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