact or Commercial Impact – one Share of Viewing (SOV) – the share of the A L SwedenSenapati Bapat Road, Elphinstone Road Loughborough, England, LE12 6RR I platform or channels that include Commercial Impact is defined as one total viewing audience during a defined N (60) Scharenmoosstrasse 105, 8052, Zurich, (West), Mumbai, Mumbai City, Maharashtra (80) 9th Floor, Azar Building, Sami Solh Avenue, advertising as part of the user experience viewer watching one 30-second television period gained by a programme or channel. FOR Switzerland40013, IndiaBeiruit, Lebanon e.g. ITV Family of channels, ITVX commercial This measure includes viewing of BBC M (61) 23 Habarzel Street, Tel Aviv, 69710, Israel(70) Lars Hilles Gate 30, 5008, Bergan, Norway(81) 1 Television Centre, 101 Wood Lane, London, channels. Unless stated otherwise, SOV A T (63) Building 2, Dubai Media City, Dubai, UAE(71) 10 rue Maître Jacques, 92100 Boulogne, United Kingdom, W12 7FABroadcasters’ Audience Research Board ITV Family – the ITV family of linear TV figures cited throughout this report are ION (64) 12 boulevard des Iles, 92130 Issy-les-Billancourt, France(82) 3rd Floor, 20 Orange Street, London, United (BARB) – organisation owned by channels which includes ITV1, ITV2, ITV3, based on BARB data and are based on the Moulineaux, Paris, France(72) 5–7 rue Saint-Augustin, 75002, Paris, FranceKingdom, WC2H 7EFbroadcasters and advertisers, providing ITV4, ITVBe, CITV (which moved onto ITVX universe of individuals (65) Avenida Cidade de Lisboa, Frente Sucupira, 2° (73) DLA Piper Denmark, Radhuspladsen 4, 1550 (83) Portwall Place, Portwall Lane, Bristol, BS1 data on linear and online television viewing in H2 2023) and all associated +1 and andar, Cidade de Praia, Cape VerdeKobenhavn V, Denmark6NAstatistics by UK householdsHD equivalents Share of Commercial Viewing (SOCV) – (66) Fitzrovia House, (3rd Floor), 153-157 (74) Finsensvej 6E, 2000, Frederiksberg, Denmark(84) Calle Puccini 3, San Bartolome de Tirajana, the share of total viewing of audiences Cleveland Street, London, W1T 6QW, (75) Aumento Advokatfirma, Ny Osteragde 3,4, 35109 Las Palmas, Gran Canaria, SpainCatch up viewing – non-live viewing of Linear television – television service during a defined period as a proportion of United Kingdom1101, Kobenhavn, Denmarkrecently broadcast television programmes, where the viewer has to watch a scheduled all ad-supported commercial broadcaster (67) 27 Mortimer Street, London, England, (76) 120 West 3rd Avenue #201, Vancouver BC either via a recording device, often called TV programme at the particular time it is viewing in the UK. This measure excludes W1T 3JFV5Y 1E9, Canadaa personal video recorder (PVR) or digital offered, and on the particular channel it is the BBC (68) C/O Dentons UK and Middle East LLP, (77) 101c Telok Ayer Street, Singapore 068574video recorder (DVR), such as Sky or presented on Quartermile One 15 Lauriston Place, (78) Calle Velaquaz 18, 6-D, 28001 Madrid, Spainthrough a streaming service such as ITVX, Simulcast viewing – viewing live TV Edinburgh, EH3 9EP BBC iPlayer, Channel 4 or My5 Monthly Active User (MAU) – the average channels via a broadcaster’s streaming number of monthly registered users across service such as ITVX, at the same time as Channel 3 licences – the 15 regional a defined period who accessed ITV owned broadcast on linear TV licences and one national licence awarded and operated on-demand platforms (web, INTEREST KEY to transmit Channel 3 across the UK. All are mobile, or connected TV) Spot advertising – linear television owned by ITV except for two of the regional advertising occupying a short break during licences which are owned by STV Net Advertising Revenue (NAR) – the or between programmes (a) Ordinary(f) Cumulative redeemable preference(k) Preference amount of money received by a broadcaster (b) Deferred(g) Convertible preference(l) Part PreferenceDigital revenue – includes revenue from as payment for television spot advertising Streaming service – online provider of (c) Special deferred(h) Membership / Partnership(m) Branchdigital advertising, subscription, linear net of any commission paid to agencies unlimited, on-demand streaming of (d) Redeemable preference(i) Guaranteeaddressable advertising, digital content such as TV shows, films and (e) Cumulative preference(j) Commonsponsorship and commercial partnerships, Non-consolidated licensees – the two original programming over the internet to a ITV Win (digital competitions platform) regional channel 3 licences that ITV does TV, computer, or mobile device and other revenues from digital not own. These licences are owned by STV business ventures and revenues received from these licences Subscriptions – users of ITVX’s premium for ITV programming content are referred tier, which includes those who pay ITV FAST channels – Free Ad-supported to as minority revenues directly, those who are paid for by an Streaming TV services – curated, operator, and free trialists data-driven channels that are always on Ofcom – communications regulator in the with content that evolves and changes UK who regulate the TV, radio and Subscription streaming service – a depending on viewer preferences video-on-demand sectors, fixed-line paid-for, subscription streaming service telecoms (phones), mobiles and postal available to subscribers on demand but Free-to-air (FTA) television – viewing of services, plus the airwaves over which for a fee e.g. ITVX premium television through devices not requiring wireless devices operate a subscription such as the Freeview or Total Advertising Revenue (TAR) – this Freesat services SDN – multiplex operator owned by ITV, includes ITV Family NAR, advertising via which operates one of the eight national ITVX, programme sponsorship revenue Intellectual Property (IP) – intangible multiplex licences in the UK on Freeview and other affiliated advertising revenue property that is the result of creativity streams Share of Commercial Impacts (SOCI) – Inventory – advertising inventory is the the term used to define the share of total Total ITV Streaming Hours – the total number of advertisements or amount of UK television commercial impacts number of hours viewers spent watching advertising space, which we have available delivered by one channel or group of ITV across all streaming platforms. This to sell to advertisers channels. This measure excludes viewing figure includes both advertiser-funded of BBC channels as they do not generate and subscription streaming commercial impacts. Unless stated otherwise, SOCI figures cited throughout YouView – a joint venture (with the this report are based on BARB data and BBC, Channel 4, Channel 5, BT, TalkTalk, are based on the universe of Adults (16+) and Arqiva) to operate and promote a hybrid television platform combining Freeview channels with catch up and on-demand service * Direct subsidiary ** Having met the criteria under Regulation 7 of the Partnership (Account) Regulations 2008 (SI 2008/569) these Limited Partnerships have taken the exemption to deliver accounts to the Registrar of Companies
Printed in the UK by Pureprint using vegetable inks and their environmental printing technology. Pureprint is a CarbonNeutral® company. Both manufacturing mill and the printer are registered to the Environmental Management System ISO14001 and are Forest Stewardship Council® (FSC) chain-of-custody certified. Designed and produced by
Printed in the UK by Pureprint using vegetable inks and their environmental printing technology. Pureprint is a CarbonNeutral® company. Both manufacturing mill and the printer are registered to the Environmental Management System ISO14001 and are Forest Stewardship Council® (FSC) chain-of-custody certified. Designed and produced by
I T V p l c A n n u a l Re p o r t a n d A c c o u n t s f o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 2 3 ITV plc White City Place 201 Wood Lane London W12 7RU www.itv.com Investors: www.itvplc.com Stock code: ITV