REG - ITV PLC - Preliminary Results - year ended 31 December 2015 <Origin Href="QuoteRef">ITV.L</Origin> - Part 6
02/03/2016 07:12
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limits for
cash deposits are largely based upon long-term ratings published by the major credit rating agencies and perceived state
support. Deposits longer than 12 months require the approval of the Board.
Borrowings
ITV is rated as investment grade by Moody's and S&P. ITV's credit ratings, the cost of credit default swap hedging and the
absolute level of interest rates are key determinants in the cost of new borrowings for ITV.
Liquidity risk
The Group's financing policy is to fund itself for the medium to long-term by using debt instruments with a range of
maturities and to ensure access to appropriate short-term bank facilities with a minimum of £250 million of undrawn
facilities available at all times.
Long-term funding comes from the UK and European Capital markets, while any short to medium-term debt requirements are
provided through bank credit facilities totalling £775 million (see below). Management monitors rolling forecasts of the
Group's liquidity reserve (comprising undrawn bank facilities and cash and cash equivalents) on the basis of expected cash
flows. This monitoring includes financial ratios to assess possible future credit ratings and headroom and takes into
account the accessibility of cash and cash equivalents.
The Group has available funds through a Revolving Credit Facility ('RCF') with a group of relationship banks. This £525
million facility is committed with leverage and interest cover financial covenants and matures in 2019. In addition, the
Group has £250 million of financial covenant free financing which runs for three to seven years. All of these facilities
were undrawn at 31 December 2015 (2014: no drawings).
Fair value versus book value
The tables below provide fair value information for the Group's borrowings:
Bookvalue Fairvalue
Maturity 2015£m 2014£m 2015£m 2014£m
Loans due within oneyear
Other short-termloans Various 5 - 5 -
Loans due in more than oneyear
£161 millionEurobond Jan2017 161 161 168 173
E600 millionEurobond Sept2022 437 - 445 -
Loans settled or matured in theperiod
£78 millionEurobond Oct2015 - 78 - 81
603 239 618 254
Finance leases
The following table analyses when finance lease liabilities are due for payment:
Minimumlease payments£m Interest£m 2015Principal£m Minimumlease payments£m Interest£m 2014Principal£m
In one year orless 6 - 6 8 1 7
In more than one year butnot more than fiveyears 4 - 4 10 - 10
10 - 10 18 1 17
Finance leases principally comprise programmes under sale and leaseback arrangements. The net book value of tangible assets
held under finance leases at 31 December 2015 was £1 million (2014: £1 million).
4.3 Managing market risks: derivative financial instruments
Keeping it simple
What is a derivative?
A derivative is a type of financial instrument typically used to manage risk. A derivative's value changes over time in
response to underlying
variables such as exchange rates or interest rates and is entered into for a fixed period. A hedge is where a derivative is
used to manage exposure in an underlying variable.
The Group is exposed to certain market risks. In accordance with Board approved policies, which are set out in this note,
the Group manages these risks by using derivative financial instruments to hedge the underlying exposures.
Why do we need them?
The key market risks facing the Group are:
· Currency risk arising from:
i. translation risk, that is, the risk in the period of adverse currency fluctuations in the translation of foreign
currency profits, assets and liabilities ('balance sheet risk') and non-functional currency monetary assets and liabilities
('income statement risk') and
Ii. transaction risk, that is, the risk that currency fluctuations will have a negative effect on the value of the Group's
non-functional currency trading cash flows. A non-functional currency transaction is a transaction in any currency other
than the reporting currency of the subsidiary.
· Interest rate risk to the Group arises from significant changes in interest rates on borrowings issued at or swapped to
floating rates.
How do we use them?
The Group mainly employs three types of derivative financial instruments when managing its currency and interest rate
risk:
· Foreign exchange swap contracts are derivative instruments used to hedge income statement translation risk arising from
short term intercompany loans denominated in a foreign currency
· Forward foreign exchange contracts are derivative instruments used to hedge transaction risk so they enable the sale or
purchase of foreign currency at a known fixed rate on an agreed future date and
· Interest rate swaps are derivative instruments that exchange a fixed rate of interest for a floating rate, or vice
versa, or one type of floating rate for another, and are used to manage interest rate risk
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 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 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.
Determining Fair Value
The fair value of forward foreign exchange contracts is determined by using the difference between the contract exchange
rate and the quoted forward exchange rate at the reporting date. The fair value of interest rate swaps is the estimated
amount that the Group would receive or pay to terminate the swap at the reporting date, taking into account current
interest rates and our current creditworthiness, as well as that of our swap counterparties.
Third-party valuations are used to fair value the Group's interest rate derivatives. The valuation techniques use inputs
such as interest rate yield curves and currency prices/yields, volatilities of underlying instruments and correlations
between inputs.
How do we manage our currency and interest rate risk?
Currency risk
As the Group expands its international operations, the performance of the business becomes increasingly sensitive 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 currency
denominated costs or revenue at the time of commitment for up to five years forward. The Group also hedges a proportion of
highly probable non-functional currency denominated costs or revenue on a rolling 18 month basis (see 'Keeping it simple
box' for explanation of non-functional currency transactions).
The Group ensures that its net exposure to foreign currency denominated cash balances is kept to a minimal level by using
foreign currency swaps to exchange balances back into sterling or by buying or selling foreign currencies at spot rates
when necessary.
The Group also utilises foreign exchange swaps both to manage foreign currency cash flow timing differences and to hedge
foreign currency denominated monetary items.
The Group's net investments in overseas subsidiaries may be hedged where the currency exposure is considered to be
material. In 2015 the Group designated a portion of its euro borrowings into a net investment hedge against its euro
denominated assets following the acquisition of Talpa Media.
The following table highlights the Group's sensitivity to translation risk resulting from a 10% strengthening/weakening in
sterling against the US dollar and euro, assuming all other variables are held constant:
2015-post- taxprofit 2015 -equity 2014 -post- taxprofit 2014 -equity
USdollar £10 million £63million £8million £34million
Euro £8million £41million £8million £29million
Interest rate risk
The Group's interest rate policy is to allow fixed rate gross debt to vary between 20% and 100% of total gross debt to
accommodate floating rate borrowings under the revolving credit facility.
At 31 December 2015 the Group's fixed rate debt represented 99% of total gross debt (2014: 100%). Consequently a 1%
movement in interest rates on negligable floating variable rate debt would not impact the post-tax profit for the year.
For financial assets and liabilities classified at fair value through profit or loss, the movements in the year relating to
changes in fair value and interest are not separated.
What is the value of our derivative financial instruments?
The following table shows the fair value of derivative financial instruments analysed by type of contract. Interest rate
swap fair values exclude accrued interest.
At31December2015 Assets£m Liabilities£m
Current
Cash flowhedges - (4)
Foreignexchangeforwardcontractsandswaps-fairvaluethroughprofitorloss 1 (1)
Interestrateswaps-fairvaluethroughprofitorloss - -
Non-current
Interestrateswaps-fairvaluethroughprofitorloss 8 (6)
9 (11)
At 31 December2014 Assets£m Liabilities£m
Current
Cash flowhedges - (3)
Interestrateswaps-fairvaluethroughprofitorloss 11 (9)
Non-current
Cash flowhedges - (1)
Interestrateswaps-fairvaluethroughprofitorloss 16 (11)
27 (24)
Interest rate swaps
On issuing the 2017 Eurobond, the Group entered into a portfolio of fixed to floating interest rate swaps and then
subsequently overlaid a portfolio of floating to fixed interest rate swaps with the result that interest was 100% fixed on
these borrowings. The timing of entering into these swaps locked in an interest benefit for the Group, resulting in a net
mark-to-market gain on the portfolio.
Cash flow hedges
The Group applies hedge accounting for certain foreign currency firm commitments and highly probably cash flows where the
underlying cash flows are payable within the next two years. In order to fix the sterling cash outflows associated with the
commitments - which are mainly denominated in AUD or euros - the Group has taken out forward foreign exchange contracts for
the same foreign currency amount and maturity date as the expected foreign currency outflow. The amount recognised in other
comprehensive income during the period all relates to the effective portion of the revaluation loss associated with these
contracts. There was less than £1 million (2014: £nil) ineffectiveness taken to the income statement and £6 million
cumulative loss (2014: £nil) recycled to the income statement in the year.
Net investment hedges
The Group uses euro denominated debt to partially hedge against the change in the sterling value of its euro denominated
net assets due to movements in foreign exchange rates. The fair value of debt in a net investment hedge was £141 million
(2014: £nil). A foreign exchange loss of £2 million (2014: £nil) relating to the net investment hedges has been netted off
within exchange differences on translation of foreign operations as presented on the consolidated statement of
comprehensive income.
Undiscounted financial liabilities
Keeping it simple
The Group is required to disclose the expected timings of cash outflows for each of its financial liabilities (including
derivatives). 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.
At31December2015 Carryingvalue£m Total contractual cashflows£m Lessthan1year£m Between 1 and 2years£m Between 2 and 5years£m Over 5years£m
Non-derivative financialliabilities
Borrowings (613) (703) (30) (184) (28) (461)
Trade and otherpayables (834) (834) (786) (34) (14) -
Other payables -non-current (4) (4) - (1) (2) (1)
Other payables - commitmentson acquisitions (85) (303) (12) (108) (183) -
Derivative financialinstruments
Cash flowhedges
Inflow 66 66 49 17 - -
Outflow (70) (70) (53) (17) - -
Foreign exchange forward contractsand swaps
Inflow 147 147 144 3 - -
Outflow (147) (147) (144) (3) - -
Interest rateswaps
Inflow 8 22 9 13 - -
Outflow (6) (12) (6) (6) - -
(1,538) (1,838) (829) (320) (227) (462)
At 31 December2014 Carryingvalue£m Total contractual cashflows£m Lessthan 1year£m Between 1 and 2years£m Between 2 and 5years£m Over 5years£m
Non-derivative financialliabilities
Borrowings (256) (357) (100) (16) (175) (66)
Trade and otherpayables (726) (726) (699) (23) (4) -
Other payables -non-current (4) (4) - (3) (1) -
Other payables - commitmentson acquisitions (34) (96) - (9) (81) (6)
Derivative financialinstruments
Cash flowhedges
Inflow 88 88 52 36 - -
Outflow (92) (92) (54) (38) - -
Foreign exchange forward contractsand swaps
Inflow 19 19 17 2 - -
Outflow (19) (19) (17) (2) - -
Interest rateswaps
Inflow 26 47 26 8 13 -
Outflow (19) (27) (16) (5) (6) -
(1,017) (1,167) (791) (50) (254) (72)
4.4 Net financing costs
Keeping it simple
This section details the interest income generated on the Group's cash and other financial assets and the interest expense
incurred on borrowings and other financial liabilities.
In reporting 'adjusted profit', the Group adjusts net financing costs to exclude unrealised mark-to-market movements on
interest rate and foreign exchange derivatives, gains/losses on bond buybacks, net pension interest, interest and fair
value movements in acquisition-related liabilities and other financing costs.
Our rationale for adjustments made to financing costs is set out in the Financial and Performance Review.
Accounting policies
Net financing costs comprise interest income on funds invested, gains/losses on the disposal of financial instruments,
changes in the fair value of financial instruments, interest expense on borrowings and finance leases, unwinding of the
discount on provisions, unwinding of the discount on liabilities to non-controlling interest, foreign exchange
gains/losses, and imputed interest on pension assets and liabilities. Interest income and expense is recognised as it
accrues in profit or loss, using the effective interest method.
Net financing costs
Net financing costs can be analysed as follows:
2015£m 2014£m
Financingincome:
Interestincome 3 4
Changeinfairvalueofinstrumentsclassifiedatfairvaluethroughprofitorloss 3 -
Foreign exchangegain - 1
Other financeincome - 17
6 22
Financingcosts:
Interestexpenseonfinancialliabilitiesmeasuredatamortisedcost (17) (19)
Netpensioninterest(seenote3.7) (10) (17)
Losses on earlysettlement - (30)
Foreign exchangeloss (2) -
Other financeexpense (8) (7)
(37) (73)
Net financingcosts (31) (51)
Interest on financial liabilities relates to the interest incurred on the Group's borrowings in the year.
The losses on early settlement in the prior year of £30 million were incurred as a result of the repurchase of the
remaining £62 million 2019 bilateral loan.
Other finance income in the prior year primarily relates to acquisition-related contingent liabilities. This is where
estimates of the future performance against stretch targets is reassessed, resulting in adjustments to the related put
option liabilities. Other finance expense includes the amortisation of facility commitment and upfront fees.
4.5 Fair value hierarchy
Keeping it simple
The financial instruments included on the ITV statement of financial position are measured at either fair value or
amortised cost. The measurement of this fair value can in some cases be subjective, and can depend on the inputs used in
the calculations. ITV generally uses external valuations using market inputs or market values (e.g. external share prices).
The different valuation methods are called 'hierarchies' and are described below.
Level 1
Fair values are measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2
Fair values are measured using inputs, other than quoted prices included within Level 1, that are observable for the asset
or liability either directly or indirectly.
Interest rate swaps and options are accounted for at their fair value based upon termination prices. Forward foreign
exchange contracts are accounted for at the difference between the contract exchange rate and the quoted forward exchange
rate at the reporting date.
Level 3
Fair values are measured using inputs for the asset or liability that are not based on observable market data.The tables
below set out the financial instruments included on the ITV statement of financial position at 'fair value'.
Fairvalue 31December2015£m Level131December2015£m Level231December2015£m Level331December2015£m
Assets measured at fairvalue
Available for sale financialinstruments
Availableforsalegilts(seenote4.1) 38 38 - -
Availableforsaleinvestments(seenote3.5) 11 - - 11
Financialassetsatfairvaluethroughprofitorloss
Foreign exchange forward contracts andswaps 1 - 1 -
Interest rateswaps 8 - 8 -
58 38 9 11
Fairvalue 31December2015£m Level131December2015£m Level231December2015£m Level331December2015£m
Liabilities measured at fairvalue
Financialliabilitiesatfairvaluethroughprofitorloss
Contingentconsideration (3) - - (3)
Foreign exchange forward contracts andswaps (1) - (1) -
Interest rateswaps (6) - (6) -
Financialliabilitiesatfairvaluethroughreserves
Cash flowhedges (4) - (4) -
(14) - (11) (3)
Fairvalue 31December2014£m Level131December2014£m Level231December2014£m Level331December2014£m
Assets measured at fairvalue
Available for sale financialinstruments
Availableforsalegilts(seenote4.1) 39 39 - -
Financialassetsatfairvaluethroughprofitorloss
Contingentconsideration 32 - - 32
Interest rateswaps 27 - 27 -
98 39 27 32
Fairvalue 31December2014£m Level131December2014£m Level231December2014£m Level331December2014£m
Liabilities measured at fairvalue
Financialliabilitiesatfairvaluethroughprofitorloss
Contingentconsideration (3) - - (3)
Interest rateswaps (20) - (20) -
Financialliabilitiesatfairvaluethroughreserves
Cash flowhedges (4) - (4) -
(27) - (24) (3)
Refer to note 4.3 for how we value interest rate swaps and forward foreign currency contracts.
Contingent consideration is the Group's only financial instrument classified as Level 3 in the fair value hierarchy. As
noted in the accounting policy section of note 3.3, the key assumptions taken into consideration when measuring this
acquisition-related liability are the performance expectations of the acquisition and a discount rate that reflects the
size and nature of the new business. There is no reasonable change in discount rate or performance targets that would give
rise to a material change in the liability at year end.
The table below summarises the key movement in the contingent consideration during the year.
Asset2015£m Liability 2015£m Asset2014£m Liability2014£m
At 1January 32 (3) - (7)
Acquisitions (see note3.4) - - 30 (1)
Changes in non-controllinginterests (32) - - -
Changesinestimates(incomestatement) - - - 5
Currencytranslation - - 2 -
At 31 December - (3) 32 (3)
Current - (2) - -
Non-current - (1) 32 (3)
At 31 December - (3) 32 (3)
Changes in estimates, including the unwind of interest and fair value movements, are recognised in net financing costs.
4.6 Equity
Keeping it simple
This section explains material movements recorded in shareholders' equity that are not explained elsewhere in the financial
statements. The movements in equity and the balance at 31 December 2015 are presented in the consolidated statement of
changes in equity.
Accounting policies
Available for sale reserve
Available for sale assets are stated at fair value, with any gain or loss recognised directly in the available for sale
reserve in equity, unless the loss is a permanent impairment, when it is then recorded in the income statement.
Dividends
Dividends are recognised through equity on the earlier of their approval by the Company's shareholders or their payment.
4.6.1 Share capital and share premium
The Group's share capital at 31 December 2015 of £403 million (2014: £403 million) and share premium of £174 million (2014:
£174 million) is the same as that of ITV plc. Details of this are given in the ITV plc Company financial statements section
of this Annual Report.
4.6.2 Merger and other reserves
Merger and other reserves at 31 December 2015 include the following reserves:
2015£m 2014£m
Merger reserves 98 119
Capitalreserves 112 112
Capital redemptionreserves 36 36
Revaluationreserves 2 6
Putoptionliabilitiesarisingonacquisitionofnewsubsidiaries (27) (45)
Total 221 228
The movement in the merger reserve and put option is in relation to the acquisition of the remaining non-controlling
interest of Leftfield Entertainment.
4.6.3 Translation reserve
The translation reserve comprises:
· all foreign exchange differences arising on the translation of the accounts of, and investments in, foreign operations
and
· the gains or losses on the portion of cash flow hedges that have been deemed effective (see note 4.3)
4.6.3 Available for sale reserve
The available for sale reserve comprises all movements arising on the revaluation of gilts accounted for as available for
sale.
4.6.5 Retained earnings
The retained earnings reserve comprises profit for the year attributable to owners of the Company of £495 million (2014:
£466 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 and the charge for the purchase of
ITV shares via the ITV Employees' Benefit Trust, which are described in note 4.7.
The Directors of ITV plc propose a final dividend of 4.1p per share and a special dividend of 10.0p per share.
4.6.6 Non-controlling interests
The movement for the year comprises:
· the fair value of the non-controlling interest acquired in the year of £19 million relates to the acquisition of the
remaining 20% in Leftfield Entertainment (2014: £20 million);
· the share of profits attributable to non-controlling interests of £7 million (2014: £7million); and
· the distributions made to non-controlling interests of £5 million (2014: £8 million).
4.7 Share-based compensation
Keeping it simple
The Group utilises share award schemes as part of its employee remuneration packages, and therefore operates a number of
share-based compensation schemes, namely the Deferred Share Award (DSA), Performance Share Plan (PSP), Long Term Incentive
Plan (LTIP) and Save As You Earn (SAYE) schemes.
A transaction will be classed as share-based compensation where the Group receives services from employees and pays for
these in shares or similar equity instruments. If the Group incurs a liability based on the price or value of the Group's
shares then this will also fall under a share-based transaction.
A description of each type of share-based payment arrangement that existed at any time during the period are set out in the
Annual Remuneration Report.
Accountingpolicies
For each of the Group's share-based compensation schemes, the fair value of the equity instrument granted is measured at
grant date and spread over the vesting period via a charge to the income statement with a corresponding increase in
equity.
The fair value of the share options and awards is measured using either market price at grant date or, for the Save As You
Earn scheme (SAYE), a Black-Scholes model, taking 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
relevant Group performance measures are projected to the end of the performance period in order to determine the number of
options expected to vest. The estimate is then used to determine the option fair value, discounted to present value. The
Group 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, are recognised in the income statement, with
a corresponding adjustment to equity.
Exercises of share options granted to employees can be satisfied by market purchase or issue of new shares. No new shares
may be issued to satisfy exercises under the terms of the DSA. During the year all exercises were satisfied by using shares
purchased in the market and held in the ITV Employees' Benefit Trust.
Share-based compensation charges totalled £14 million in 2015 (2014: £14 million).
Share options outstanding
The table below summarises the movements in the number of share options outstanding for the Group and their weighted
average exercise price:
Number ofoptions('000) 2015Weightedaverage exerciseprice(pence) Number ofoptions('000) 2014Weightedaverage exerciseprice(pence)
Outstanding at 1January 51,933 32.97 67,676 14.52
Granted during the year - nilpriced 6,744 - 8,594 -
Granted during the year -other 4,615 198.94 5,999 162.86
Forfeited during theyear (30) 143.65 (1,381) 28.67
Exercised during theyear (19,477) 16.65 (27,860) 9.02
Expired during theyear (3,618) 18.77 (1,095) 12.94
Outstanding at 31December 40,193 55.63 51,933 32.97
Exercisable at 31December 610 53.17 1,129 14.47
The average share price during 2015 was 254.24 pence (2014: 198.01 pence).
Of the options still outstanding, the range of exercise prices and weighted average remaining contractual life of these
options can be analysed as follows:
Rangeofexerciseprices(pence) Weightedaverage exerciseprice(pence) Number ofoptions('000) 2015Weightedaverageremaining contractuallife(years) Weightedaverage exerciseprice(pence) Number ofoptions('000) 2014Weightedaverageremaining contractuallife(years)
Nil - 25,910 1.79 - 36,522 1.75
20.00 -49.99 - - - 35.61 1,120 0.53
50.00 -69.99 67.24 991 0.98 67.37 5,123 1.11
70.00 -99.99 73.58 301 0.92 73.58 303 1.90
100.00 -109.99 102.59 1,672 1.14 102.59 1,733 2.16
110.00 - 119.99 - - - - - -
120.00 -149.99 131.44 1,175 1.52 131.44 1,251 2.52
150.00 -199.99 172.58 8,089 2.22 - - -
200.00 -249.99 206.83 2,054 2.52 163.72 5,881 2.80
Assumptions
DSA, LTIP and PSP options are valued directly by reference to the share price at date of grant. The options for the SAYE
scheme, an HMRC approved SAYE scheme, are valued using the Black-Scholes model, using the assumptions below:
Schemename Date ofgrant Sharepriceat grant (pence) Exerciseprice(pence) Expected volatility% Expectedlife(years) Grossdividendyield% Risk-freerate% Fair value (pence)
3Year 3 April 2014 195.50 159.68 32.00 3.25 2.15 1.27 53.78
5Year 3 April 2014 195.50 159.68 38.00 5.25 2.15 1.94 70.41
3Year 10 Sept2014 212.40 165.33 29.00 3.25 1.98 1.30 61.14
5Year 10 Sept2014 212.40 165.33 34.00 5.25 1.98 1.81 74.29
3Year 2 April 2015 251.00 192.52 26.00 3.25 2.27 0.74 65.85
5Year 2 April 2015 251.00 192.52 32.00 5.25 2.27 1.14 80.81
3Year 16Sept2015 249.60 206.83 25.00 3.25 2.28 0.97 55.71
5Year 16 Sept2015 249.60 206.83 30.00 5.25 2.28 1.38 72.02
Employees' Benefit Trust
The Group has investments in its own shares as a result of shares purchased by the ITV Employees' Benefit Trust ('EBT').
Transactions with the Group-sponsored EBT are included in these financial statements and primarily consist of the EBT's
purchases of shares in ITV plc, which are accounted for as a reduction to retained earnings.
The table below shows the number of ITV plc shares held in the EBT at 31 December 2015 and the purchases/(releases) from
the EBT made in the year to satisfy awards under the Group's share schemes:
Scheme Shares heldat Number ofshares (released)/purchased Nominalvalue£
1 January2015 22,482,747 2,248,275
DSAreleases (2,589,150)
PSPreleases (5,580,025)
SAYEreleases (5,313,414)
Sharespurchased 7,949,693
31 December2015 16,949,851 1,694,985
The total number of shares held by the EBT at 31 December 2015 represents 0.42% (2014: 0.56%) of ITV's issued share
capital. The market value of own shares held at 31 December 2015 is £47 million (2014: £48 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 which 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.
Section 5: Other Notes
5.1 Related party transactions
Keeping it simple
The related parties identified by the Directors include joint ventures, associated undertakings, fixed asset investments
and key management personnel.
To enable users of our financial statements to form a view about the effects of related party relationships on the Group,
we disclose the Group's transactions with those related parties during the year and any associated year end trading
balances.
Transactions with joint ventures and associated undertakings
Transactions with joint ventures and associated undertakings during the year were:
2015£m 2014£m
Sales to jointventures 9 7
Sales to associatedundertakings 13 10
Purchases from jointventures 24 26
Purchases from associatedundertakings 65 59
The transactions with joint ventures primarily relate to sales and purchases of digital multiplex services with Digital 3&4
Limited. Purchases from associated undertakings primarily relate to the purchase of news services from ITN.
All transactions with associated undertakings and joint ventures arise in the normal course of business on an arm's length
basis. None of the balances are secured.
The amounts owed by and to these related parties at the year end were:
2015£m 2014£m
Amounts owed by jointventures 3 -
Amounts owed by associatedundertakings 66 48
Amounts owed to jointventures 2 -
Amounts owed to associatedundertakings 5 5
Amounts owed by pensionscheme - 1
Balances owed by associated undertakings largely relate to production funding advanced to Tomorrow ITV Studios.
Amounts paid to the Group's retirement benefit plans are set out in note 3.7.
Transactions with key management personnel
Key management consists of ITV plc Executive and Non-executive Directors and the ITV Management Board. Key management
personnel compensation is as follows:
2015£m 2014£m
Short-term employeebenefits 9 9
Share-based compensation 6 5
15 14
5.2 Contingent liabilities
Keeping it simple
A contingent liability is a liability that is not sufficiently certain to qualify for recognition as a provision where
uncertainty may exist regarding the outcome of future events.
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.
5.3 Subsequent events
Keeping it simple
Where the Group receives information in the period between 31 December 2015 and the date of this report about conditions
related to certain events that existed at 31 December 2015, we update our disclosures that relate to those conditions in
light of the new information. Such events can be categorised as adjusting or non-adjusting depending on whether the
condition existed at 31 December 2015. If non-adjusting
events are material, non-disclosure could influence the economic decisions that users make on the basis of the financial
statements. Accordingly, for each material category of non-adjusting event after the reporting period we disclose in this
section the nature of the event and an estimate of its financial effect, or a statement that such an estimate cannot be
made.
On 19 October 2015 the Group announced that it had agreed to acquired 100% of the share capital of UTV Limited for a total
cash consideration of £100 million, subject to regulatory and UTV Media plc shareholder approval. Final approvals were
obtained by 18 February 2016 and the acquisition completed on 29 February 2016. The transaction was financed through
existing cash and debt facilities.
5.4 Subsidiaries exempt from audit
Keeping it simple
Certain subsidiaries of the Group can take an exemption from having an audit. Strict criteria must be met for this
exemption to be taken, and it must be agreed to by the Directors of that subsidiary entity.
Listed below are subsidiaries controlled and consolidated by the Group, where the Directors have taken the exemption from
having an audit of its financial statements for the year ended 31 December 2015. This exemption is taken in accordance with
Companies Act s479A.
CompanyNumber CompanyName
01891539 Broad Street FilmsLimited
02285229 CampaniaLimited
5078683 Carbon MediaLimited
4159249 Carlton Content HoldingsLimited
1692483 Carlton FinanceLimited
03984490 Carlton Food NetworkLimited
3053908 Carlton Programmes DevelopmentLimited
3210452 Carlton Screen Advertising (Holdings)Limited
3307790 Carltonco103
2625225 Carltonco FortyInvestments
3210363 CarltoncoNinety-Six
2852812 Cosgrove Hall FilmsLimited
3209058 DTVLimited
00290076 Granada GroupLimited
3962410 GranadaLimited
03106798 Granada MediaLimited
05344772 Granada Screen (2005)Limited
00733063 GranadaTelevisionOverseasLimited
01127149 ITV BreathlessLimited
04209918 ITV CillaLimited
06914987 ITV (HC)Limited
08534385 ITV LucanLimited
03916436 ITV News ChannelLimited
09499040 ITV TennisonLimited
05518785 Juice Music UKLimited
04201477 Morning TVLimited
ITV plc Company Financial Statements
Company BalanceSheet
As at 31December Note 2015£m 2015£m Restated*2014£m Restated*2014£m
Non-currentassets
Investments in subsidiaryundertakings iii 1,861 1,705
Derivative financialinstruments 9 17
Deferred taxasset 2 2
1,872 1,724
Current assets
Amounts owed by subsidiaryundertakings 3,864 1,441
Derivative financialinstruments 6 14
Otherreceivables 16 20
Cash and cashequivalents 126 145
4,012 1,620
Currentliabilities
Borrowings v - (78)
Amounts owed to subsidiaryundertakings (3,760) (1,795)
Accruals and deferredincome (21) (19)
Derivative financialinstruments (6) (12)
(3,787) (1,904)
Net current assets/(liabilities) 225 (284)
Total assets less currentliabilities 2,097 1,440
Non-currentliabilities
Borrowings v (598) (161)
Derivative financialinstruments (6) (12)
(604) (173)
Net assets 1,493 1,267
Capital andreserves
Sharecapital vi 403 403
Sharepremium vii 174 174
Otherreserves vii 36 36
Retainedearnings vii 880 654
Totalequity 1,493 1,267
* 2014 has been restated as part of the transition to FRS 101. See note xii.
The accounts were approved by the Board of Directors on 2 March 2016 and were signed on its behalf by:
Ian Griffiths
Director
Company Statement of Changes in Equity
Note ShareCapital£m SharePremium£m Other Reserves£m RetainedEarnings£m Total£m
Balance at 1 January2015 403 174 36 654 1,267
Total comprehensive income for theyear
Profit - - - 671 671
Total comprehensive income for theyear - - - 671 671
Transactions with owners recorded directly inequity
Contributions by and distributions toowners
Equitydividends - - - (459) (459)
Movements due to share basedcompensation - - - 14 14
Total contributions by and distributions toowners - - - (445) (445)
Total transactions withowners - - - (445) (445)
Balance at 31 December2015 vii /viii 403 174 36 880 1,493
Note ShareCapital£m SharePremium£m Other Reserves£m RetainedEarnings£m Total£m
Balance at 1 January2014 403 174 36 995 1,608
Effect of changes to FRS101 - - - 2 2
Restated balance at 1 January2014 403 174 36 997 1,610
Total comprehensive income for theyear
Profit - - - (44) (44)
Total comprehensive income for theyear - - - (44) (44)
Transactions with owners recorded directly inequity
Contributions by and distributions toowners
Equitydividends - - - (313) (313)
Movements due to share basedcompensation - - - 14 14
Total contributions by and distributions toowners - - - (299) (299)
Total transactions withowners - - - (299) (299)
Balance at 31 December2014 vii /viii 403 174 36 654 1,267
Notes to the ITV plc Company Financial Statements
i Accounting policies
Basis of preparation
The Company transitioned from old UK GAAP to Financial Reporting Standard 101 Reduced Disclosure Framework (FRS101) for all
periods presented. The Company's transition date is 1 January 2014. This is the first year adoption of FRS101. There were
no material amendments on the adoption of FRS101. See note xi for further information.
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework.
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.
Exemptions Applied
The Company is taking advantage of the following disclosure exemptions under FRS101.
· Presentation of a Statement of Cash Flows
· Disclosure of key management personnel compensation
· Disclosure of related party transactions between wholly-owned subsidiaries
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