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Business Review
NEIL CHUGANI, CFO
This has been another year characterised by very strong operating and financial performance, as well
as one in which significant investment has been targeted in areas where substantial growth is expected
in future years. Financial information on the seven individual businesses can be found via the links on the left.
SALES
Overall sales, including the BBC Worldwide Group of companies’ (the Group) share of the sales of joint ventures,
grew 13.1% to £916.3m (2006/07 £810.4m). Excluding the impact of the Lonely Planet acquisition in October 2007,
sales grew by 10.2% to £893.2m compared with the previous year (2006/07 £810.4m).
Profit
Operating profit has grown 17.0% to a record £117.7m (2006/07 £100.6m before net exceptional profit of £10.5m). In
the current year there were no exceptional items. Profit after prior-year exceptional items grew 5.9% over the same period (2006/07 £111.1m).
OPERATING MARGINS
BBC Worldwide remains focused on growing margins. Operating margins before prior-year exceptional items have increased each year since
the BBC’s commercial review in 2004 and grew again to 12.8% in 2007/08 (2006/07 12.4%).
OUTLOOK
The existing portfolio of activities is expected to continue to perform well in 2008/09, subject to the prevailing economic conditions.
However, during the year the Group will invest in new services, including TV channel launches around the world, new
web-based services, new magazine titles and the continued roll-out of international production businesses. In addition, should it be
approved by the BBC Trust, investment will be made in the proposed commercial media player, Kangaroo. These significant investments
in the long-term future of the Group are expected to impact profits in 2008/09.
In light of the changing macro-economic environment it is more important than ever that the Group remains focused on disciplined value
creation and the pursuit of profitable growth. Only those investments will be undertaken which deliver a clear value proposition for the
Group, and deliver a healthy return in excess of our cost of capital as determined by the use of a rigorous investment appraisal process. The
four commercial criteria provide the Group with an essential framework for those decisions.
The portfolio of businesses will also be kept under constant review to ensure that appropriate capital resources are
allocated to the operating businesses which offer the highest returns, on a risk-adjusted basis.
