Financial Review
The 2006/07 financial year was one of significant
transition for BBC World Service. It saw the implementation of the
changes announced in the BBC World Service 2010 strategic review with
the savings made within the business being re-invested in new developments.
This re-prioritisation of funding was supplemented by £6.5 million
of additional Grant-in-Aid received under the Government's 2004
Spending Review. New investments focused on the development of new
distribution platforms for BBC World Service content and on the preparations
to launch Arabic television in autumn 2007.
The financial statements
reflect the changes to the funding arrangements for BBC Monitoring
which resulted in it receiving its grant funding directly from the
Cabinet Office rather than from its various stakeholders, including
BBC World Service. This separation took effect on 1 April 2006 and
consequently the results of BBC Monitoring have been excluded from
BBC World Service from that date.
Grant-in-Aid income for BBC World
Service increased to £239.5 million in the year. Operating expenditure
fell from £235.9 million to £230.9 million. This created
a planned surplus on operating activities which was required to offset
the operating deficit of 2005/06. The majority of the savings resulting
from the language service closures in 2005/06 were spent on restructuring
costs and the start up of the Arabic television project.
Within 2006/07
operating expenditure is a charge of £0.2 million which has been
categorised as exceptional. This comprises £1.6 million of additional
restructuring costs relating to the BBC World Service 2010 strategic
review announced in 2005/06. These costs are mitigated by a net credit
of £1.4 million relating to exceptional restructuring costs paid
in the year being less than provided for in the 2005/06 financial statements.
A significant part of this was the result of more staff being redeployed
within the BBC than had been anticipated at the time of the original
provision.
BBC World Service invested over £26 million in capital
projects during the year. This included significant spend on the Content
Delivery Programme, a series of projects to replace and enhance existing
distribution systems. Other major developments in the year included
Production House of the Future, a project to improve studio and programme
making functionality within Bush House. Internationally new offices
were opened in Islamabad, Abuja, Delhi and Sao Paulo and work on the
Ascension Island oil tanks was completed. These major projects reflect
the commitment of BBC World Service to the production of high quality
programming from both the UK and overseas and an ongoing investment
in distribution to reach audiences around the world.
ALISON WOODHAMS
Chief Operating Officer and Director
of Finance, BBC World Service
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