Annual Review 2007/08




[Page 2 of 2] Further Financial Info


The Group’s share of joint venture sales increased by 15.1% to £274.6m (2006/07 £238.5m). Its share of operating profit of joint ventures rose by 47.7% to £58.8m (2006/07 £39.8m).

The 2 entertain DVD publishing business, a joint venture with Woolworths plc in which the Group has a 60% interest, had another very good year. The Group’s share of sales grew strongly to £146.8m (2006/07 £115.3m) and the Group’s share of operating profit after goodwill amortisation rose to £41.2m (2006/07 £28.5m). The landmark natural history title Planet Earth topped 3m DVD unit sales in the year, with other titles including Clarkson’s Supercar Showdown and Doctor Who helping buck the DVD market trend.

In the UK, the Group operates a portfolio of ten channels via the UKTV joint ventures with Virgin Media, with a combined annual reach of 20m homes. Under the terms of the various agreements with its joint-venture partners, the Group has no obligation to fund losses incurred by these entities or make good their net liabilities and it has no effective obligation to these ventures. The Group only recognises its share of the profits from these ventures to the extent that they have become cumulatively profitable. Following a very strong year the Group equity accounted for £10.4m of operating profits from UK Channel Management Ltd (2006/07 £6.5m). In addition, the Group received a further £6.2m (2006/07 £4.5m) in dividends from UK Gold Holdings Ltd during the year. The share of sales generated from the principal UKTV joint ventures UK Channel Management Ltd and UK Gold Holdings Ltd grew 8.3% year on year to £83.3m (2006/07 £76.9m).

The share of operating losses from the Group’s other joint ventures rose to £(1.9)m (2006/07 operating profit £0.3m) following further investment in magazine publishing and children’s licensing ventures.


Net debt at 1 April(9.8) (19.5)
Cash generated from operations199.2 205.1
Operating exceptional1- (51.5)
Taxation & net interest paid(24.0) (17.1)
Capital expenditure(14.7) (7.5)
Proceeds from sales of assets2- 72.4
Purchase of subsidiary   
(incl acquired cash and debt)(91.2) -
Investment in programmes(88.2) (109.5)
Investment in joint ventures(6.3) (5.5)
Dividends paid(49.4) (75.3)
Exchange adjustments (non-cash)(6.7) -
Other(0.7) (1.4)
Net debt at 31 March(91.8) (9.8)
  1. Represents an operating exceptional payment made to Discovery Communications Inc in respect of its service agreement
  2. Net cash proceeds arising on the sale of the Group’s shareholdings in Animal Planet LLC , Woodlands Books Ltd and Origin Publishing Ltd.

    The main sources of liquidity for the Group include funds flowing from trading operations, dividends from its joint ventures and other associated undertakings and periodic asset disposals.

The main uses of liquidity include funds required to manage working capital in support of trading operations, investment in programmes for future sale, dividends, taxation and periodic investment in new businesses.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) grew to £233.3m (2006/07 £222.0m) before exceptional items. The year-on-year cash flow improvement was driven by trading performance, working capital movements and the timing of certain receipts and payments falling due for settlement at year-end.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) grew to £233.3m (2006/07 £222.0m) before exceptional items. The year-on-year cash flow improvement was driven by trading performance, working capital movements and the timing of certain receipts and payments falling due for settlement at year-end.

Expenditure on capital assets was £14.7m (2006/07 £7.5m), reflecting investment both in the move to the Media Centre and to update IT equipment and build software assets, particularly to support the development of online initiatives.


BBC Worldwide had net borrowings of £91.8m at the balance sheet date (2006/07 £9.8m) with the increase largely a result of the Lonely Planet acquisition.

The Group maintains a debt facility with BBC Commercial Holdings Ltd, the holding company for the BBC’s commercial subsidiaries, on which the outstanding balance at 31 March 2008 was £89.5m (2006/07 £16.6m). The loan has been renegotiated since the year-end and extended to 30 September 2009. In addition the Group further drew down on an external loan facility with the European Investment Bank during the year, resulting in a closing balance at 31 March 2008 of £50.0m.

The Group held £50.7m in cash or cash equivalents at 31 March 2008 (2006/07 £27.3m).


BBC Worldwide staff are eligible for either defined contribution or defined benefit schemes operated by the BBC Group and some of its overseas subsidiaries, into which the Group makes employer contributions. In accordance with Financial Reporting Standard 17 (FRS17), the Group accounts for its contributions to the BBC Group defined benefit scheme as if it were a defined contribution scheme because its share of the underlying scheme assets and liabilities cannot be determined on a reasonable and consistent basis.

Risks and uncertaintities

Risks and Uncertaintities Key Impact Mitigation
BBC Worldwide has embedded programme of risk assessment and management, which is described in more detail in the Corporate Governance report on pp 44-50. The Group considers that its principal risks and uncertainties are as follows:
Increased competition for key programmes and talent, with merger and aquisition activity in the media sector resulting in market consolidation.   All areas
  • Establishing stronger supplier relationships.
  • Developing own production capability overseas.
  • Investing in established independent production companies.
  • Further building on the in-house format development business.
Overseas expansion, including sourcing of a product from overseas markets, increases risk profile.   Channels,
Content & Production, Lonely Planet, Magazines,
Home Entertainment.
  • Dedicated teams for international developement.
  • Market and risk assesments from local expects.
  • Review of controls for major acquisitions.
  • Implementation of Ethical and Anti-fraud Codes of Conduct.
Changing technology may undermine core businesses.   DVD,
  • Focus on complementary Digital Media services covering web, video on demand mobile platforms.
  • Launch of and the proposed launch of the commercial media player.
Delays launching new services may impact ability to achieve strategic plan.   Channels
Commercial media player
  • Careful planning and preparation to obtain BBC and regulatory approval where necessary.

Execution risk for new services in developing markets.   Commercial media player,
  • Extensive research testing of both consumer and advertiser propositions and the underpinning technology.

  • Tight controls in place to ensure editorial integrity at all stages of development and operation of new services.

Increasing exposure to fluctuations in major currencies, particulary the US and Australian dollars, as the business expands its operations overseas.   Channels, Sales & Distribution, Children's licensing, US DVD, Lonely Planet.
  • Hedging process managed by BBC Treasury.
US or UK recession.   All areas
  • Possible implications of a recession factored into BBC Worldwide's planning process. Diversifying operational portfolio.


The Group’s Treasury activities are principally managed in the UK by a central team employed and directed by the BBC. They operate within parameters set by the BBC Worldwide Board and in conjunction with the BBC’s Executive Board. BBC Worldwide takes a risk-averse approach to cash and Treasury management activities and seeks to limit its exposure to fluctuations in exchange rates where appropriate. The Group is funded by operational cash flows and a debt facility provided by its parent undertakings and by external loans.

Neil Chugani,
Chief Financial Officer, BBC Worldwide

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