You are viewing: Home
/
Financials
Summary Financial Statements
These Summary Financial Statements contain BBC Worldwide's (the
Group) Consolidated Income Statement, Consolidated Balance Sheet,
Consolidated Statement of Changes in Equity, Consolidated Statement
of Comprehensive Income and Consolidated Cash Flow Statement, as
well as some detailed notes to help explain these primary
statements. These notes include the key headline data from the
Group's 2011 Annual Report and Accounts.
The information contained in the Summary Financial Statements
does not constitute the Group's statutory accounts for the year
ended 31 March 2011, but is derived from those accounts. The
auditors' report on the Group's statutory accounts is unqualified.
The Summary Financial Statements do not contain sufficient
information to allow a full understanding of the results and state
of affairs of the BBC Worldwide Group as provided by the 2011
Annual Report and Accounts.
The Summary Financial Statements were approved by the Board on
10 June 2011 and signed on its behalf by:
John Smith
|
Philip Vincent
|
Auditors' statement
Independent auditors' statement to the Shareholder of
BBC Worldwide
We have examined the Summary Financial Statements for the year
ended 31 March 2011 which comprise the Consolidated Income
Statement, Consolidated Balance Sheet, Consolidated Statement of
Changes in Equity, Consolidated Statement of Comprehensive Income
and Consolidated Cash Flow Statement (see below).
This statement is made solely to the company's members, as a
body, in accordance with section 427 of the Companies Act 2006. Our
work has been undertaken so that we might state to the company's
members those matters we are required to state to them in such a
statement and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other
than the company and the company's members as a body, for our
work, for this statement, or for the opinions we have formed.
The directors are responsible for preparing the Annual Review in
accordance with applicable United Kingdom law. Our responsibility
is to report to you our opinion on the consistency of the Summary
Financial Statements within the Annual Review with the full annual
Financial Statements and the Directors' Report, and its compliance
with the relevant requirements of section 427 of the Companies Act
2006 and the regulations made thereunder. We also read the other
information contained in the Annual Review and consider the
implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the Summary
Financial Statements.
We conducted our work in accordance with Bulletin 2008/3: The
auditors' statement on the Summary Financial Statements in the
United Kingdom, issued by the Auditing Practices Board. Our report
on the company's full annual Financial Statements describes the
basis of our audit opinion on those Financial Statements and the
Directors' Report.
In our opinion the Summary Financial Statements are consistent
with the full annual Financial Statements, and the Directors'
Report of BBC Worldwide Ltd for the year ended 31 March 2011 and
comply with the applicable requirements of section 427 of the
Companies Act 2006 and the regulations made thereunder.
Paul Korolkiewicz
1. Basis of preparation
The Summary Financial Statements are a summary of the
information presented in the 2011 Annual Report and Accounts. They
do not contain sufficient information to allow for a full
understanding of the results or the financial position of BBC
Worldwide. The Consolidated Financial Statements of BBC Worldwide
included in the 2011 Annual Report and Accounts have been prepared
in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union (the EU), the Companies Act
2006 and Article 4 of the EU International Accounting Standards
Regulations.
2. Key accounting policies
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes. Sales of promotional
merchandise and publishing are stated after deduction of the sales
value of actual and estimated returned goods.
The Group's main sources of revenue and its policies for the
recognition of such revenue are summarised as follows:
- Licence fees from international television programme sales -
recognised at the later of the start of the licence period or the
delivery of the programme rights.
- Licence and production fees from content and production -
recognised on delivery of the related programme or on provision of
service.
- Distribution and other sales commission income - recognised on
provision or delivery of service.
- Advertising revenue - on transmission of the
advertisement.
- Subscription fees - recognised over the period of the
subscription.
- Income from publishing sales and the sale of promotional
merchandise - recognised at time of delivery or on provision of
service.
Distribution rights represent rights to programmes and
associated intellectual property acquired with the primary
intention of exploiting the rights commercially as part of the
Group's long-term operations. Distribution rights are initially
recognised at acquisition cost or production cost, when the Group
controls the respective assets and the risks and rewards attached
to them. The carrying amount is stated at cost less accumulated
amortisation and provision for impairment.
Amortisation of distribution rights is charged to the income
statement to match the average revenue profile of the programme
genre over its estimated average marketable life. The expected
lives of distribution rights range from 1 to 10 years.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting assumptions, and
requires management to exercise its judgement and to make estimates
in the process of applying the Group's accounting policies. The
areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the
Consolidated Financial Statements are:
Judgement is required in determining whether certain entities in
which the Group has an economic interest should be considered to be
subsidiaries or joint ventures. In such circumstances, the Group
has assessed its ability to control or influence those entities.
Control has been assessed with reference to the ability of the
Group to direct, unilaterally, key policies of the entity. Where
such policies are reserved such that an economic partner has the
power to veto key strategic financial and operating decisions, the
entity is considered to be a joint venture.
The determination of whether goodwill is impaired requires
an estimation of the value in use of the cash-generating units to
which goodwill has been allocated. The value in use calculation
requires the entity to estimate the future cash flows expected to
arise from the cash-generating unit and a suitable discount rate
that reflects current market assessments of the risks specific to
the asset and the time value of money, in order to calculate
present value.
The timing of revenue recognition requires judgement, as does
the amount to be recognised. This may involve estimating the fair
value of consideration before it is received. In making these
judgements, the Group considers the detailed criteria for the
recognition of revenue set out in IAS 18 Revenue and, in
particular, whether the Group has transferred the significant risks
and rewards of the goods or services to the customer.
The assessment of the appropriate profile over which to
recognise the amortisation of distribution rights and programme
rights involves a certain degree of judgement. Amortisation is
charged to the income statement to match the average revenue
profile of the programme genre over its estimated average
marketable life.
Certain financial instruments are carried on the balance sheet
at fair value, with changes in fair value reflected in the income
statement. Fair values are estimated by reference in part to
published price quotations and in part by using valuation
techniques.
Deferred tax assets and liabilities require management judgement
in determining the amounts to be recognised. In particular,
judgement is used when assessing the extent to which deferred tax
assets should be recognised with consideration given to the timing
and level of future taxable income.
3. Operating profit before specific items
The operating results of the Group can be impacted by material
individual gains and losses, making the understanding and
comparability of annual results more complex. The Group therefore
provides additional disclosure on the face of the income statement
to state operating profit before certain 'specific items', which
are disclosed separately, to improve the comparability of
year-on-year results. Operating profit before specific items,
including profits from discontinued operations (referred to as
headline profit in this Annual Review), grew 10.3% from £145.2m in
2009/10 to £160.2m in 2010/11.
Further information on specific items can be found below.
The Group has separately identified amounts written off acquired
goodwill owing to their scale and one-off nature.
The Group views its investments as being a fundamental part of
its ongoing operations. IFRS requires that the Group report its
share of the results of joint ventures and associates on an
after-tax, after-interest basis. The interest and tax charges borne
by joint ventures and associates have been added back as a specific
item in order to present an operating profit measure which more
appropriately represents the way in which the business is reviewed
and assessed internally.
Other specific items
As described above, IFRS requires the results of joint ventures
and associates to be presented on a net basis, i.e. after tax and
interest. The Group includes changes in the fair value of
derivative financial instruments within 'other gains and losses'
below operating profit. Fair value gains and losses included within
the results of joint ventures and associates are therefore regarded
as a specific item in order to align the operating profits of
equity-accounted investees with those of the Group.
In July 2009, the Group reversed impairment charges totalling
£2.0m in respect of its joint venture UK VOD LLP. In the year to
March 2011, the Group has impaired its investment in Worldwide
Media Ltd, following a revised assessment of recoverable
amount.
Reorganisation costs relate to other one-off costs including
transaction fees and costs relating to the Group's ongoing disposal
of its Magazines business and costs relating to reorganisation of
the Group's Lonely Planet business.
4. Other gains and losses
The Directors have re-presented the income statement to include
the above changes in fair values within other gains and losses.
These were previously presented within total operating costs or
finance income and expense.
5. Goodwill
Goodwill, allocated by cash generating unit (CGU), is analysed
as follows:
The goodwill in this CGU arose as a result of the acquisition of
Lonely Planet on 1 October 2007. Following the impairment review
performed during the year to 31 March 2011, the carrying value of
this CGU has been written down to its recoverable amount, resulting
in a charge to the income statement of £33.8m.
The Lonely Planet business is based in Australia, where most of
its costs are incurred. Accordingly, the CGU's cost base is
primarily denominated in Australian dollars. However, the business
operates internationally and earns revenues in a wide variety of
jurisdictions, with the majority of its revenue streams being
earned in sterling and in US dollars. The strength of the
Australian dollar in recent years has led to challenging sales
conditions for the Lonely Planet business. This has been compounded
by declines since 2008 in key travel guide markets suffering from
the impact of the global financial crisis. Further adverse
movements in currency pairings during the course of the year have
weakened the commercial environment in which the business
operates.
The Group is now in the process of identifying areas where
efficiencies can be achieved and greater synergies made with its
other operations. Included in the Group's plans are reductions in
the local cost base - which will reduce the exposure of the
business to Australian dollars - expansion of the business into new
geographical markets and exploitation of the Lonely Planet brand in
generating new sources of revenue. In accordance with IAS 36
Impairment of Assets, some of these plans, which were
approved by management subsequent to the balance sheet date, have
not been reflected in the forecast future cash flows used in
determining value in use.
Had foreign exchange rates at the date of the Group's impairment
tests remained unchanged since the prior year, the impairment
recorded in respect of the Lonely Planet business would have been
reduced by £20.7m. The remaining impairment of the business
reflects the ongoing challenges facing the industry. As described
above, management is currently in the process of implementing plans
which will seek to address these ongoing challenges.
Transactional details of the CGUs and key goodwill calculation
assumptions are detailed below:
7. Investments in joint ventures and
associates
The movement in joint ventures and associates is as follows:
*Dividends received exclude £5.8m
of dividends received from Animal Planet whilst classified as held
for sale (see note 8).
Investments in joint ventures and associates continue to form a
significant part of the Group's operations with a £27.6m share of
profit (£39.1m 2009/10) and dividends received of £43.8m (£10.7m
2009/10).
Joint ventures and associates are recorded in the balance sheet
as follows:
The principal contributor to this performance is the UKTV joint
venture with Virgin Media for the production, marketing and
wholesale supply of free-to-air and subscription channels in the
UK.
During 2009/10, 2 entertain Ltd became a subsidiary undertaking
following the Group's joint-venture partner entering
administration. This resulted in a deemed disposal of its
joint-venture investment of £39.5m.
8. Disposals
On 12 November 2010, the Group disposed of its interests in
Animal Planet and People&Arts. The Group had classified these
investments as assets held for sale as at 31 March 2010 and has not
therefore equity accounted for them during the year to 31 March
2011. As a result of the cessation of equity accounting, the
Group's share of the results of these investments is included in
the gain on disposal. Similarly, dividends received during the year
have been included within the calculation of the gain on disposal
as follows:
9. Interest bearing loans and borrowings
As at 31 March 2011 and 31 March 2010, the Group had the
following loan facilities:
1. Includes a £50.0m (£50.0m
2009/10) borrowing facility available provided that a corresponding
cash balance is maintained across the Group.
Subsequent to the balance sheet date, the Group negotiated an
extension to its loan facility with BBC Commercial
Holdings (see note 13).
10. Employee costs
The average number of employees during the year was 2689
(2598 2009/10).
The aggregate remuneration recognised in the income statement in
respect of these employees, including casual staff, comprised:
In addition to the above, redundancy costs and compensation for
loss of office payments totalling £2.3m (£6.7m 2009/10) were
incurred in the year.
The remuneration of the directors during the year was as
follows:
Retirement benefits were accrued by three directors (10 2009/10)
and no directors (two 2009/10) under defined benefit schemes and
money purchase schemes respectively, during the year.
Further details of Directors' remuneration, including that of
the highest paid director, are provided in the Remuneration
Report.
The Group made no contributions (2010: £nil) to money purchase
schemes for its Directors during the year.
11. Taxation
Tax charge for the year comprises:
Reconciliation of tax expense
The total tax charge for the year is lower (higher
2009/10) than the standard rate of corporation tax in the UK of 28%
(28% 2009/10). The differences are explained as follows:
The total tax charge for the year is lower (higher 2009/10) than
the standard rate of corporation tax in the UK of 28% (28%
2009/10). The differences are explained as follows:
12. Discontinued operations
On 1 October 2010, the Board resolved to dispose of the Group's
Magazines operations, subject to limited titles being retained as
they are published on a different basis. Negotiations with
interested parties have subsequently taken place and the Group was
in exclusive discussions with a potential partner at the date of
approval of the financial statements. These operations, which are
expected to be sold within 12 months, have been classified as a
disposal group held for sale and presented separately in the
balance sheet.
The results of the discontinued operations have been included
separately on the face of the consolidated income statement.
13. Events after the balance sheet date
On 3 May 2011, the Group renegotiated its loan facilities with
its intermediate parent company, BBC Commercial Holdings Ltd. The
Group's funding from BBC Commercial Holdings Ltd now consists of a
£168.0m multi-currency loan facility which supersedes the
facilities in place at the balance sheet date. The revised facility
expires in September 2012, and is subject to BBC Commercial
Holdings Ltd renewing its own borrowing facility, which is due to
expire in June 2012.
On 9 June 2011, a dividend of £34.5m in respect of 2010/11 was
declared.
TOP