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Annual Review 2006/07

 

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

Financial review
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