You are viewing: Home
/
Financials
Directors' Statement
These Summary Financial Statements contain BBC Worldwide
Limited's ('the Group') Consolidated Income Statement, Consolidated
Statement of Comprehensive Income, Consolidated Balance
Sheet, Consolidated Cash Flow Statement and Consolidated Statement
of Changes in Equity as well as some detailed notes to help explain
these primary statements. These notes include the key headline data
from the Group's 2012 Annual Report and Accounts.
The information contained in the Summary Financial Statements
does not constitute the Group's statutory accounts for the year
ended 31 March 2012, but is derived from those accounts. The
auditor's report on the Group's statutory accounts is unqualified.
The Summary Financial Statements do not contain sufficient
information to allow a full understanding of the results and state
of affairs of the BBC Worldwide Group as provided by the 2012
Annual Report and Accounts. Copies of the 2012 Annual Report and
Accounts may be obtained from www.bbcworldwide.com
The Summary Financial Statements were approved by the Board on 7
June 2012 and signed on its behalf by:
John Smith
|
Philip Vincent
|
Chief Executive Officer
|
Chief Financial Officer
|
Auditor's Statement
Independent auditor's statement to the Shareholder of BBC
Worldwide Limited
We have examined the Summary Financial Statements for the year
ended 31 March 2012 which comprise the Consolidated Income
Statement, Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Consolidated Cash Flow Statement and
Consolidated Statement of Changes in Equity set out below.
This statement is made solely to the company's members, as a
body, in accordance with section 427 of the Companies Act 2006. Our
work has been undertaken so that we might state to the company's
members those matters we are required to state to them in such a
statement and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone
other than the company and the company's members as a body, for our
work, for this statement, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
The Directors are responsible for preparing the Annual Review in
accordance with applicable United Kingdom law.
Our responsibility is to report to you our opinion on the
consistency of the Summary Financial Statements within the Annual
Review with the full annual Financial Statements and the Directors'
Report, and its compliance with the relevant requirements of
section 427 of the Companies Act 2006 and the regulations made
thereunder.
We also read the other information contained in the Annual
Review and consider the implications for our report if we become
aware of any apparent misstatements or material inconsistencies
with the Summary Financial Statements.
Basis of opinion
We conducted our work in accordance with Bulletin 2008/3: The
auditor's statement on the Summary Financial Statements in the
United Kingdom, issued by the Auditing Practices Board. Our report
on the group's full annual Financial Statements describes the basis
of our audit opinion on those Financial Statements and the
Directors' Report.
Opinion on Summary
Financial Statements
In our opinion the Summary Financial Statements are consistent
with the full annual Financial Statements and the Directors' Report
of BBC Worldwide Ltd for the year ended 31 March 2012 and comply
with the applicable requirements of section 427 of the Companies
Act 2006 and the regulations made thereunder.
Paul Korolkiewicz
For and on behalf of KPMG LLP,
Statutory Auditor,
Chartered Accountants
15 Canada Square
London
E14 5GL
7 June 2012
Notes to the Summary Financial Statements
1. Basis of preparation
The Summary Financial Statements are a summary of the
information in the 2012 Annual Report and Accounts. They do not
contain sufficient information to allow for a full understanding of
the results or the financial position of BBC Worldwide. The
Consolidated Financial Statements of BBC Worldwide included in the
2012 Annual Report and Accounts have been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted
by the European Union (the EU), the Companies Act 2006 and Article
4 of the EU International Accounting Standards Regulations.
2. Key accounting policies
(a) Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of
discounts, VAT and other sales-related taxes. Sales of merchandise
and publishing are stated after deduction of the sales value of
actual and estimated returned goods.
The Group's main sources of revenue and its policies for the
recognition of such revenue are summarised as follows:
-
Licence fees are earned by the Group's Sales & Distribution
and Content & Production segments from programme content and
programme formats, respectively. Once a contract has been signed,
licence fees are recognised on the later of the start of the
licence period or on delivery of the associated programme.
-
Subscription fees from the broadcast of the Group's Channels on
pay television platforms, and from subscriptions to print and
online publications and services, is recognised as earned, pro rata
over the subscription period.
-
Advertising revenue generated by the Group's Channels business
and from websites and magazines managed by the Global Brands
operating segment are recognised on transmission or publication of
the advertisement.
-
Production fees and participation royalties earned by the
Group's Content & Production business are recognised as earned.
Production fees are recognised on delivery of the programme or on a
stage of completion basis, depending on the nature of the contract
with the customer. Royalties are recognised on receipt or on an
accruals basis where sufficient reliable information is
available.
-
Revenue generated from the sale of physical and digital products
by the Consumer Products and Global Brands operating segments (and
by the Group's discontinued Magazines operations) is recognised at
the time of delivery. Revenue from the sale of goods is stated net
of deductions for actual and expected returns based on management
judgement and historical experience.
(b) Distribution rights
Distribution rights represent rights to programmes and
associated intellectual property acquired with the primary
intention of exploiting the rights commercially as part of the
Group's long-term operations.
Distribution rights acquired by the group are either purchased,
generated internally or licensed following the payment of an
advance on royalties. Where the Group controls the respective
assets and the risks and rewards attached to them, rights are
initially recognised at acquisition cost or production cost. The
carrying amount is stated at cost less accumulated amortisation and
provision for impairment.
Amortisation of distribution rights is charged to the income
statement to match the average revenue profile of the programme
genre over its estimated average marketable life. The expected
lives of distribution rights range from one to 10 years. In the
case of royalty advances, amortisation is charged as the advances
are recouped.
Where the carrying value of any individual set of rights exceeds
management's best estimate of future exploitation revenues, a
provision for impairment is recorded in the income statement
immediately.
For self-produced content, distribution rights exclude
co-production costs borne by third parties. These costs are
deferred within current assets and expensed upon recognition of the
associated production income. Production income is recognised in
accordance with the Group's revenue recognition policies.
(c) Critical accounting estimates and key judgements
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting assumptions, and
requires management to exercise its judgement and to make estimates
in the process of applying the Group's accounting policies. The
areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed below.
i. Basis of consolidation
Judgement is required in determining whether certain entities in
which the Group has an economic interest should be considered to be
subsidiaries or joint ventures. In such circumstances, the Group
has assessed its ability to control or influence those entities.
Control has been assessed with reference to the ability of the
Group to direct, unilaterally, key policies of the entity. Where
such policies are reserved such that an economic partner has the
power to veto key strategic financial and operating decisions, the
entity is considered to be a joint venture.
ii. Carrying value of goodwill
The determination of whether goodwill is impaired requires an
estimation of the value in use of the cash-generating units to
which goodwill has been allocated. The value in use calculation
requires the entity to estimate the future cash flows expected to
arise from the cash-generating unit and a suitable discount rate
that reflects current market assessments of the risks specific to
the asset and the time value of money, in order to calculate
present value. Further information about assumptions used in
determining the carrying value of goodwill can be found in note
11.
iii. Revenue recognition
The timing of revenue recognition requires judgement, as does
the amount to be recognised. This may involve estimating the fair
value of consideration before it is received. In making these
judgements, the Group considers the detailed criteria for the
recognition of revenue set out in IAS 18 Revenue and, in
particular, whether the Group has transferred the significant risks
and rewards of the goods or services to the customer.
iv. Distribution rights and programme rights
The assessment of the appropriate profile over which to
recognise the amortisation of distribution rights and programme
rights involves a certain degree of judgement. Amortisation is
charged to the income statement to match the average revenue
profile of the programme genre over its estimated average
marketable life.
v. Fair value of financial instruments
Certain financial instruments are carried on the balance sheet
at fair value, with changes in fair value reflected in the income
statement. Fair values are estimated by reference in part to
published price quotations and in part by using valuation
techniques.
3. Segment information
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses. The results of all operating segments are reviewed
regularly by the BBC Worldwide Board (the 'Board') which has been
identified as the Group's chief operating decision maker in
accordance with IFRS 8 Operating Segments.
The Board considers the business primarily from a product and
service line perspective. Management has determined the reportable
segments based upon reports reviewed by the Board. All segments
reported meet the quantitative thresholds required by IFRS 8. The
reportable segments are:
|
Operates international television channels,
broadcasting programmes made by both the BBC and other independent
providers. Manages the Global BBC iPlayer video-on-demand
service.
|
|
Manages the sale and syndication of the Group's
content across television and video-on-demand.
|
|
Creates and distributes consumer products,
including DVDs, DTO, music and books.
|
|
Provides central management of the Group's
international brands. Manages the Group's magazines, gaming and
live events businesses and its branded websites, including
BBC.com.
|
|
Develops and sells programme content and formats
and manages the Group's rights acquisitions. |
Segment information as presented is consistent with the Group's
internal reporting to the Board and has been amended since the
previous reporting date. As explained in note 9, the Group disposed
of its Magazines operations during the year, but retained rights to
certain branded titles, which are now published under contract. The
results from these ongoing magazines operations are included within
the Global Brands operating segment.
The operations which together made up the Digital Entertainment
segment at the previous reporting date are now included within the
Global Brands segment, with the exception of the Global BBC
iPlayer, which is now included in the Channels segment. Comparative
information is presented in line with the revised segmental
composition adopted in the current year.
The Board assesses the performance of reportable segments based on
Headline sales and Headline profit. Inter-segment sales are
conducted on an arm's length basis. Specific items, non-trading
gains and losses, and net financing costs are not allocated to
segments.
Results by segment
Information regarding the assets and liabilities of reportable
segments is not reported to the Board.
4. Headline profit
The operating results of the Group can be impacted by material
individual gains and losses, making the understanding and
comparability of annual results more complex. The Group therefore
provides additional disclosure on the face of the income statement
of Headline profit before certain 'specific items', which are
disclosed separately, to improve the comparability of year-on-year
results. Headline profit grew 7.9% from £143.5m in 2010/11 to
£154.8m in 2011/12.
Further information on specific items can be found below:
Impairment of goodwill
The Group has separately identified amounts written off goodwill
owing to their scale and one-off nature. Further information about
amounts written off goodwill is included in note 11.
Share of interest and tax of joint ventures and associates
The Group views its investments as being a fundamental part of
its ongoing operations. IFRS requires that the Group reports its
share of the results of joint ventures and associates on an
after-tax, after-interest basis. The interest and tax charges borne
by joint ventures and associates have been added back as a specific
item in order to present an operating profit measure which more
appropriately represents the way in which the business is reviewed
and assessed internally.
Pension deficit reduction payment
The Group accounts for contributions to the BBC Pension Scheme
as if it were a defined contribution scheme. In July 2011, the
Group made an additional cash payment of £4.3m to the BBC in
connection with the BBC's deficit reduction plan. As this payment
is not reflective of the ongoing service cost of active scheme
participants, management believes it is appropriate to present this
cost as a specific item. The Group anticipates making similar
payments in future periods.
Other specific items
5. Other gains and losses
6. Employee costs
The average number of employees during the year was 2,565 (2011:
2,689).
The aggregate remuneration recognised in the income statement in
respect of these employees, including casual staff, comprised:
In addition to the above, redundancy costs and compensation for
loss of office payments totalling £4.4m (2011: £2.3m) were incurred
in the year.
6. Employee costs continued
The remuneration of the Directors during the year was as
follows:
7. Taxation
Tax charge for the year comprises:
Reconciliation of tax expense
The total tax charge for the year is lower (higher
2009/10) than the standard rate of corporation tax in the UK of 28%
(28% 2009/10). The differences are explained as follows:
The total tax charge for the year is higher (2011: lower) than
the standard rate of corporation tax in the UK of 26% (2011: 28%).
The differences are explained as follows:
8. Discontinued operations
On 12 August 2011 the Group entered into a sale agreement to
dispose of its subsidiaries BBC Magazines Limited, Bristol
Magazines Limited, Magazines Services Limited and Genealogy Events
Limited; its joint venture Dovetail Services (UK) Holdings Limited;
and its associates Frontline Limited and Origin Publishing Holdings
Limited (OPL). On 3 October 2011, the Group entered into a further
sale agreement to dispose of its joint venture Worldwide Media
Private Limited. These investments collectively formed the Group's
Magazines operations.
The disposal was effected in pursuit of the group's strategic
priorities. The disposal of Worldwide Media Private Limited was
completed on 14 October 2011 and the disposal of the remaining
investments was completed on 31 October 2011. Consideration for
these disposals was received wholly in the form of cash (see note
9).
In connection with its disposal, the Group also exercised a call
option over 61% of the equity of OPL, taking its interest to 100%
immediately prior to completion of the disposal. As the acquisition
of OPL was linked to the Group's disposal of its Magazines
operations, the acquisition proceeds have been included in the
disposal accounting disclosures in note 9.
Continuing operations which previously formed part of the
Magazines operating segment are included within the Global Brands
operating segment. Continuing operations include a limited number
of magazine titles carrying the Group's key brands where ownership
has been retained. The Group has entered into an agreement with the
buyer under which these titles will be published under contract on
the Group's behalf.
The results of discontinued operations, which have been included
in the consolidated income statement, were as follows:
During the year, the Group's discontinued Magazines operations
contributed £4.1m (2011: £20.9m) to the Group's net operating cash
flows, contributed £110.2m to (2011: paid £3.5m in respect of)
investing activities and paid £nil (2011: £0.2m) in respect of
financing activities.
9. Disposals
In October 2011, the Group completed its disposal of a number of
subsidiaries and investments which, collectively, made up its
Magazines operations. The Group had classified these investments as
assets held for sale as at 31 March 2011 and has not therefore
equity accounted for joint ventures and associates included within
the disposal group during the year to 31 March 2012. As a result of
the cessation of equity accounting, the Group's share of the
results of these joint ventures and associates is included in the
gain on disposal.
The net assets of the Magazines operations at the date of
disposal and at 31 March 2011 were:
The net sale proceeds of £111.1m consisted of gross proceeds of
£121.0m less working capital adjustments of £9.9m.
In the year ended 31 March 2011, the following disposals took
place:
The Group disposed of its interest in BBC Audiobooks Limited on
13 July 2010 to Audio London Limited for cash consideration of
£14.0m resulting in a gain on disposal of £2.0m. Consideration was
received in the form of cash of £11.6m, deferred consideration of
£0.3m and 15% of the ordinary share capital of Audio London
Limited. Cash disposed of amounted to £2.1m giving rise to a net
cash inflow of £9.5m.
The Group disposed of its 50% interests in Animal Planet Europe
and People & Arts on 12 November 2010 to its joint venture
partner, Discovery Communications. Cash consideration of £97.9m was
received, giving rise to a gain on disposal of £96.4m.
11. Goodwill
Goodwill, allocated by cash generating unit (CGU), is analysed
as follows:
The goodwill in this CGU arose as a result of the acquisition of
Lonely Planet on 1 October 2007. Following the impairment review
performed during the year to 31 March 2012, the carrying value of
this CGU has been written down to its recoverable amount, resulting
in a charge to the income statement of £16.1m.
Despite solid underlying performance, the Australian dollar has
continued to strengthen, proving challenging for the Lonely Planet
business, which incurs the majority of its costs in its home of
Australia, but earns the majority of its revenue streams in
sterling, euros and US dollars. Had foreign exchange rates at the
date of the Group's impairment tests remained unchanged since the
prior year, no impairment would have been recorded in respect of
the Lonely Planet business.
During the year, the Group began to implement changes to the
Lonely Planet business which management believes will help to
secure its long-term viability and reduce the impact of further
currency appreciation. This includes reducing the Australian cost
base, relocation of its Digital business from Australia to the UK
and exploitation of the Lonely Planet brand through online travel
booking services.
Key assumptions for the value in use calculations are those
regarding growth rates, foreign exchange rates and discount
rates.
The future cash flows used by management in determining the
value in use are based on the most recent financial plan approved
by management and cover a period of 10 years from the balance sheet
date. This period reflects the transition of the business away from
its more mature print activities towards mobile and online content,
including travel booking services, where growth assumptions are
linked to web traffic and conversion rates. Beyond this period,
forecast cash flows have been extrapolated based on an estimated
growth rate of 3% (2011: 3%). This growth rate does not exceed the
average long-term growth rate for the markets in which the Lonely
Planet business operates.
Forecast foreign exchange rates have been based on spot rates at
the date of impairment testing. Any appreciation or devaluation of
the Australian dollar during the forecast period would result in a
corresponding reduction or increase in the value-in-use,
respectively.
Transactional details of the CGUs and key value in use
assumptions are detailed below:
12. Distribution rights
Where content in the course of production is funded by a
commissioning broadcaster or co-production partner, this is now
separately presented as programmes in the course of production
within current assets. Management believes the revised presentation
more faithfully represents the substance of these transactions.
Comparative information has been restated accordingly, reducing the
previously reported additions figure by £8.1m.
13. Interests in joint ventures and associates
The movement in joint ventures and associates during the year
was as follows:
* Dividends received in the year ended
31 March 2011 exclude £5.8m of dividends received from joint
ventures classified as held for sale.
Investments in joint ventures and associates continue to form a
significant part of the Group's operations with a £23.4m share of
profit (2011: £27.5m) and dividends received of £18.7m (2011:
£38.0m excluding dividends from associate held for sale).
The principal contributor to the Group's share of the results of
joint ventures and associates is the UKTV joint venture, which
produces, markets and supplies on a wholesale basis free-to-air and
subscription channels in the UK. During the year Virgin Media sold
its equity shareholding in UKTV to Scripps Networks
Interactive.
14. Programme rights and other inventories
Within finished goods and goods for resale is inventory of £3.1m
(2011: £4.1m), relating to Lonely Planet, which is expected to be
sold more than 12 months after the balance sheet date in accordance
with the entity's normal operating cycle.
Programmes in the course of production were previously included
within Distribution rights, as described in note 12. Comparative
information has been restated where appropriate.
15. Interest bearing loans and borrowings
As at 31 March 2012 and 31 March 2011, the Group had the
following loan facilities:
* Includes £50.0m (2011: £50.0m)
borrowing facility available provided corresponding cash balance is
maintained across the Group.
16. Events after the balance sheet date
On 2 April 2012, a dividend of £5.3m in respect of 2011/12 was
paid.
There were no other events subsequent to the balance sheet date,
details of which are required to be included in the financial
statements.
TOP