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ANNUAL REPORT 2015


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ANNUAL REPORT 2015


HEADLINE REVENUE

£57.6M

(-4% YEAR-ON-YEAR)

HEADLINE PROFIT

£2.1M

(+6% YEAR-ON-YEAR)

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chairman's statement


chairman's statement


Throughout 2015, the PA Group continued to reposition itself to capitalise on growth opportunities in the digital market, while seeking new ways to diversify its sources of income.

During the year, the Company acquired the remaining 30% of Globelynx, the business which enables live broadcast interviews from experts’ own offices. This follows the Group’s first investment in 2011. We also became entitled to acquire and since exercised the option to acquire the remaining 20% stake in Sticky Content our digital content marketing agency, having initially invested in this business during 2013.

In addition, significant investment was made in the training and development of our sales teams to drive take up of new digital products, such as Snappa, which completed its first full year of operation in 2015.

The impact of a declining traditional media market was reflected in a 4% year-on-year reduction in the Company’s overall turnover to £57.6m, with the reductions mainly arising in revenues from newspaper publishers.

However, operating profit from continuing operations was £2.1m, up 6% from last year, due mainly to technology-led efficiencies in our data business and a continued focus on costs.

During the year we paid shareholders a dividend of £20m from the final proceeds from the sale of our MeteoGroup weather business to General Atlantic LLC in 2014. From the proceeds of that sale, a further £10m payment was placed in an escrow account in favour of the PA pension fund.

We also saw some changes to the makeup of our board whose guidance remains crucial to ensuring that the PA Group continues to meet the changing needs of its customers, while implementing new strategies to future-proof the business. 

Geraldine Allinson was appointed as a non-executive director in March 2015. She brings to the board considerable insight into the needs of the UK’s regional press, as Chairman of the KM Group, an independent, family-owned multimedia company serving the communities of Kent and Medway.

In September, we also welcomed back Rebekah Brooks as a non-executive director, following her appointment as Chief Executive of News UK. Rebekah had previously served on the board between 2010 and 2011.

Three non-executive directors, Dame Helen Alexander, Mike Darcey and Adrian Jeakings, stepped down during the year and they leave with our thanks for their hard work and dedication over their terms of service.

Simon Fox replaces Adrian Jeakings as chair of the Audit Committee, with Geraldine Allinson also making a valuable contribution as a recently appointed member. 

In 2016 we will also bid farewell to John Bryant who retires as Chairman of the PA Trust having worked since 2008 to ensure that the agency’s values of fast, fair and accurate reporting were never compromised. He leaves with our thanks and best wishes.

As publishers seek to adapt and evolve their business models during a period of unparalleled change, PA is continuing to position itself to capitalise on the opportunities to create new content, products and services for digital platforms, while remaining true to its core values of accuracy, impartiality and integrity.
 

MURDOCH MACLENNAN
CHAIRMAN

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CHIEF EXECUTIVE'S STATEMENT


CHIEF EXECUTIVE'S STATEMENT


SUMMARY

2015 was a year of great change and innovation for the Group as it continued its mission to build a digital-focused, multi-platform business and to diversify the company’s sources of revenue. For the fifth consecutive year the Group delivered record profits when comparing continuing operations – with operating profit before goodwill amortisation 9% ahead of 2014. This was in spite of difficult trading conditions in our traditional media market, reflected in a 4% decline in our year-on-year revenue. 

Operating profit before goodwill amortisation was £3.9m, £0.3m higher than the same figure for 2014. Operating profit was £2.1m, a year-on-year improvement of £0.1m.

BROADENING OUR REVENUE BASE

In a challenging media environment, it remains imperative that the PA Group continues to find new customers and revenue streams, and reduce its reliance on the traditional media sector. 

In 2015 we saw further progress towards this goal with our non-media acquisitions – Globelynx, Sticky Content and TNR – delivering 14% of
total group revenue and 13% of contribution, almost entirely mitigating the loss of revenue from traditional media.

During the year we acquired the remaining shares in Globelynx, our live broadcasting operation. Under the leadership of new Managing Director, John Holliday, a restructured sales team helped the business double sales and enter new markets including Abu Dhabi, Hong Kong and the US.

We also reached agreement to acquire the remaining 20% stake in Sticky Content, our digital content and content strategy agency, with founder Catherine Toole agreeing to stay on as a non-executive director. Restructuring the sales team to prioritise new business wins has led to Sticky Content signing major new clients like Coca Cola, with more expected in 2016.  

TNR, our specialist communications consultancy had its strongest ever profit performance and continued to undertake major video and photography projects for leading UK and international brands. Stand-out campaigns during the year included staging a series of press events to mark the 60th anniversary of Guinness World Records and unleashing a life-sized polar bear in London to mark the launch of Sky Atlantic’s new drama Fortitude. Plans for 2016 include the launch of a survey service and corporate photography offshoot.

The PR experts at TNR arranged for an animatronic polar bear to roam through London ahead of the launch of Fortitude on Sky Atlantic

The PR experts at TNR arranged for an animatronic polar bear to roam through London ahead of the launch of Fortitude on Sky Atlantic

Building on the success of our existing investments, in 2015 we began the process of seeking new opportunities to invest in or acquire; complementary businesses that are earnings-enhancing, bring new capabilities into the business and deliver against our objective of revenue diversification. Deploying the proceeds set aside for this purpose from the sale of Meteogroup in 2014, we are confident this process will yield attractive investment opportunities in 2016. 

TRANSFORMING OUR NEWS OPERATION

In our core content business, centred on the news Agency, the focus remained on building new products and services for digital platforms.  This has involved significant investment in technology and a programme of training and development for our editorial and commercial teams, ensuring our people are equipped with the tools to create and sell high quality digital services. In tandem with these initiatives there have been a number of new appointments to key roles to ensure we have the right skills and leadership to deliver the changes the business requires.  

At the beginning of the year we also introduced a new visual identity to better position PA in the digital landscape and allow easier integration of our branding onto digital channels for both internal and external stakeholders. Going forward, the Group’s branding will focus on the initials ‘PA’ rather than ‘Press Association’.
 
The beginning of the year saw the appointment of a new Editor-in-Chief, Pete Clifton. As part of his remit to evolve the Agency into a more digitally-focussed news and information business, he initiated a wide ranging transformation plan including the  establishment of multi-skilling across our news gathering teams and command desk; a unified planning system, new types of story-telling for digital and social platforms; and a renewed focus on video. 

There were a number of senior editorial appointments during the year to upgrade our skills in key positions including a Head of Video, Head of Production, Head of Social Media, Entertainment Editor, and the agency’s first data journalist. 

A new social media team was established under Darren Waters who joined PA as its first Social Media Editor in December 2014. His strategy for the agency brought clarity and consistency to our approach to newsgathering and publishing updates on these vital channels. This focus has significantly increased our online following across our accounts, with the @PA Twitter account alone doubling its followers to 41,000 in the year. All our journalists received training on social media, and their updates on PA social accounts are widely followed by media clients. 

In response to market trends, PA’s video service underwent a complete refresh in 2015 with significant investment in a new end-to-end system. All our footage is now shot in HD, and a cloud-based system allows us to input, process and publish video content more quickly. The agency invested in its first drone and a new broadcasting channel to send live video back to the newsroom for faster turnaround to customers. A new portal also makes it easier for customers to find and download video content. 

Upgrades to journalists’ mobile phones have led to a dramatic improvement in the quality of reporter generated pictures and videos captured and shared on our main wires and social media accounts. On an almost daily basis, one of our reporters will capture a video or picture that will appear on newspaper front pages, websites and television. 

One highlight of many was the footage of the Tadcaster Bridge collapsing during the floods that plagued the north of England over the winter. Shot by a PA reporter on his smartphone, it was to prove the best footage of the incident, and sold widely to customers across the UK and Internationally. 

Snappa, launched in 2014 to target millennial audiences, marked its first full year of operation in August. Based on just the subset of customers who share data with us, the service has had more than 33 million page views and published more than 20,000 stories. The total actual audience is many times higher. Its highly shareable, image-led stories can be found on several of PA’s existing clients’ websites including Yahoo, BT and BreakingNews.ie, and it has opened up new revenue channels such as the outdoor and Transport sectors. 

Insight from our customers has been invaluable during this period of transformation. Throughout the year the editorial team, in tandem with commercial colleagues, have carried out a concerted programme of client visits across the UK to get a better understanding of how their newsrooms work and how PA can better support them.

STAYING AT THE FOREFRONT OF THE YEAR'S BIGGEST STORIES

PA remained at the forefront of coverage of many of the year’s most dominant stories, while innovating to build on the breadth, depth and value of content, and the way it is delivered to customers.

Our comprehensive coverage of the general election in May included a number of firsts to keep social media at the heart of our reporting. 

Labour Party leader Ed Miliband, Plaid Cymru Party leader Leanne Wood, Green Party leader Natalie Bennett, Scottish National Party leader Nicola Sturgeon and Ukip leader Nigel Farage after the BBC Challengers' Election Debate 2015 at Central Hall Westminster, London.

Labour Party leader Ed Miliband, Plaid Cymru Party leader Leanne Wood, Green Party leader Natalie Bennett, Scottish National Party leader Nicola Sturgeon and Ukip leader Nigel Farage after the BBC Challengers' Election Debate 2015 at Central Hall Westminster, London.

Innovations included: a rolling “live” service on the wire of short, rapid updates, designed to meet the requirements of our customers’ live blogs. We also introduced fast, simple and informative graphics; a daily 60-second video round-up; curated lists of social media updates from our reporters and the wider Twittersphere; a Snappa election channel; and a live blog that plugged directly into digital clients including MSN and BT.com. 

The election also marked PA’s first collaboration with Facebook which saw us manage the social network’s ‘UK Politics’ page, curating and posting the most shareable content from the PA and around the web. 

During the campaign period, we also supplied data to power Google’s ‘Make Up Your Own Mind’ search feature which allowed the public to find information about their local candidates.

The Royal Family remained a source of interest to both UK and international audiences, with PA coverage featuring heavily across major news outlets.

The highly anticipated birth of Princess Charlotte led to another triumph of planning and the skill of our photographers. One iconic image – the only clear shot of the baby’s face as she left hospital with her parents – appeared in multiple newspapers, magazines and websites across the world. 

In the year that Queen Elizabeth II became the country’s longest reigning monarch, PA made excellent use of its image archive. Highlights included a stunning gallery of pictures – one for every year of the Queen's reign - which sold particularly widely to online news outlets.

Duke and Duchess of Cambridge outside the Lindo Wing of St Mary's Hospital in London, with their newborn daughter Princess Charlotte of Cambridge

Duke and Duchess of Cambridge outside the Lindo Wing of St Mary's Hospital in London, with their newborn daughter Princess Charlotte of Cambridge

Breaking exclusive stories remains an important goal for the agency, and the efforts of our news teams have been greatly enhanced by information and data acquired under the Freedom of Information (FoI) legislation in the UK. 

Investigations carried out during the year revealed, among others, the level of expenses claimed by the Speaker of the House of Commons; the millions of pounds made by hospital trusts in car parking charges; and the number of registered sex offenders reported missing across the UK.

Snappa also gave a new dimension to our coverage of the Paris terror attacks in November, with several news sites pulling in tagged content to populate their own live blogs.

The world of sport also provided PA with some of its biggest stories of the year. In June, our reporter Martyn Ziegler uncovered evidence linking Fifa President Sepp Blatter’s right-hand man Jerome Valcke to the ongoing bribery scandal. Blatter resigned eight hours after Martyn tweeted the incriminating letter. 

Planning also began during the year for the agency’s coverage of key sporting events in 2016 including the Ryder Cup, the UEFA European Championships, and the Olympic and Paralympic Games.

MONETISING OUR OUTPUT

PA Images remains one of the largest, most prestigious picture libraries in the UK. In June we welcomed a new Managing Director Stephen Munday whose responsibilities include capitalising on the massive demand for images from a diverse range of potential customers in the UK and elsewhere.

A public-facing e-commerce site launched in March and has already increased traffic from new and existing users. New iterations in user functionality continue to be added to the platform, with collections like ‘Britain Images’ also planned to highlight the breadth and depth of the archive. 

Our wider commercial team has focussed on creating new opportunities for a suite of digital products from PA, including Snappa and our video packages. A dedicated team was established under a new Head of Digital Sales, and works in partnership with the newsroom to deliver a product set for our growing non-traditional client roster.

New business secured in the year included wins in the outdoor sector, with clients like Verifone and C3UK displaying Snappa content in taxis and transport hubs. New international deals such as the syndication of Real Life feature content to the US and Sports content to Eskimi in Lithuania, have also been secured as part of a strategy for portfolio diversification intended to create a sustainable revenue base for the company. 

INVESTING IN PEOPLE

It was also a year in which there was a special focus on training and development. A graduate training scheme was initiated by the commercial team to bring more digital natives to our sales teams. It has been widely adopted across the company and as a result, eight new account executives have joined the business, working across the range of products we offer, as well as Sticky Content and PA Training.

In an effort to better reflect the communities we report on, we launched a bursary scheme in March to bring in aspiring journalists from ethnically and socially diverse backgrounds. Consequently two young journalists have won places in our News and Sports operations, on a full trainee salary for two years. 

All our journalists completed the PA-developed, online course on the Editors’ Code of Practice to meet the requirements of the new regulator, the Independent Press Standards Organisation. 

INNOVATING FOR THE FUTURE

During the year we made a number of technology-led improvements within our data business which supplies a wide range of customers with sport, television and event data.  We removed or streamlined a number of manual processes and entered into a number of data supply partnerships, both of which have contributed to a reduced cost base. 

We also launched a new racing platform in the year, the first stage of an ambitious project to transform the way that we collect and deliver racing data to our customers. The second stage of this project will continue in 2016 with the automated collection of live data from race courses to further reduce the latency of racing data. 

We continued to invest in digital-focused services like our application programming interfaces (APIs) for TV and Sports data. In 2016, we will further enhance these products with the addition of value-added data-sets.

In summary it has been a year in which the Group has made tremendous progress in positioning the business to capitalise on opportunities in digital, and in developing new markets and customers in order to diversify our revenue base. Building on this progress we can look forward with confidence to a challenging, exciting and promising year in 2016.

CLIVE MARSHALL
CHIEF EXECUTIVE