Corporate Governance within BBC Worldwide is driven by our desire to promote and protect the values at the heart of the BBC brand, both in the UK and internationally, and details of our values are set out in the How We Do Business section. Together with the fact that we are a company wholly owned by a public body, this means that we have a unique and wide-ranging governance structure.
In September 2009, the BBC Trust published the results of the Commercial Review of BBC Worldwide's activities (www.bbc.co.uk/bbctrust). Among the conclusions was a requirement that BBC Worldwide's governance framework should be revised to provide greater transparency and compliance with The Combined Code.
In addition, we are also governed by the principles contained within the Royal Charter of July 2006, which is the constitutional basis for the BBC.
This section looks at both our corporate and commercial governance structures and implementation.
The Chairman leads the Board, setting its agenda and ensuring that each Director is able to contribute effectively to decision-making. The Chairman has no involvement in the day-to-day business of the BBC Worldwide Group of companies (the 'Group'). The Chief Executive holds day-to-day management responsibility for the Group's businesses, devising and implementing Group strategy, as agreed by the Board.
The division of responsibilities between the Chairman and Chief Executive has been set out in writing and agreed by the Board. A copy is available at www.bbcworldwide.com/media/13005/bbcw_role_of_chairman_and_ceo.doc.
The Non-executive Directors play a key role in providing independent advice and supervising governance issues. In addition, the Non-executive Directors have the opportunity to meet in the absence of the Executive Directors, which they did on one occasion during the financial year. The Board is satisfied that each Non-executive Director is able to give sufficient time commitment to BBC Worldwide.
The Company Secretary comprehensively briefs Directors on their responsibilities on appointment to the Board. All Directors are equally accountable for the proper stewardship of BBC Worldwide's affairs. The Executive Directors are also appointed to the Boards of various joint ventures and associated undertakings as appropriate and participate in the overview and management of those ventures, for which they do not receive any fees or additional compensation.
John Smith and Neil Chugani are Directors of UKTV, and a small number of its related companies, in respect of the joint venture between BBC Worldwide and Virgin Media. Additionally, John Smith holds Directorships within the Lonely Planet group of companies in which BBC Worldwide holds a 75% stake. During the year, Neil Chugani was a Director of 2 entertain Ltd prior to its acquisition by BBC Worldwide on 8 March 2010.
The Board has delegated certain of its responsibilities to:
Full terms of reference for each of these committees can be found on the BBC Worldwide website at www.bbcworldwide.com.
Further information on the BBC's Executive Board and the BBC Trust is available in the BBC Annual Report and Accounts (www.bbc.co.uk/annualreport/).
Robert Webb QC, Chairman
John Smith, Chief Executive Officer
Neil Chugani, Chief Financial Officer
Sharon Baylay, Non-executive Director (BBC-nominated Director)
Simon Clift, Independent Non-executive Director
Nicholas Eldred, Non-executive Director (BBC-nominated Director)
Thomas Geitner, Independent Non-executive Director
Zarin Patel, Non-executive Director (BBC-nominated Director)
Tim Weller, Independent Non-executive Director*
*Appointed 26 April 2010
The responsibilities of the Board are set out in the Matters Reserved for the Board and briefly comprise:
Robert Webb QC was appointed as Chairman on 1 October 2009, following the resignation of Etienne de Villiers (Non-executive Chairman) on 30 September 2009. Robert Webb is also a Non-executive Director of the BBC Executive Board.
The independent Non-executive Directors who served during the year were Simon Clift and Thomas Geitner. Tim Weller was appointed as an independent Non-executive Director effective 26 April 2010 and will also be a member of the Audit Committee. None of the independent Non-executive Directors has any relationship with BBC Worldwide or its shareholder which would impede their independence.
The BBC-nominated Non-executive Directors who served during the year were Nicholas Eldred (BBC Group General Counsel) and Zarin Patel (BBC Chief Financial Officer). Sharon Baylay (Director of BBC Marketing, Communications & Audiences) was appointed as a Non-executive Director on 1 February 2010. Jana Bennett (Director of BBC Vision) resigned on 30 September 2009.
The Executive Directors who served during the year and who remained in office at 31 March 2010 were John Smith (Chief Executive Officer) and Neil Chugani (Chief Financial Officer). Biographies of each of the Directors may be found on the BBC Worldwide Board page.
In order to balance the composition of the Board in accordance with the principles of The Combined Code (now renamed the UK Corporate Governance Code), the following Executives who had been in office at 1 April 2009 stood down as Directors of the Board on 31 October 2009: Marcus Arthur, Darren Childs, Sarah Cooper, Paul Dempsey, Wayne Garvie, Steve Macallister, David Moody and Peter Phippen.
The table below shows the number of scheduled Board and Committee meetings attended by each Director, out of the number held during the time he/she served on the Board or Committee during the year.
BBC Worldwide Board Attendance
|Sharon Baylay1||1 (1)||-||-||-|
|Neil Chugani||8 (8)||-||-||-|
|Simon Clift||7 (8)||-||-||-|
|Nicholas Eldred||8 (8)||-||1 (1)||4 (4)|
|Thomas Geitner||5 (8)||-||-||-|
|Zarin Patel||7 (8)||1 (1)||-||-|
|John Smith||8 (8)||-||1 (1)||-|
|Robert Webb QC2||4 (4)||1 (1)||1 (1)||-|
1 Appointed to the Board on 1 February 2010
2 Appointed to the Board on 1 October 2009
Former Directors who served during the year (none was a member of a Committee)
|Marcus Arthur1||4 (4)|
|Jana Bennett2||2 (4)|
|Darren Childs1||4 (4)|
|Sarah Cooper1||4 (4)|
|Etienne de Villiers2||3 (4)|
|Paul Dempsey1||4 (4)|
|Wayne Garvie1||3 (4)|
|Steve Macallister1||4 (4)|
|David Moody1||4 (4)|
|Peter Phippen1||4 (4)|
1 Resigned from the Board on 31 October 2009
2 Resigned from the Board on 30 September 2009
Robert Webb QC (Chairman)
The responsibilities of the Remuneration Committee are set out in its terms of reference and include:
For further details please see the Directors' Remuneration Report.
Robert Webb QC (Chairman)
The responsibilities of the Nominations Committee are set out
its terms of reference and include:
The Nominations Committee was established in January 2010 and met once in the financial year. Attendance is shown in the table of attendances above.
During the year, the Committee retained the services of The Zygos Partnership to identify new potential Non-executive Directors, which resulted in the appointment of Tim Weller.
Zarin Patel (Chairman)
*Appointed 26 April 2010
The responsibilities of the Audit Committee are set out in its terms of reference and include:
The Board is satisfied that the Audit Committee has an appropriate range of financial experience.
We have implemented a policy to ensure that other services provided by the external auditors do not impair the auditors' objectivity and the Committee monitors this on a regular basis. The policy sets pre-approval requirements for non-audit services and outlines the types of service for which the external auditors would not be appropriate. The policy is reviewed annually. The external auditors are also appointed as auditors of subsidiary, joint-venture and associate undertakings wherever possible.
The Audit Committee met four times during the year, with both members attending each meeting. The Chief Executive, Chief Financial Officer, BBC Director of Risk and Assurance, the Chairman, external auditors, the Risk Advisory team and the Managing Directors of the operating businesses attend by invitation as appropriate. Both the BBC Director of Risk and Assurance and the external auditors have the opportunity to meet with the Audit Committee in the absence of executive management at least once a year and may do so at any other time they consider necessary. The BBC Worldwide Audit Committee submits quarterly reports to the BBC Executive Audit Committee. The Committee is responsible for monitoring risk management. Further details of our risk management processes are set out below.
John Smith, Chief Executive Officer (Chairman)
Neil Chugani, Chief Financial Officer
Marcus Arthur, Managing Director, Global Brands
Darren Childs, Managing Director, Channels
Sarah Cooper, Chief Operating Officer
Paul Dempsey, Managing Director, Home Entertainment
Jane Earl, Company Secretary
Charlotte Elston, Director of Communications
Michelle Emmerson, HR Director
Wayne Garvie, Managing Director, Content & Production
Helen Kellie, Director of Marketing
Steve Macallister, Managing Director, Sales & Distribution
David Moody, Director of Strategy
Peter Phippen, Managing Director, Magazines
Herb Scannell, President, BBC Worldwide America*
*Appointed 2 June 2010
The responsibilities of the Worldwide Executive Committee are set out in its terms of reference and include:
WEX is supported by the Content Investment Committee (CIC), whose responsibilities include the approval of programme and product investments of between £0.5m and £2.0m, and the Investment Review Group (IRG) which approves all routine and operational investments between £0.5m and £2.0m and all new business venture proposals. Both Committees are chaired by Neil Chugani, Chief Financial Officer. In addition, each business has its own Board which is chaired by the Managing Director of the relevant business area. Each Business Board has authority for routine and operational expenditure of up to £0.5m.
The BBC Worldwide Board has overall responsibility for maintaining an adequate system of internal control and for reviewing its effectiveness. Such a system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can provide only reasonable, but not absolute, assurance against material misstatement or loss.
The Board of Directors considers that there is an appropriate ongoing process for identifying, evaluating and managing significant risks faced by BBC Worldwide. The Board exercises control through an organisational structure with clearly defined levels of responsibility, authority and reporting procedures. Documented policies and procedures exist to define clearly the level of delegated authority for operational decision making and to provide structured processes for identifying and managing risk. These policies are applicable across the Group and ensure consistency worldwide.
Key policies include Ethics, Standards and Conflicts of Interest, BBC Worldwide Group Accounting Policies, Anti-fraud & Corruption Code of Conduct, Investment & Expenditure Approval Guidelines and the Protected Disclosure Policy. A compliance programme is currently being rolled out to ensure that all trading businesses comply with local laws and regulations.
The Board has responsibility for the identification and management of risks facing the business. An assessment of the exposure to risk, and the extent to which these risks are controlled, including implementation of actions to mitigate risk, is updated and presented to the Audit Committee every three months. Each operating unit and major region monitors risks on an ongoing basis, providing their assessments to the Risk Management and Internal Control Committee (RMIC) quarterly.
In addition to the members of the RMIC (the Chief Financial Officer, the Chief Operating Officer and the HR Director), Risk Advisory, the Company Secretary and the Director of Business and Legal Affairs attend all meetings, and the Managing Directors of the operating businesses are invited to attend on a rotating basis. WEX reviews the RMIC's report prior to it going to the Audit Committee. Management assessments are reviewed by the BBC's Business Assurance function, which reports on these matters to the BBC Executive Board and the Executive Audit Committee. This Committee considers risk management across the BBC Group as a whole. Within BBC Worldwide, the Risk Advisory team monitors risks facing the business and provides advice on developing the internal control environment.
|Risks & uncertainties||Potential impacts||Mitigation|
|EXTERNAL AND MARKET|
|Conditions could deteriorate further in some or all of our markets.||
|We operate in a highly competitive market and must continue to invest and adapt||
|Changing technologies or means of content consumption may replace core linear TV businesses||
|Changes in the regulatory framework and interpretation of regulations, or failure to obtain required approvals||
|Volatility may give rise to financial exposure to fluctuations in major currencies and interest rates||
|Economic, regulatory and political constraints may affect our ability to recruit, retain and motivate personnel||
|Rogue activities (including those of suppliers and service providers) that are not consistent with the BBC's values in respect of ethical standards, may jeopardise the value of the brand||
|Requirement to comply with statutory obligations and regulatory requirements in all countries in which we do business||
|Execution on business priorities may not meet stated targets||
The BBC's Business Assurance department provides an internal audit function in respect of BBC Worldwide on behalf of the BBC. The audit plan is based on a continuing assessment of key risks and monitoring compliance of key systems and processes and is approved by the Audit Committee. The results of testing are reported at each meeting of the Audit Committee, which scrutinises the operation of controls throughout the year. BBC Business Assurance's authority and independence are ensured by its joint independent reporting relationship to the BBC's Executive Audit Committee and to the BBC's Director-General. The scope of BBC Business Assurance includes the examination and evaluation of the adequacy and effectiveness of the systems of internal control and the quality of performance in carrying out assigned responsibilities. BBC Worldwide also calls on BBC Business Assurance and external accounting firms for advice on internal controls and programme governance as needed.
Key controls over business risks include performance review and exception reporting. As referred to above, the Content Investment Committee approves all programme and product investment while the Investment Review Group approves all routine/operational investments.
The Treasury team manages the Group's financial risk management operations, with trade execution carried out by BBC Group Treasury. Additional details on Treasury activities can be found in Further Financial Information.
BBC Worldwide has a comprehensive budgeting system, with an annual budget and quarterly forecasts prepared by management and approved by the Board. Monthly financial information, including balance sheets, cash flow statements, trading results and indebtedness, are reported to Directors, allowing them to take action as appropriate.
Futureworks is a two-year initiative focusing on how BBC Worldwide can simplify and improve its business processes, systems and data to empower the company to achieve better results and greater profitability. The Futureworks programme has five work streams, each of which plays a pivotal role in achieving overall objectives:
Although incidents of reported fraud are rare, BBC Worldwide takes its responsibilities to minimise the risk of fraud very seriously. BBC Worldwide operates an Anti-fraud & Corruption Code of Conduct and a Fraud Control Policy which set out consistent standards across the Group, and responsibilities for ensuring adequate controls are in place. In addition, the Risk Advisory team organises training for key areas in order to embed measures to minimise fraud risk, particularly for those operating in high-risk-fraud territories.
BBC Worldwide has an ongoing process to review its anti-fraud management practices to ensure that they remain appropriate to the scale and complexity of the business and the international legal and regulatory environment. BBC Worldwide is responsible for reporting any suspicions of fraudulent activity to the BBC's Investigations Unit.
BBC Worldwide has a protected disclosure policy to help ensure that any suspicions of criminal activity or malpractice are fully reported. Employees who wish to remain anonymous can report concerns directly to the BBC Business Assurance team or via a service that is administered by an independent external firm. The BBC Business Assurance team is notified of reports of fraud and malpractice and ensures that every incident is investigated and action taken as appropriate. Investigations and recommended remedial actions are reported to the BBC Worldwide Audit Committee.
BBC Worldwide must demonstrate compliance with the BBC's Four Commercial Criteria (4CC). All commercial activities must:
A range of approval processes and reporting procedures ensure that BBC Worldwide can demonstrate to the BBC Trust that throughout 2009/10, its commercial activities have continued to comply with the 4CC. The BBC's fair trading obligations are outlined in the BBC Trust's Statement of Policy on Fair Trading (www.bbc.co.uk/bbctrust/) and the BBC's Fair Trading Guidelines (www.bbc.co.uk/aboutthebbc/policies/fairtrading/). As part of BBC Worldwide's commitment to a programme of continuous appraisal and improvement, BBC Worldwide has adopted a range of initiatives to ensure ongoing compliance, including a controls framework and an extensive programme of 4CC training and internal reporting. New proposals continue to be measured against the 4CC, both in their development and implementation.
During the year, compliance with the Fair Trading Guidelines was scrutinised by formal sub-committees of the BBC Trust and Executive Board. The management of the BBC's fair trading arrangements has been accredited with the ISO 9001:2008 quality standard. The most recent assessment by the British Standards Institute, conducted in December 2009, confirmed that the procedures were continuing to operate effectively. The BBC Trust commissions independent auditors, currently Deloitte, to undertake an annual Fair Trading Audit. Deloitte has confirmed that the BBC (including BBC Worldwide) hadestablished and applied a system of internal controls thatprovided reasonable assurance that it had complied with therequirements of Fair Trading rules for the year ended 31 March 2009. Further details of the audit and opinion can be found in the BBC Annual Report and Accounts for 2009/10 (www.bbc.co.uk/annualreport/).
BBC Worldwide's brand-protection team continues to work with local investigators and enforcement authorities, including customs, trading standards and police, around the world to investigate infringements and undertake seizures and prosecutions in order to help control the market for pirate audiovisual products, counterfeit goods and other infringements of the Group and its partners' intellectual property rights, and with an increasing emphasis on online infringements, particularly on auction and content-sharing sites. BBC Worldwide is a member of various industry and enforcement bodies, including the Anti-counterfeiting Group, Television Against Piracy and Internet Enforcement Group in the UK, ABAC-BAAN in Belgium, and SNB-REACT in the Netherlands. The team also manages trademark protection of key BBC Worldwide brands, including the registration of marks and conducting oppositions to conflicting marks worldwide.
BBC Worldwide strives to respect the privacy of its customers, audiences, employees and contributors. As part of the BBC's data-protection compliance framework, BBC Worldwide is committed to holding personal data in accordance with the provisions of the Data Protection Act 1998. Where BBC Worldwide operates in jurisdictions outside the UK, it may also be subject to the additional requirements of local laws. Compliance with data-protection legislation is treated with utmost importance and is an essential part of protecting the BBC brand. BBC Worldwide has established controls and procedures over the security of data held on computer systems. Arrangements are in place for computer processing to continue, and data to be retained, in case BBC Worldwide's own dataprocessing facility fails.
The BBC Worldwide Procurement team ensures that goods and services are obtained in a fair and transparent way with a clear emphasis on risk management, quality, service, cost and innovation. In addition we partner with critical and strategic suppliers to drive a continuous improvement agenda that ensures security of supply whilst maintaining TCOA (Total Cost of Ownership Approach) in sourcing decisions. BBC Worldwide is committed to dealing with all suppliers with clarity to ensure we deliver on our agreed payment terms whilst ensuring that the supplier delivers their performance commitment and quality parameters are met.
BBC Worldwide's increasing success not only gives a global platform to the best of British talent, but also delivers substantial financial returns to rights holders and producers. BBC Worldwide is committed to accounting accurately and on time to rights holders and continues to invest time and money in improving systems and processes, to enable it not only to meet the increase in volumes that success has produced, but also to provide a high level of customer service. The Talent Accounting Department at BBC Worldwide is responsible for accruing and paying royalties to contributors, independent producers and third-party profit participants.
We reduce carbon emissions through our travel policy, which bans all domestic and near-European flights, and restricts long-haul flights. This has decreased business flight mileage by around 10% in the past year. In addition, a rainwater harvesting system at head office has saved almost 4m litres of water, we have sent zero waste directly to landfill from UK Head Office from December 2009, and staff received training in environmental best practice.
To supplement efforts in tackling carbon emissions, we are offsetting the remaining carbon footprints for our premises and travel in 2009/10 by investing in Gold Standard carbon-offset projects with The CarbonNeutral Company.
In the past year our magazines, including Radio Times and Top Gear, plus 75% of Lonely Planet guidebooks, have been printed on FSC-certified (Forest Stewardship Council) paper. We were delighted to be included in The Sunday Times Green List for the first time and were in the top five for Bigger Companies with Low Environmental Impact category.
We have developed recruitment practices that ensure we attract a more diverse pool of candidates. There has been a high focus on creating new programmes to support staff development in the last year. Launched near year end these include: Aspire, which will help identify future business leaders, and a range of new performance management tools and training. Our induction programme has been completely refreshed.
We provide opportunities for our employees to get involved in community projects and charitable activities. Our volunteer scheme at the Jack Tizard School for pupils with severe learning difficulties is now in its third year. Staff have participated in team challenges and we regularly run internal fundraising drives for BBC charities such as Children in Need and Sport Relief. Staff can also contribute to personal charities by donating via our payroll-giving scheme. We have also developed a business-focused Enterprise Day with the London Borough of Hammersmith and Fulham for local secondary school and college students.
This year we achieved ISO14001 certification in the UK, the international gold standard in environmental management, awarded to companies that strive for the highest standards across every aspect of their business. Having an Environment Management System helps us to manage the impact we have on the environment by ensuring we comply with environmental legislation and measure and improve our environmental performance. It's also a way of letting customers, staff and suppliers know that we take environmental issues seriously.