Magazines

The UK's third largest consumer magazine publisher, BBC Magazines has divested itself of previously contentious titles but still produces more than 50 different magazines. Last year over 90 million copies were sold - that's over 170 magazines every minute! Independent research shows that one in four UK adults reads a BBC magazine every month.

Two new titles were launched this year, CBeebies Weekly and BBC Sky at Night, and two just after year end, Doctor Who Adventures, and Amy, a general interest magazine for five-to-eight year old girls. A significant development this year was the growth in international magazine launches, with licensing contracts increasing to nearly 30. Our joint venture with The Times of India, Worldwide Media, is now one of India's largest magazine companies.

Our strategy for 2006 and beyond is to continue to grow the scope and scale of every aspect of our international business, and we are actively seeking partners for equity investments, joint ventures, licensing and content syndication.

Sales in 2005/06 were £164m and profit £19.3m. This is an apparent reduction on 2004/05 but that year included a number of one-off items such as the sale of Eve magazine, which, if excluded, leave a yearon- year profit improvement of 2.5%.

Home Entertainment

This business includes the top UK-owned DVD and video distributor, 2 entertain - a 60:40 joint venture with Woolworths plc - plus the UK's numberone audiobook publisher. It also includes seven high street shops and the online store bbcshop.com. 2 entertain produced great results returning £25.8m in profit largely from sales of DVDs.

BBC Audiobooks started selling digital downloads in September and sales approached 170,000 across 1,000 titles.

During the year, the learning business partnered with Pearson Education.

We also announced our intention to substantially dispose of the books business to a larger scale publisher. Although this business has done very well to get into profit this year, we intend to complete a transaction in 2006/07.

Overall sales were up 9% to £175m and profit up £17.1m to £25.8m.

Children's

This business has done well to cut its losses to £0.9m this year on sales of £38m. There were some notable successes. The Doctor Who radio-controlled Dalek was the UK's second best-selling toy at Christmas, and the CBeebies Live! show sold 115,000 tickets over the Christmas period.

In China a Teletubbies Edutainment centre was opened in Dongguan and a Teletubbies Play and Development Centre in Shenzhen.

Digital Media

A whirlwind of activity included the first mobile content deal with Orange; the sale of a back catalogue of music publishing rights; and a range of VoD, iPTV and interactive deals.

The Motion Gallery clip sales business had an excellent year and now has 30,000 digitised clips online.

Much groundwork was laid for next year's proposed launch of bbc.com and the commercial iPlayer.

Activities such as the sale of the music back catalogue enabled Digital Media to turn a £4.8m loss into a £3.4m profit, despite significant investment in restructuring, legal costs and the development of new services.

Outlook

The profit levels and margins of BBC Worldwide are getting close to the levels they should be for a business with this portfolio, and 2006/07 will complete this process of repositioning.

Preparations have been made to help us seize the opportunities that present themselves as markets open up, develop and move to digital technologies, and next year we will focus on securing strong growth in emerging territories.

The Board of BBC Worldwide is now united in its focus on profit growth in order to return a healthy dividend to our parent, the BBC. We can only achieve that because of the very many dedicated staff who work for us and in our joint ventures, and the talented people who create the media content we exploit in all its forms around the world.