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.