REG - ITV PLC - Final Results 2015 <Origin Href="QuoteRef">ITV.L</Origin> - Part 1

ITVAnnouncement

17/03/2016 10:05

RNS Number : 3544S
ITV PLC
17 March 2016
17 March 2016
ITV plc Annual Report and Accounts for the year ended 31 December 2015
Annual Financial Report
ITV plc (the 'Company') released its preliminary announcement of annual results for the year ended 31 December 2015 ('Preliminary Announcement') on 2 March 2016. Further to the Preliminary Announcement, the Company can now confirm that the 2015 Report and Accounts, Notice of 2016 Annual General Meeting (AGM) and Form of Proxy will be mailed to shareholders on 17 March 2016. The Report and Accounts and Notice of AGM are now available on the Company's website atwww.itvplc.com/investors.
The Online Report is available at ar2015.itvplc.com
In compliance with DTR 6.3.5, the information set out below is extracted from the 2015 Report and Accounts and should be read in conjunction with the Preliminary Announcement issued on 2 March 2016, both of which can be viewed atwww.itvplc.com/investors. Together these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the 2015 Report and Accounts in full.
Articles of Association
The Company is proposing to adopt new Articles of Association (the "New Articles") at the AGM which will reflect developments in market practice andprovide clarification and additional flexibility on certain matters.Asummary of the key changes to the Company's existing Articles of Association is set out in the Notice of AGM available on our website at www.itvplc.com/investors/AGM. The New Articles showing all the changes to the Company's current articles are available for inspection from the date of this announcement at the Company's registered office (The London Television Centre, Upper Ground, London SE1 9LT) until the AGM and also at the AGM from 9.00am until its conclusion.
AGM
The Company's 2016 AGM will be held at 11.00 a.m. on Thursday, 12 May 2016 at The Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE. Shareholders can vote online via our website www.itvplc.com/investors/AGM.
National Storage Mechanism
In compliance with LR 9.6.3, the following documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.hemscott.com/nsm.do 
 2015 Report and Accounts 2015
 Notice of 2016 Annual General Meeting
 Form of Proxy for 2016 Annual General Meeting
ITV plc
Tel: 020 7157 3000
For further enquiries please contact:
Investor Relations
Pippa Foulds Tel: +44 20 7157 6555 or +44 7778 031097
Media Relations
Mary FaganTel: +44 20 7157 3965 or +44 77 3678 6448
Mike Large Tel: +44 20 7157 3021 or +44 77 6826 1528
Website: www.itv.com; investor information: www.itvplc.com
Risks and Uncertainties
ITV has a formal risk management process which isembedded within the business to support the identification and effective management of risks across the business. 
It is regularly reviewed and adapted as the Company, industry and macro environment evolves.
Risk management framework
Our approach, which is consistent with previous years, covers risks at all levels oftheorganisation and considers risks inthreecore groups:
High Impact, Low Likelihood (HILL) risks - of low inherent likelihood but where there wouldbe major consequences were the risk tomaterialise
Strategic risks - would impact the successfulexecution of the strategy
Process level risks - embedded into everydayactivity within the organisation.
The Board is responsible for establishing risk appetite, a robust and appropriate risk management framework and for monitoring the risk management andinternal control systems. During thecourse of the year the Board, Management Board and Divisional Boards, routinely review ITV's principal risks and discuss the mitigations and actions being taken with regards to these risks. The Audit Committee supports the Board to keep the overall effectiveness of these processes under regular review. 
In 2015 the Board has continued toenhance and develop ITV's risk management framework, in particular reviewing the level of risk appetite in the business. Further, the Board has carried out a robust assessment of the principal risks facing ITV, including those that would threaten its business model, future performance, solvency or liquidity. 
The Management Board has responsibility for the development andoperation of the risk management framework and for the operation ofITV'ssystems of internal control. Thisincludes: 
 Risk identification and assessment: identifying the risks facing the businessand for establishing controls and procedures to monitor and mitigate risks. 
 Control environment: financial controls, policies and procedures are considered as a part of the Group's ongoing risk assessment process. These controls are reviewed to ensure risks are identified and the processes and procedures are in accordance withand aligned to the strategy. The Internal Audit team provides objective assurance as to the effectiveness of the Group's systems of internal control and risk management, reporting to both the Management Board and theAudit Committee. 
 Reviewing and monitoring the effectiveness of internal controls: controls are monitored by senior management, Internal Audit and the Audit Committee. Remedial plans areput in place where controls are weak or there are opportunities forimprovement. Serious control weakness (if any) are reported to the Board and action taken as appropriate.
Risk management process
Risks are primarily controlled through therisk management process. In addition to the risk specific mitigating actions outlined in this report risks are considered through day-to-day operations and are regularly discussed by the Board and Management Board, bythe Audit Committee and as part ofthe Board's strategy day. 
During 2015 all the HILL and Strategic risks were reassessed, challenged and further refined to improve our risk management. Mitigating actions have been identified for all the HILL and Strategic risks. Each Strategic risk has been mapped to at least one of the threekey strategic priorities and, where possible, assigned key risk indicators. Where appropriate, the key risk indicators are aligned to our key performance indicators (KPIs) or asubset of these KPIs. All HILL and Strategic risks are owned by at least one member of the Management Board.
We have in place an Operational Risk Steering Group to manage and consider existing and emerging operational risks and ensure they are addressed appropriately.
Internal audit plan
The internal auditplan is driven from ITV's risk management framework. Internal Audit reviews the auditable elements of the HILL, Strategic and Process level risks and this informs theareas and topics that Internal Audit focus on. 
Risk culture
Throughout the year we have continued to focus on and strengthen our risk culture. Our Code of Conduct remains unchanged and the Operational Risk Steering Group considers ethical behaviours, governance and compliance with our Code. ITV also offers all employees annual online training onethics and compliance.
Viability Statement
In its assessment of viability the Board is of the view that a three year horizon to 31 December 2018 is appropriate, giventhe visibility ITV has over its Broadcast advertising business and the normal commissioning cycle which drives the Studios division. 
When considering the longer-term viability of ITV, the Board has reviewed each of ITV's principal risks and uncertainties and, taking into account current operational and financial performance, has in particular analysed the impact of: 
 The Broadcast division experiencing a significant and sharp downturn, similar to the 2008/09 financial crisis, with regards to advertising revenues, but in this case with no immediate recovery
 A number of key programme brands within the Studios division not being recommissioned
 A significant change in ITV's pension funding obligations, following the triennial valuation in 2017 and subsequent funding arrangements
The review involved flexing the underlying strategic forecast for the above impacts, both individually and concurrently, and no specific mitigations were assumed. The underlying strategic forecast assumed: business as usual capital spending; the ongoing availability of the financing facilities (as ITV remains within the covenants); and that ITV maintains its stated dividend policy. 
Based on the results of this review, the Board has a reasonable expectation that ITV will be able to continue in operation and meet itsliabilities as they fall due over the three year period ending 31December 2018. The assessment has been made with reference toITV's strategy and current position and prospects.

High Impact, Low Likelihood Risks (HILL)

Potential Risk
Mitigating Factors
Financial
ITV loses its credit status or lines of funding with existing lenders or there is a collapse ofa major bank impacting financial arrangements/availability of credit.
 The business is cash generative and working capital management remains a key focus.
 ITV has a balance sheet policy to maintain adjusted net debt below1.5x adjusted EBITDA and have unused liquidity headroom of250 million.
 ITV has a 525 million Revolving Credit Facility with a number of core relationship banks and 250 million of financial covenant free facilities.
 The low gross debt levels that ITV currently has should enable the Company to obtain debt from the marketplace if needed.
 We are rated investment grade by two ratings agencies.
There is a major collapse in investment values leading to a material impact on the pension scheme deficit.
 There is regular communication between ITV and the pension trustees.
 The pension scheme's assets are invested in a diversified portfolio, with a significant amount of the fund held in bonds.
 ITV has worked with the pension trustees to limit the potential deficit by a series of asset backed arrangements. Further, it has taken mortality risk out of the scheme with a longevity swap and hedged a portion of inflation and interest rate variability.
Operational
A significant event removes a number of the key management team from the business on a long-term or permanent basis.
 There is a business resilience plan in place which includes succession plans or nominated replacements for all key positions within theCompany.
Reputation
An event with public interest that causes significant reputational and brand damage.
 ITV has a crisis management policy in place and is increasing emphasis on its development and application.
There is a major health and safety incident that results in asignificant loss of human life.
 ITV has a central Health & Safety team, Operational Risk Steering Group and Health & Safety policies and procedures are in place, with appropriate training for employees where required. As we continue to expand internationally these will be reviewed.
 Regular inspections are undertaken at all sites, which are run alongside a programme of Health & Safety audits. This is subject to ongoing review.

A major incident results in ITV being unable to continue with scheduled broadcasting for a sustained period.
 A risk register of broadcast operations, including key outsourced functions, is in place and reviewed on a regular basis.
 Major incident scenario testing takes place bi-annually.
 An incident management process has been agreed and full disaster recovery plans are in place.

There is a significant or unexpected change in regulation or legislation.
 ITV regularly communicates with appropriate groups and its legalpanel and Ofcom to monitor potential policy, legal and regulatory developments.
Strategic risks
Potential Risk
Mitigating Factors
The Market
There is a major decline in advertising revenues and ITV doesnot build sufficient non-NAR revenue streams to offset the financial impact of this decline. 
 Growing non-NAR in areas such as ITV Studios and Online, Pay& Interactive, remains a key part of the strategy.
 ITV continues to focus on cash and costs, ensuring the Company has an adequate financial liquidity and balance sheet flexibility to continue to invest.
The television market moves significantly towards pay television as a preferred model, negatively impacting ITV's free-to-air revenue. 
 ITV continues to support free platforms, including YouView, tokeep free-to-air strong.
 ITV looks at and evaluates the opportunities for expanding itsexisting pay services and other pay offerings.
 ITV explores other platforms to understand viewing habits and what people are prepared to pay for.
A faster than expected shift to Video on Demand or other new technologies, such as internet enabled TVs or online only services, causes a sustained lossof advertising revenue. 
 The business continues to develop the ITV Hub VOD services, maximise the distribution of the ITV Hub and grow its VOD advertising business.
 ITV monitors the market for new technology and where appropriate explores how ITV can participate.
Organisation, Structure
and Processes 
ITV fails to evolve its organisational structure and culture to ensure that it is capable of delivering continued growth from the new businesses orrevenue streams and fails to attract, develop and retain key creative, commercial and management talent with the skills required for the ongoing business. 
 ITV constantly reassesses the business to create a fit-for-purpose organisation.
 Strategic focus on working across the business to embed and strengthen the culture of 'One ITV' way of working.
 ITV invests in training and development for all key colleagues in the business.
 Succession plans are in place for all key positions within theCompany.
There is significant loss of programme rights or ITV fails to identify and obtain the optimal rights packages.
 ITV is focused on both protecting and exploiting existing rights and ensuring that future rights generated accrue toITV.
 ITV has a detailed model to evaluate the value of third-party rights to ensure it only buys rights that make economic sense.
ITV fails to create and own asufficient number of hit programmes/formats across itsinternational portfolio of content companies. 
 ITV maximises opportunities for ITV Studios to create successful shows by investing in the creative pipeline and focusing on programmes and genres that can return and travel internationally, i.e. drama, entertainment and factual entertainment, as evidenced by our increased investment inscripted content.
 ITV is focused on hiring and retaining the right key creativetalent.
ITV fails to properly resource, financially, creatively and operationally, the new growth businesses, in particular online andinternational content. 
 Talent management plans have been developed and reviewed to ensure adequate succession planning across ITV. 
 ITV continues to embed and strengthen the culture of 'OneITV' way of working.
 Lessons from recent investments are captured through post-acquisition reviews.
ITV remains heavily reliant on legacy systems, which could potentially restrict the ability to grow the business. These systems and processes may not be appropriate for non-advertising revenue or international growth. 
 System requirements are kept under review with business growth and system modernisation projects implemented asappropriate.
 A modernisation plan is in place for the legacy systems which remains under constant review and development to ensure technology systems meet the needs of the business.
Technology
There is a sustained cyber/viral attack causing prolonged system denial or major reputational damage, for example the ability tobroadcast our channels or the availability of ITV Hub or ITV loses a significant volume of personal orsensitive data. 
 We continue to improve our ability to monitor, detect and respond to cyber threats internally and through partnerships with specialist security organisations.
 Mandatory online training modules, awareness campaigns andsimplified information security policies have been implemented for employees.
 There are disaster recovery and incident management plans in place for high-risk areas of the business to help deliver a rapid and flexible response.
 An Operational Risk Steering Group is in place to ensure the appropriate management of information security.
A significant high-profile incident or series of events e.g. a system failure, a technology issue, or a major regulatory breach that causes significant reputational and/or commercial damage. 
 ITV has ongoing modernisation projects to ensure transmission and distribution technologies are fit-for-purpose.
 There are disaster recovery and incident management plans inplace in high risk areas of the business to help deliver a rapid and flexible response.
 ITV proactively manages its broadcast chain partners and suppliers to ensure the risk of incidents and regulatory breach is minimised.
ITV fails to ensure appropriate business continuity planning and resilience within its core systems, processes, platforms and technology infrastrcture. 
 Disaster recovery plans are in place with tests conducted annually on business critical systems. 
The Strategic Report was approved by the Board and signed on its behalf by:
Adam Crozier
Chief Executive
Directors' responsibilities
The Directors consider that the Annual Report and Accounts, taken as a whole, isfair, balanced and understandable andprovides the information necessary for shareholders to assess the Company's and the Group's position andperformance, business model andstrategy.
Each of the Directors, confirm that, to the best of their knowledge:
 the Group accounts, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
 the Directors' Report includes a fair review of the development and performance of the business and the position of the Group, together with adescription of the principal risks anduncertainties that it faces.
In accordance with Section 418 of the Companies Act 2006, the Directors confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware; and each Director hastaken all steps that they ought to have taken as a Director in order to makethemselves aware of any relevant audit information and to establish thatthe Company's auditor is aware ofthat information.
The Board has conducted a review of theeffectiveness of the Group's systems of internal controls for the year ended 31December 2015. In the opinion of theBoard, the Company has complied with the internal control requirements of the UK Corporate Governance Code throughout the year, maintaining anongoing process for identifying, evaluating, and minimising risk. 
The Directors are responsible for preparing the Annual Report and the Group andparent company financial statements in accordance with applicable law andregulations.
Company law requires the Directors to prepare Group and parent company financial statements for each financial year. Underthat law they are required toprepare the Group financial statements in accordance with IFRSs as adopted bythe EU andapplicable law and have elected to prepare the parent company financial statements in accordance with UK AccountingStandards.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent company and of their profit or loss for that period. Inpreparing each of the Group and parent company financial statements, theDirectors are required:
 to select suitable accounting policies and then apply them consistently;
 to make judgements and estimates that are reasonable and prudent;
 for the Group financial statements, to state whether they have been prepared inaccordance with IFRSs as adopted by theEU;
 for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the parent company financial statements; and
 to prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company will continuein business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps asare reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible forpreparing a Strategic Report, Directors' Report, Annual Remuneration Reportand Corporate Governance Statement that comply with that law andthose regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
By order of the Board
Andrew Garard
Company Secretary
2 March 2016
ITV plc
Registered number 4967001
Independent Auditor's Report to the Members of ITV plc Only
Opinions and conclusions arising from our audit
1 Our opinion on the financial statements is unmodified 
We have audited the financial statements of ITV plc for the year ended 31 December 2015. 
In our opinion: 
 The financial statements give a true and fair view of the state of the Group's and of the parent company's affairs as at 31December 2015 and of the Group's profit for the year then ended; 
 The Group financial statements have been properly prepared in accordance with International Financial Reporting Standards asadopted by the European Union; 
 The parent company financial statements have been properly prepared in accordance with UK Accounting Standards, including FRS 101 Reduced Disclosure Framework; and
 The financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the Group financial statements, Article 4 of the IAS Regulation. 
2 Our assessment of risks of material misstatement
In arriving at our audit opinion above on the financial statements the risks of material misstatement that had the greatest effect on our audit, were as follows:
The Audit Committee's consideration of these significant risks is set out in the Audit Committee Report. 
The risk
Our response
Revenue recognition and contractual arrangements 
The Group's revenue consists primarily of advertising, programme production and programme rights. 
Net Advertising Revenue ('NAR') 1,719 million (2014:1,629 million)
The majority of ITV's advertising revenue (NAR) is subject to regulation under Ofcom's Contract Rights Renewal system ('CRR'). CRR works by ensuring that the annual share of TV advertising that will be placed with ITV by each advertising agency can change in relation to the viewing figures for commercial television that it delivers. The CRR system, the pricing of the annual contractual arrangements with advertising agencies and the details of each advertising campaign, together with the related processes and controls, are complex and involve estimation. 
In particular, the pricing mechanism means it is possible for a difference to arise between the price paid for an advertising campaign and the value it delivered, mainly as a result of the actual viewing figures being different from the agreed level. Where the Group has over-delivered viewers this is referred to as a 'deal credit', or a 'deal debt' where delivery has fallen short. Rather than the price paid for that campaign being adjusted, these differences are noted for each agency and then taken account of when agreeing either future campaigns or the annual contract. Anet deal debt position with an agency is recorded in ITV's accounts, as a liability. Net deal credit positions are not recognised.
NAR is therefore considered a significant risk due to:
 The number and complexity of contractual agreements with advertising agencies
 The complexity of the systems and processes of control used torecord revenue and
 The level of estimation involved in determining the deal debt liability at the period end 
Our procedures included: 
 Testing of controls, assisted by our own IT specialists, including those over: input of individual campaigns' terms and pricing, comparison ofthose terms and pricing data against the related contracts with advertising agencies; linkage to transmission/viewer data; and segregation of duties
 Testing management's review controls over: contract approval; periodic deal reconciliations and the related deal debt adjustment 
 Analysing revenue based on our industry knowledge and external market data, following up variances and 
 Challenging the year-end deal debt position based on comparison with customers' correspondence and agreed terms of business 
We also assessed the adequacy of the Group's disclosures in respect of the accounting policies on revenue recognition. 
Other revenue streams ('Non-NAR revenue') 1,253 million (2014: 961 million)
Non-NAR revenue includes revenue from; programme production, the sale of programme rights, transmission supply arrangements and the Online, Pay & Interactive division within the Broadcast segment.
Recognition of non-NAR revenue is driven by the specific terms of the related contracts. It is considered to be a risk as the terms of the contracts are varied and can be complex, with the result that accounting for the revenue generated in any given period can require individual consideration. 
Our procedures included:
 Testing of controls over the timing of revenue recognition. Weconsidered the Group's revenue recognition policies against therelevant accounting standards and 
 For a sample of contracts entered into during the year, we tested whether revenue had been recognised in accordance with the contractual terms in the correct accounting period, given the requirements of the relevant accounting standard
Acquisition accounting: Talpa Media B.V. (initial consideration 238 million and goodwill arising 41 million 
(2014: Leftfield Entertainment initial consideration 209 million and goodwill arising 139 million)
ITV acquired 100% of Talpa Media on 30 April 2015. The acquisition agreement requires the seller to provide services to ITV for a period of seven years, in order to qualify for performance-based payments after two, five and seven years. Further, a portion of the initial consideration is repayable if the seller ceases to provide services for a two year period after acquisition. Accounting for the Talpa acquisition is considered asignificant risk as a result of the following factors: 
 The Group is required to make a number of judgements, whichfocus on, but are not limited to: assessment of whether the performance-related consideration arrangements are acquisition consideration or post-acquisition remuneration, identification of intangible assets acquired and assessment offair value of the acquired assets and liabilities and
 In determining the fair value of the acquired intangible assets and the contingent consideration and remuneration payable, medium term cashflow forecasts have been prepared by ITV. The inherent uncertainty involved in forecasting future cash flows and the judgement involved in the selection of the appropriate discount rate makes this a key area of focus
Our procedures included:
 Inspecting the terms of the acquisition contracts to determine whether the accounting treatment of performance-related consideration arrangements applied is appropriate based on the criteria of the relevant accounting standards
 Using our own valuation specialists to assist us in: assessing both the appropriateness of the identified intangibles, against the criteria of the relevant accounting standards, and the appropriateness of the discount rates
 Comparing the Group's forecast revenue growth and margins assumptions to our own assessments, based on our industry knowledge, in relation to key inputs such as the useful lives of, andlikelihood of revenue from, existing formats and
 Understanding of the principles applied by the Group in determining the acquisition date fair values for the remaining assets and liabilities and agreeing significant adjustments to supporting documentation, such as underlying contracts and vendor due diligence reports
We also considered the adequacy of the Group's disclosures in respect of the acquisition and the related judgments..
Defined benefit pension schemes 176 million (2014: 346 million) 
Significant estimates are made in valuing the Group's post-retirement defined benefit schemes.
The key valuation assumptions are set out in in the 'Assumptions' section. When making these assumptions the Group takes independent actuarial advice relating to their appropriateness.
The valuation is considered to be a significant risk as, given the quantum of the pension deficit, small changes in the assumptions can have a material financial impact on the Group.
In this area our procedures included challenging the key assumptions applied in determining the Group's net deficit, being the discount rate, inflation rate and mortality/life expectancy, with the support ofour own actuarial specialists. This included a comparison of these key assumptions against externally derived data. 
We also considered the adequacy of the group's disclosures in respect of the sensitivity of the deficits to these.
Royalty accruals 69 million (2014: 70 million) 
The Group pays royalties directly to artists or producers for content used. The contractual terms of these agreements are varied and complex. 
The related IT systems can only address part of the processing, necessitating a significant manual element in calculating royalty accruals recorded by the Group. 
Overall the process is complex and the volume and variety of contracts being interpreted and accounted for combined with the manual nature of the process increases the risk of error. 
Among other procedures, we tested manual controls over the recording of royalty costs and the approval of royalty payments. 
We re-performed a sample of the Group's annual royalty calculations, agreeing key inputs to contracts and the underlying system data. 
In addition, for a sample of programs, we performed analytical procedures, comparing the royalty costs recorded in the financial statements to our expectation using participation percentages from the underlying contracts, and following up variances. 
3 Our application of materiality and an overview of the scope of our audit
The materiality for the Group financial statements as a whole was set at 29 million (2014: 25 million), determined with reference to a benchmark of Group profit before tax, of which it represents 4.6% (2014: 4.1%). 
We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding 1.5 million (2014:1million), in addition to other identified misstatements that warranted reporting on qualitative grounds. 
The Group's principal operations are in the United Kingdom and only the core UK operations (comprising Broadcast and Online, the UK Studios, Global Entertainment and the central functions) are scoped in for Group audit purposes. The Group audit team performed the audit of the core UK operations as if they were a single aggregated set of financial information using materiality of 25 million (2014: 23 million). The Group audit team performed all of the audit procedures over the risks related to the acquisition of Talpa Media.
Although not in-scope for Group reporting purposes, in agreement with the Audit Committee, specified audit procedures were also performed on two entities in the US and one entity in the Netherlands by component auditors simultaneously with the audit of the Group and UK operations. The Group audit team set the materiality for specified audit procedures at 5 million for all components. Together the above audit and these specified audit procedures covered 92% (2014: 96%) of total Group revenue, 94% (2014: 99%) of Group profit before taxation; and 88% (2014: 99%) of total Group assets. 
4 Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion: 
 The part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006 and
 The information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements 
5 We have nothing to report on the disclosures of principal risks
Based on the knowledge we acquired during our audit, we have nothing material to add or draw attention to in relation to: 
 The Directors' statement of long term viability, concerning the principal risks, their management, and, based on that, the Directors' assessment and expectations of the Group's continuing in operation over the three years to 31 December 2018 or 
 The disclosures of the financial statements concerning the use of the going concern basis of accounting
6 We have nothing to report in respect of the matters on which we are required to report by exception 
Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have identified other information in the Annual Report that contains a material inconsistency with either that knowledge or the financial statements, a material misstatement of fact, or that is otherwise misleading. 
In particular, we are required to report to you if: 
 We have identified material inconsistencies between the knowledge we acquired during our audit and the Directors' statement that they consider that the Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy or
 The Audit Committee Report does not appropriately address matters communicated by us to the Audit Committee.
Under the Companies Act 2006 we are required to report to you if, in our opinion: 
 Adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us or 
 The parent company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns or 
 Certain disclosures of Directors' remuneration specified by law are not made or 
 We have not received all the information and explanations we require for our audit 
Under the Listing Rules we are required to review: 
 The Directors' statements, in relation to going concern and longer-term viability and 
 The part of the Corporate Governance Statement relating to the Company's compliance with the eleven provisions of the 2014 UK Corporate Governance Code specified for our review
We have nothing to report in respect of the above responsibilities. 
Scope and responsibilities
As explained more fully in the Directors' Responsibilities Statement , the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. A description of the scope of anaudit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate. This report is made solely to the Company's members as a body and is subject to important explanations and disclaimers regarding our responsibilities, published on our website at www.kpmg.com/uk/auditscopeukco2014a, which are incorporated into this report as if set out in full and should be read to provide an understanding of the purpose of this report, the work we haveundertaken and the basis of our opinions.
Mark Summerfield (Senior Statutory Auditor) 
for and on behalf of KPMG LLP, Statutory Auditor 
Chartered Accountants 
15 Canada Square
London 
E14 5GL 
2 March 2016

This information is provided by RNS
The company news service from the London Stock Exchange
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