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CHILDREN'S

The Children's business has been in loss for several years and in 2006/07 its losses were £(1.6)m. By the end of 2005/06, its financial results had been moving strongly in the right direction with losses down to £(0.6)m, and the trend would have continued this year, but for the fact it took a share of the significant costs of investment in new royalty systems.

Sales from merchandising licences grew to almost £9m, reaching their highest levels for over five years, with Doctor Who the key brand and the fastest-growing licence in the UK children's sector.

Live Entertainment had its most profitable year yet, running successful shows on four continents. The CBeebies Live! Christmas show played to over 120,000 fans in nine UK cities while Walking with Dinosaurs: The Live Experience played to over 270,000 people in Australia in 2007.

During the year, BBC Worldwide entered into an agreement with Ragdoll Ltd to form two new joint ventures to exploit and manage existing Children's properties and to invest in the development of new intellectual property rights.

Consolidating its relationship with Ragdoll will give BBC Worldwide the chance to make a creative contribution to future projects while adding a very high-quality back catalogue to the Children's international offering. The partnership got off to a promising start with In the Night Garden, which first aired in the UK on CBeebies in March 2007 to favourable reviews. The merchandise is predicted to be a bestseller when it hits the market in autumn 2007. Meanwhile, Ragdoll's international hit, Teletubbies, marked its 10th anniversary in March 2007. The celebrations will continue throughout the year with the launch of a new website and a special birthday DVD.

AUDIOCALL

It was a year of growth for Audiocall, which provides premium-rate telephony services that enable BBC audiences to interact with programmes such as How Do You Solve a Problem Like Maria? and Strictly Come Dancing. Plans to sell the business were reviewed and the decision was taken to retain it in order to ensure the BBC has an in-house option for telephony services that continues to meet the highest professional and editorial standards.

LEARNING

Losses in Learning were reduced from £(1.7)m to £(0.9)m despite the costs of closing a business-learning video label. Interactive Learning Services is a small in-house unit that develops web-based teaching aids mainly for the Open University. BBC Active, a partnership with Pearson that creates products mainly for use in primary schools, did well despite the educational market dropping in value.

BOOKS

As planned, during the year BBC Worldwide divested itself of a majority stake in BBC Books, a non-fiction imprint, to Random House. Despite the disruption caused by the business transfer, BBC Books continued to perform strongly as part of Random House's Ebury Publishing business, and remains one of the UK's leading non-fiction imprints. Planet Earth and Coast were two of the UK's best-selling Christmas titles with sales of 232,000 and 122,000 units respectively.

RETAIL

During the year, the decision was taken to close BBC Shops, a chain of seven outlets specialising in TV-related products. The move came after the business failed to meet its profit targets in the face of intensifying online competition, combined with weak sales on the high street. The online shop, bbcshop.com, managed by Magazines was unaffected by this decision.

OUTLOOK

After a year of change the business will focus on growth, both in the home and international markets, and on improving profitability. The performance of the Audio & Music business will be reviewed as part of a new five-year strategy aligned with BBC Audio and Music. The business will grow the international franchises of Doctor Who, Planet Earth, Earth the movie, In the Night Garden and Charlie & Lola, continuing to create products that delight customers and bring value to the BBC.