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In Books, following a year of accelerated investment
write-offs in 2004, tight cost control and a refocus on TV-tie-in
titles delivered a £5.8 million reduction in losses. In Audio,
direct cost reductions and strong new releases delivered
a £1.5 million improvement in profit.
2|entertain Limited
In September 2004 BBC Worldwide entered into an
agreement with Woolworths Group plc (‘Woolworths’)
to form a joint venture comprising BBC Worldwide’s
DVD/video business (excluding children’s titles) and the
DVD/video and music-publishing business of Woolworths.
This transaction resulted in the formation of a joint-venture
company, 2|entertain Limited (‘2|entertain’), which is
60% owned by BBC Worldwide.
The accounting reflects BBC Worldwide’s retention of
60% of the business and divestment of the remaining
40% in return for a 60% interest in Woolworth’s video
business. The 40% disposal is recorded at fair value. The
difference between this fair value and the 40% of the
book value of assets disposed resulted in an unrealised
gain on disposal of £22.8 million, which has been recorded
directly within reserves. Goodwill of £24.9 million arose on the
transaction; this being the difference between the fair value of the
40% video business given up and the value of the separable
net assets of the acquired Woolworth’s video business. |
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2|entertain is accounted for as a joint venture under FRS9:
Associates and Joint Ventures.
Acquisitions and disposals
BBC Worldwide’s trading activity includes the acquisition,
development, exploitation, licensing and sale of intellectual
property. During the year ended 31 March 2005 BBC
Worldwide completed a number of transactions in pursuit
of its strategy.
In addition to the 2|entertain transaction, BBC Worldwide
has entered into a magazine publishing joint venture,
Worldwide Media Limited (see Joint ventures and associates
below) and completed the rationalisation of several
businesses as follows.
In April 2004 BBC Worldwide announced the formation of
a new venture, Children’s Character Books Limited, which is
75% owned by Penguin Books and 25% owned by the Group.
BBC Worldwide has disposed of its children’s books business
to the new venture in exchange for cash consideration of
£2.3 million. A profit on disposal of £0.4 million has been
recorded in respect of the 75% of the business in which the
Group no longer holds an interest. The Group’s 25% interest
in Children’s Character Books Limited is accounted for as an
associate undertaking. |
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