Full Financial
Statements
2010/11

Contents
F2 Chief Financial Officer’s review
F3 Summary financial performance
F4 Financial overview
F13 Looking forward
F14 Independent auditor’s report
F15 Group Financial Statements and notes
F83 Statement of responsibilities

BBC FULL FINANCIAL STATEMENTS 2010/11

Presented to Parliament by the Secretary of State
for Culture, Olympics, Media and Sportby command of Her Majesty
July 2011

The BBC’s Annual Report and Accounts 2010/11, giving narrative context to the numbers contained in this document,
were also laid before Parliament on 12 July 2011 and are available online at www.bbc.co.uk/annualreport

Chief Financial Officer’s review
The last year has seen the
BBC face a number of financial
challenges. But we end the year
in a financially resilient position –able to absorb these challenges,
and also unlock significant futuresavings as we transform our ways
of working as we continue toprovide audiences with excellent
content across all our platforms.
Financial resilience
It is the management of these challenges and our preparations
for the future which have driven the result for the year.
The full year group surplus of £483million reflects some
exceptional credits which are not part of our regular
operations: we benefit from a £250million actuarial gain
which is a direct result of significant pension reform to reduce
our ongoing pension costs, as well as a profit of £96million
from the disposal of Animal Planet as we concentrate ourcommercial activities on BBC branded channels and platforms.
Excluding these two significant items, the underlying groupsurplus for the year was £137million, or 2.7% of our income.
A small surplus like this is appropriate as it reflects a broad
matching of income and expenditure, whilst providing someheadroom for unforeseen events or costs.
Although at the year-end we are showing an overall cash
balance of £513million, this needs to be seen in the context
of our short-term commitments. £266million of this cash isring-fenced for repayment to DCMS as it is the surplus on the
Digital Switchover Help Scheme and Digital UK. Further sumsof £74million and £120million respectively, have been set aside
to fund the completion of the move to Salford and ourpension deficit recovery payments for the next two years.
Finally, £69million of this cash is destined for investment in thedevelopment of our commercial operations. After allowancefor these amounts, the BBC has an underlying net overdraftof £16million at the year-end which is a reasonable level.
The first step of providing value to licence fee payers is toensure the maximisation of our income. In difficult economic
times we have protected the level of licence fee income andat the same time grown our non-licence fee incomes to show
an overall increase in our income of over £200million. The
commercial operations should not be overlooked withsignificant contributions being made by BBC Worldwide,
which goes from strength-to-strength as a business, but BBC
World News and BBC Studios & Post Production (BBC S&PP)
also contributed.

We have also agreed with the government the levels of thelicence fee through to the end of the Charter period andalthough this agreement comes with significant additional
financial obligations, it gives us the financial security to plan
our operations and prioritise our expenditure to best serve
the needs of our audiences.
Delivering efficiency
We are in the position to do this is because of the operationaland financial efficiencies we have delivered in recent years,
augmented by the prioritisation of our expenditure in linewith the editorial priorities set out in Putting Quality First.
We are now projecting that the efficiencies to be generated
from our Continuous Improvement Programme will exceed£2billion, with all the money being recycled into either
the enhancement of our content or investment in our
infrastructure, especially our operational sites. In addition
we continue to identify further opportunities to reduce thecosts of senior managers and of our talent and remain on
track to hit all our targets in these areas.
Financial challenges
In the course of this year we have not only confirmed thesize of our pension deficit but also agreed a plan with thepension trustees to recover the deficit over a mutually agreed
timescale and which does not unduly compromise the funding
available for our services.
The management of high inflation (the RPI increase was
5.3% over the year) has put significant pressure on the BBC’s
finances, and will continue to do so with the licence fee frozen
for the next five years. However, recent experience hastaught us how to manage such pressures and puts the BBC
in a strong position to enable their management withoutcompromising our spending and investment ambitions.

Zarin Patel
Chief Financial Officer
23 June 2011
F2

Summary financial performance
Licence fee payers rightly expect their investment in the BBC to offer
distinctive, high-quality programmes, and at the same time deliver
real and sustainable value for them and their families. The onus is on
the BBC to efficiently manage how we spend licence fee income, as
well as striving to continuously cut duplication and waste across all ouroperations, and increase revenues from our commercial activities.

Licence fee spend• 80p in every £1 of licence fee is spent on programmes
or the infrastructure to support the BBC’s activities.

Breakdown of licence fee spend 2010/11• 6p in every £1 is spent getting our services to audienceson analogue, DTT, satellite and the internet.

Content spend
Property and technology
Support and marketing functions
Service distribution
Licence fee collection
Digital Switchover Help Scheme
Restructuring
Total• The cost of collecting the licence fee is lower than lastyear at 3.4p per £1 collected (down from 3.5p last year).

Efficiency savings• £1billion of sustainable savings achieved since the startof the Continuous Improvement Programme without
deterioration in quality of our content.
• Of the remaining £1.1billion, £870million will be deliveredby initiatives already in place (assured savings).
• We remain on track to achieve our 3% annual
savings target.
• Total savings are anticipated to be £1.9billion after
implementation costs.
Commercial performance• BBC Worldwide record gross sales of £1.158billion –8% up on last year.
• BBC World News sales benefit from recovery inadvertising markets and show a 16% increase on last year.
• BBC S&PP operations show profits before
restructuring costs.
• BBC Worldwide returned £182million to Public Services
Broadcasting in the year.

£m

%

2,549
308
303
202
124
80
30
3,596

71
9
8
6
3
2
1
100

Ongoing gross efficiency savings £mProjected

2,000
1,500

501

1,000

434

500
0

328
237

237

08/09

09/10

585

2.1bn

1.5bn

999

565
10/11

New savings

11/12

12/13

Year-on-year change in income% change – equates to – Change £m
16.3%£10.3m7.8%-1.1%£-0.7mBBC World NewsBBC Studios and Post Production

Total

Ongoing annual savings£83.5mBBC Worldwide

F3

Financial overview
In common with many other organisations, the BBC has continued
to face some significant financial challenges as the UK economy has
continued to suffer from the effects of its deepest recession since the1930s. Collecting the licence fee has been a challenge in this difficult
environment, and as I set out last year, the value of the pension
scheme has led to the need for us to address a significant deficit.

The actions that we have taken during the last two years have
met the short-term pressures of needing to fund the pensions
deficit and lower than planned income from the licence fee
whilst sustaining and improving the breadth, depth and reachof the services that our viewers, listeners and readers value.
This has, I believe, created a strong platform from which we
can begin to meet the future challenge of maintaining thequality of our output within our future funding pressures.
We set out our strategic view for the BBC in the publicationin March 2010 of Putting Quality First. This strategy ambitiously
reshapes the BBC and its output to serve audiences in a
future that will be much more dynamic than traditional linear
programming. It would have been an easy response to theprevailing financial conditions to have scaled back our ambition
for more creative and innovative programming, or to haveretrenched our range of TV and radio channels or to havescaled back our transformational investment programme in
an infrastructure that will enable the delivery of great quality
output for the next 25 years.
We have, though, maintained the direction of travel on which
we had embarked whilst beginning the implementation of ourplans to tackle the key issue of the recovery of the pension
scheme deficit. Our financial statements and the balance sheet
in particular, demonstrate the underlying health of the BBC
and the success, so far, of our investment strategy.

The multimedia newsroom at Television Centre brings different journalistic sources
together so that all BBC news outlets and services on all platforms can meet thechallenges of an on-demand digital world.

F4

Efficiency savings by category
Category% of total savings

PeopleRe-focusing to get the right mix of people to continue to deliver distinctive output that audiences value. We are committed
to a real-term reduction in talent spend.
Production and process improvement
Using innovative technology to improve how we do things and minimise costs across our operations, from schedulingto shooting.
Procurement and contracts
Releasing funds for programmes and content with savings from bulk buying, outsourcing and re-negotiating contracts.
Property and technology
Transforming the way we work, for example using tapeless, digital production to make multiplatform content more efficiently
than ever before.
Focusing on content quality
Putting Quality First builds on our existing efficiency programme, with an editorial focus on original output of the highest quality
and maximum audience impact.

13%
29%
23%
7%
28%

The following examples give a sense of how and where we
made some of our ongoing efficiency savings this year:
Saving today, planning for tomorrow
During 2010/11 BBC network radio made some immediate
practical changes to how it is structured, removing duplicationand improving impact across the division – for the benefit of ouraudiences. For instance, it now has a single Live Events unit, aone-stop-shop where specialist expertise and resources are easilyfound and shared.
The same colleagues also carried out a number of studies to
identify opportunities for new and future efficiency savings –including an external review benchmarking BBC music radio
operations against the commercial sector, and a study comparing
programme prices across BBC radio networks. Both provided
real insight into current BBC practices and will help to deliver
sustainable improvements.

Deriving ongoing benefits
While long-term contracts deliver many benefits, dramatic changes
in the economic environment can necessitate some renegotiations.
The economic downturn over the last few years coupled withthe licence fee freeze has given us leverage to renegotiate some
supplier contracts and deliver improved value to licence fee payers.
For example, with operations from catering to construction,
car parking to cleaning, BBC Workplace manages some of ourbiggest contracts. During 2010/11, it negotiated a change to thecontracted inflation provisions (from RPI-based to CPI-based)and embedded guaranteed reductions in charges into two service
provider contracts. The result was additional savings of £1.3million
over the year, worth around £7.0million until the end of thecurrent licence fee period.

News headlines
Last year we realised our first full year of savings from theintroduction of a new playout system for dedicated politics channel
BBC Parliament from its Millbank HQ in Westminster. The new
system enabled the automation of a number of key tasks, aswell as facilitating integration with the operations supporting the
Democracy Live website. Combined, these different ways ofworking delivered significant savings on what had previously been
a separate third party contract for BBC Parliament channel playout.

Creative solutions
Different television programme genres have distinct ways ofworking, and there is not always a single solution to a problem
that can be applied across the board.
Because of large studio and overhead costs, growing volume
and long-term or bulk deals allow better cost management forentertainment series, and effectively reduce the average costof programmes.
Volume commissioning has also been used to lower average
programme costs in drama (due to low marginal cost of additional
episodes) and has delivered savings on shows such as The
Armstrong and Miller Show (pictured).
Shooting drama episodes together in blocks has reduced
preparation time, and therefore costs, which have been further
reduced by re-working crew structures and levels.
Commissioning of returning factual strands has generated some of
the largest efficiencies. For example, The Antiques Roadshow is now
a 60 minute programme (was 50 minutes in 2007/08), allowing
additional content that would previously have been cut, driving
audience value at little extra input and having no negative impact
on programme quality.
The Armstrong and Miller Show.
F5

Financial overview, continued/…

Summary consolidated income statement
For the year ended 31 March 2011

2011
£m

2010
£m

Licence fee income
Other income

3,513
1,480

3,447
1,343

Total income
Operating costs (excluding restructuring costs
and exceptional pension income)

4,993

4,790

(4,789)(4,541)

Exceptional pension income
Restructuring costs

250
(63)

334
(62)

Total operating costs(4,602)(4,269)

Share of results of associates and joint ventures
Gain on sale of operations and disposal of fixed assets
Tax, interest and financing costs

27
96
(31)

37
41
(122)

Group surplus for year

483

477

Income and expenditure statement
The management of our recent financial challenges and the
preparations put in place for the future are heavily reflectedin the group result of a £483million surplus. An actuarial gainof £250million was made as a direct result of significant
pension reform to reduce our ongoing pension costs; and a
profit of £96million was made from the disposal of Animal
Planet as we moved to concentrate our commercial activities
on BBC branded channels and platforms. After excludingthese two items, the underlying group surplus for the year was£137million (2.7% of our income), in line with our broad aim tomatch our income and costs over each licence fee period.
The licence fee is our single biggest source of income andthrough efficient and effective collection we have increased
this by £66million this year. This income is augmented by thecommercial exploitation of licence fee funded content throughour commercial subsidiaries – primarily BBC Worldwide, but
this year has also seen greater contributions from BBC WorldNews and from BBC S&PP.
Despite the difficult wider trading environment, total
commercial revenues have increased 13% year-on-year, with
a 68% increase in profit before interest and tax – boosted
by the disposal of Animal Planet for £96million as the BBC
continues to focus on BBC branded channels and platforms.
BBC Worldwide has delivered record gross sales of£1,158million, up 8%. The continued diversity of its portfolioof businesses has allowed it to beat the trend in many markets
and generate strong margins with operating profit before
specific items up by 10%.
As a result of its activities in 2010/11, BBC Worldwide
contributed £182million to the BBC from, in the main,
dividends and investment in programming – an increase of 9%
on last year. Looking forward, BBC Worldwide will continue
to invest in great programming, international expansion, thegrowth of its channels businesses and new digital opportunities
to fuel the UK creative economy.

Effective and efficient collection of thelicence fee has maintained income despite
household growth continuing to be lower
than historic levels
Other income – primarily from thecommercial group – is up by 10% with strong
growth in BBC Worldwide sales
Operating costs reflect higher sales in
BBC Worldwide. Costs also reflect a big yearin sport and coverage of the General Election
and world events
The exceptional pension income reflects
the change in scheme benefits announced
during 2010/11, partly offset by the cost of early
retirement and redundancy
Gains this year relate to the disposal by
BBC Worldwide of Animal Planet

During the year, BBC Worldwide wrote down the carrying
value of its Lonely Planet investment by £34million. This is asa result of the continued strengthening of the Australian dollar– at a 27-year high against sterling – as well as the challenging
market conditions facing the business.
BBC World News maintained the BBC’s international
reputation for high quality journalism and delivered an
operating profit for the first time this year with sales increasing
and reduced costs – advertising sales in particular recoveredfrom the prior year recession and sales improved, althoughin part from the continued weakness of sterling.
Despite tough market conditions BBC S&PP performed
well, achieving an operating profit before restructuring of£6million. This is the highest operating profit margin achievedsince incorporation. BBC S&PP also completed the closureof its Sport and Children’s business as this activity transfers
to Salford.
The Trust, on behalf of licence fee payer, scrutinises how wespend this revenue whilst also ensuring that our high profilerole in the sector does not damage the industry. One of
the tools that the Trust uses to monitor our performanceis Service Licences – we agree a Baseline Budget for eachone of our 28 major services and report against that baseline
within a 10% tolerance either higher or lower.
The full outturn of our content spend by service shows thatthrough our efficiency programme, we are delivering output
for broadly the same cost as last year, and this includes funding
the cost of covering the General Election and the FIFA World
Cup in South Africa. We have been able to do this bymanaging our cost base tightly, for example with staff costs,
where we have held pay increases to below the rate of
inflation again.
We have seen a very marginal increase in headcount in thelicence fee funded services (from 17,238 to 17,242 full-time
equivalent people) and a reduction in the staff paybill of 4%
this year, reflecting the continued focus on reducing ourpermanent staffing levels.
F6

Total operating expenditure on UK public services
2011 Service
BBC One
BBC Two
BBC Three
BBC Four
CBBC*
CBeebies*
BBC HDBBC ALBA
BBC News channel
BBC Parliament
BBC Red Button

Content£m

Infrastructure/
support£m

Distribution
£m

2011
Total
£m

2010
Total
£m

1,130.9
421.0
84.7
50.8
78.3
28.5
2.1
5.0
47.1
2.0
14.9

50.8
21.0
3.9
2.9
3.2
3.3
8.2
1.5
6.2
4.7
19.5

221.2
86.3
21.5
13.4
17.8
7.9
1.5
1.1
7.8
1.3
5.1

1,402.9
528.3
110.1
67.1
99.3
39.7
11.8
7.6
61.1
8.0
39.5

1,373.6
575.6
118.6
74.0
57.1
28.7
10.9
6.1
64.0
10.3
39.3

1,865.3

125.2

384.9

4.8
1.2
4.9
4.9
9.9
1.1
6.2
1.1
1.2
1.4
10.1
3.3
1.4
1.2
1.6
1.8
56.1

6.6
2.4
7.6
8.5
17.1
1.8
11.3
1.3
2.3
2.6
22.6
5.3
0.9
2.8
2.7
3.6
99.4

2,358.2
43.8
10.1
53.2
54.7
112.7
7.8
72.7
4.9
10.0
12.9
141.5
33.1
6.3
16.7
15.9
18.9

Radio

36.7
7.4
46.7
37.3
92.8
5.3
55.4
2.5
7.3
8.6
114.8
23.8
3.8
13.0
11.8
16.2
483.4

2,375.4
48.1
11.0
59.2
50.7
119.8
8.2
72.9
4.9
10.8
12.6
147.5
32.4
6.1
17.0
16.1
21.6

BBC Online

125.8

21.1

2,474.5

202.4

Television
BBC Radio 1
BBC 1Xtra
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio 4 Extra
BBC Radio 5 LiveBBC Radio 5 Live Sports Extra
BBC 6MusicBBC Asian Network
BBC Local RadioBBC Radio Scotland
BBC Radio nan Gàidheal
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foyle

Spend regulated by service licence
*

638.9

615.2

47.3

194.2

199.3

531.6

3,208.5

3,172.7

The methodology for setting the CBBC and CBeebies content spend changed in 2010/11, following the BBC Trust’s 2009 review of children’s services. All children’s spend
is now allocated to either CBBC or CBeebies, including that portion which was previously allocated to BBC One and BBC Two.

It is the ‘more for less’ strategy that is creating downward
pressure on service licence baselines. One service licence
finished the year below its 10% tolerance – BBC 1Xtra, where
savings were delivered from leveraging greater synergies fromits sister station, BBC Radio 1 and several others were close to
the 10% mark as efficiencies and savings are delivered. We arecareful, though, to ensure that these savings are not at the costof quality and we carefully monitor the audience response to
our output to ensure that we still deliver value.

The increasing costs of BBC Radio 1 and BBC Radio 2 reflect
their success in attracting larger audiences which increases
their allocation of music copyright costs with corresponding
reductions across other services.
Management is committed to reducing the budget of BBC
Online by 25% and has now agreed plans with the Trust to
deliver this saving over the next three years.

F7

Financial overview, continued/…

The team from In Your Corner travels round and about Northern Ireland picking up
on the stories that affect the ordinary person on the street.

Our orchestras (like the BBC National Orchestra of Wales, shown) and singers are
based across the UK, and work among local communities and groups as well as taketheir rightful place on the global stage. For more see www.bbc.co.uk/orchestras/.

Total BBC expenditure
Content£m

Distribution£m

Infrastructure/
support£m

Other items
£m

2011
Total
£m

2010
Total
£m

2,474.5

202.4

531.6

–

3,208.5

3,172.7

–
20.2
26.9
27.6
–

–
–
–
–
–

–
3.9
5.3
5.3
–

123.6
–
–
–
64.6

123.6
24.1
32.2
32.9
64.6

126.5
24.1
36.6
37.1
41.5

74.7

-

14.5

188.2

277.4

265.8

–

–

–

29.6

29.6

36.9

Total UK public services expenditure
Digital switchover (Digital UK Limited)
Digital switchover (DSHS Limited)

2,549.2
–
–

202.4
–
–

546.1
–
–

217.8
25.0
55.3

3,515.5
25.0
55.3

3,475.4
29.2
55.6

Total UK Public Service BroadcastingGroup expenditure

2,549.2

202.4

546.1*

298.1

3,595.8

3,560.2

2011
Spend regulated by service licence
Other UK PSB spend
Licence fee collection costs
Orchestras and performing groups
S4C
Development spend
Costs incurred to generate third party income
Total other UK PSB spend
Restructuring costs* Infrastructure and support costs include spend on learning support and community events, marketing, press and publicity, the BBC Trust Unit (£14.0million (2010:£13.9million)) and other overheads excluding restructuring.

F8

Summary balance sheet
for the year ended 31 March 2011

2011
£m

2010
£m

Non current assets
Current assets
Current liabilities
Non current liabilities (excluding pensions)

1,947
2,082
(1,344)(1,357)

1,533
2,242
(1,498)(1,084)

Net assets (excluding pension)

1,328

1,193

Net pension liability(927)(1,647)

Net assets/(liabilities)

401

(454)

Represented by
BBC reserves
Non-controlling interests

394
7

(470)
16

401

(454)

The balance sheet – plant, property and equipment
A quick glance at the change in our balance sheet from lastyear to this shows the increase in value of our non current
assets, particularly our plant, property and equipment, ie theassets on which we rely to make and distribute programmes.
The key reason behind the increase is the delivery to the
BBC of our major development of the renewed Broadcasting
House in London, delivered ahead of time and on budget.
This building, along with Pacific Quay in Glasgow, MediaCityUK
in Salford and the new Roath Lock Drama Village in Cardiff
Bay (the latter two will both come into service next year) arecornerstones of our strategy to transform the way we work,and to move the BBC out of London. The depreciation of
Broadcasting House will only commence once the building
becomes functional in 2011/12.
It will be sad to leave Television Centre (as announced for2015) but it is a building that needs significant investment andwhich is becoming increasingly less suited to the way that
programmes are made now. Our new buildings represent
substantial investments to enhance creative collaborations
and cross-platform working. This investment is also serving toredistribute our infrastructure across the UK to ensure that by
2016, 50% of network TV spend will be outside of London.
Although our permanent asset base has increased by£414million this year, we will reap future cost savings from
more efficient use of space, people and time as well as
broadening our dialogue with audiences across the UK, finding
and fostering new talent and opening up opportunities for
production beyond the M25. These benefits are why it wasright that we continued with these projects despite the added
risks and pressures from the economic environment.

Completed refurbishment of Broadcasting
House has increased non current assets andreduced current asset as the pre-paid value
is capitalised. Recognition of the finance leaseliability increases liabilities
The valuation of the pensions scheme’s net
liabilities reflect changes to scheme benefits,
the deficit reduction payments and changes inmarket valuation of assets

Pension liability
Last year’s valuation of our pension scheme showed a deficitof £1,647million, a situation that clearly needed addressing.
Due to a combination of stronger performance from thescheme’s investments, pension reform and an initial deficit
recovery payment made to the scheme in 2010/11, thescheme has made significant progress in recovering the
deficit. At 31 March 2011, the deficit has reduced by£720million (44%) to £927million.
There are three main constituent parts to this improvement:
Pension curtailment
During the year we announced plans to reform thepension benefits of active scheme members and to reducethe cost of benefits building up in the future. The gain is
calculated at £250million based on the expected actionsof scheme participants.
Actuarial gain on defined benefit pension schemes
A net gain of £304million arose in the year as a consequenceof a rise in the equity markets, and changes in the key
demographic assumptions.
Additional payments
We have agreed a Deficit Reduction Plan with the Scheme
Trustees, which after making an initial payment of £110million
in 2010/11, allows for annual payments of between £60millionand £100million over the ten years to 2021/22 at levels which
are regarded as affordable and do not unduly jeopardise thedelivery of programme content and other investments.

F9

Financial overview, continued/…

Summary consolidated cashflow statement
for the year ended 31 March 2011

2011
£m

2010
£m

Net cash inflow from operating activities
Net cash outflow
from investing activities
Summary
consolidated
cashflow statement
for
the
year
ended
31
March
2011 activities
Net cash outflow fromfinancing

475
(149)
(110)

441
(147)
(144)

Net increase in cash and cash equivalents

2011
216
£m

2010
150
£m

Cash and cash equivalents at the beginning of the year
Effect Movementsof foreign exchange
rate changes
in cash£m on cash and cash equivalents
Cash classified
as held for sale and restricted funds
800

264
(1)
34

124
(2)
(8)

475 at the149
Cash and cash equivalents
end of the year

513

264

Cash and cash equivalents at the beginning of the year
Net cash inflow from operating activities
Effect of foreign exchange rate changes on cash and cash equivalents
Net cash outflow from investing activities
Cash classified as held for sale and restricted funds
Net cash outflow from financing activities
Cash and cash equivalents at the end of the year
Net increase in cash and cash equivalents

600

110
266

Movements
in cash £m
400
800
200
600

264

475

247
110

0
Cash at
400 thestart

Cash fromoperatingof the year* activities

200

149

Cash frominvestingactivities

264

266

Cash from
DigitalRemainingfinancing Switchover
cash atactivities underspend
the endat endof the yearof year247* Includes Digital Switchover underspend at start of the year of £132million.

0

Cash atCash fromthe start
operatingof the year* activities

Cash frominvestingactivities

Cash from
DigitalRemainingfinancing Switchover
cash atactivities underspend
the endat endof the yearof year* Includes Digital Switchover underspend at start of the year of £132million.

264
475
(1)
(149)
34
(110)
513
216

124
441
(2)
(147)
(8)
(144)
264
150

The group’s operating surplus excluding
depreciation, but including changes inworking capital
Addition and disposal of assets less interest
earnedInterest
paid
and financeleasesentered into
The group’s
operatingsurplusexcludingdepreciation, but including changes inworking capital
2011 figure represents:
Addition–and
disposalof assets less interest£266m
digitalunderspend
earned– commercial companies£69m£178m – Home and World Services
Interest paid and finance leases entered into
2011 figure represents:£266m – digital underspend£69m – commercial companies£178m – Home and World Services

Cash
We always seek to match the cash collected from the licencefee payer with the programmes and services we deliver. This
year, however, we have a significant amount of cash retained
for three very good reasons:
Digital Switchover£266million of the year-end cash is money that we collected
to fund the transition to digital transmission. This reflects
significantly lower rates of take up of the offer of digital
switchover support than were initially assumed and also
contract procurement efficiencies. £32million of the cash
saved so far has already been paid back to DCMS and we
expect to repay substantially more over the course of thenext year.
Investment in our infrastructure
As I set out above, we are investing in our productive
infrastructure across the UK. These are large scale projects
that spread across a number of years and the cash demands
vary from year to year. Hence we have cash set aside now
to finance the completion of these projects. We also face thechallenge of moving 1,600 posts from London to Salford which
commenced in May 2011 and will complete in December at abudgeted cost of £74million.
Recovery of the pension scheme deficit
As set out above, we have agreed a deficit reduction plan withthe scheme trustees and have made financial provision for thepayments of £120million due to 2013.
As these pressures crystallise, and are compounded by thefinancial challenges of the flat licence fee settlement from thisyear onward plus the wider inflation environment, the BBC’s
cash balance will reduce rapidly.

F10

1

2

Optimising our income – collecting the licence feewith sensitivity
I am very aware of the BBC’s unique position of trust withthe licence fee payer, and this places on us some important
responsibilities: to use the money well and to spend it on thethings that matter, to use the money efficiently and finally, tomake sure that everyone who should pay does pay. There isan inherent unfairness in evasion which penalises those who
do pay.
Within these principles, we have continued to improve ourcollection services – offering different ways to pay; enhancing
the web based self-serve options; more targeted marketing
and reminder contacts and earlier follow up action on licencesthat are not renewed.
During this year, the fall in the rate of growth in licence fee
income seen last year has stopped as household growth
has started to show signs of recovery. Also, despite therecessionary pressures in the economy, we have held the rateof evasion stable. Income is higher than last year, attributable
to the increase in the cost of a TV Licence. This is the last time
the fee will be increased for the next five years under thesettlement agreed with the government.

It has been a significant year for science programming on BBC television – which
saw some creative thinking in meeting existing efficiency targets as well as delivering
sustainable changes in work practices.
1 Bang Goes the Theory presenter Liz Bonnin was on OB duties in Hawaii for
Stargazing Live, speaking to an assortment of experts over the three programmes.
The production team from her ‘day job’ took this as an opportunity to work up
two relevant stories for Bang…, completing film inserts that otherwise they could
not have afforded. The Bang… and Stargazing teams shared all location staff, andboth teams benefited from improved usage of valuable presenter time, as well assavings in location and travel costs.
2 Horizon improved the efficiency of its staffing mix so that the two Series Producers
covered most of the development producer role, used more desktop FCP editing
to reduce post-production costs, and – in common with increasing numbers ofother factual teams like The One Show – increased the amount of self shooting,
reducing the number of staff needed to make a shoot. The use of different
combinations of initiatives enabled significant saving to be made without impacting
on programme quality.
3 The One Show.

Even within a difficult collection environment, the cost ofcollection is lower than last year and the cost per £1 collected
is lower at 3.4p. There is evidence that people preferelectronic options as a method of payment as self-servetransactions on our website have increased to 54% andaround 68% of all licences are paid for now by direct debit.
We have continued to focus on enforcement activity and havebeen quicker to follow up where licences are not renewed
or direct debit payments missed. But alongside this, we havebeen able to offer flexible ways for people to pay through the
cash schemes and whilst this activity is expensive compared
to renewals via direct debit, it is still cost effective in protecting
our income. Furthermore, I believe that this approachis reasonable and fair, a view supported by the fact thatrecorded complaints are down by 20% this year at less than
1% of licences in force.
This year, in collaboration with Harris, the world regarded
polling agency, we have started maintaining a Reputation Index
to track the attitude of the British public towards the activity
for the collection of the TV licence. Over the course of theyear this index has increased from 100 to 102.
For the first time this year, the BBC is publishing a Trust
Statement which specifically discloses all licence fee income
collected and paid over to HM Treasury. The statement isaudited by the National Audit Office.

3

F11

Financial overview, continued/…

1

2

Making the licence fee work harder – the efficiency story
Looking at what we do and how we do it has become part of
the way that the BBC does business since the Value for Money
programme was launched in 2005. We are now three years
into a five year programme of Continuous Improvementthat aims to generate over £2billion of savings withoutcompromising quality. This is money that has been recycled
to develop our content and our infrastructure.
This year, savings of £434million have been generated and theactions taken to date, if continued, will deliver over £2billionof savings by the end of 2012/13. There are plans in place todeliver the remaining efficiencies by March 2013 and whilst theachievement of this is not without risk, I am confident that wewill continue to deliver on this programme.
Beyond continuous improvement, we have looked further
at how much we spend on senior staff pay. We have set
ourselves some challenging targets to reduce senior manager
paybill by 25% and senior manager headcount by 20% – bothtargets to be achieved by December 2011. We are on course
to deliver these targets. Talent costs have also been targetedfollowing a 3% reduction in talent spend last year, a further£9million has been saved this year.

The Continuous Improvement savings plan, reductions insenior manager pay and what we spend on talent were
initiatives already in place at the beginning of this year and are
all important contributors to being able to commit as muchof the licence fee to content as possible. When the valuationof the pension deficit was confirmed, it was clear that pension
reform would not be adequate in itself to close the gap andconsequently that additional contributions to the scheme
would be needed. To afford those additional contributions, afurther set of challenges were put in place to generate savings.

1 Picture shows Hilary Kay, one of the The Antiques Roadshow experts, who
understands the importance of knowing the value of assets. Format sold by
BBC Worldwide.
2 Picture shows Sir Kenneth Clark’s landmark 1969 arts series Civilisation,remastered this year by BBC S&PP in HD for broadcast and retail sale.
F12

Looking forward
The licence fee settlement means that we are able to planahead, including investing in programmes and genres like
Lost Land of the Tiger that have long production lead times
and need major up-front commitment of resources or
may be unattractive to commercial producers.

20%

Reduction in annual cost baseafter impact of licence fee
settlement and Government
Spending Review.

£501m

£9m

Projected pan-BBC
Year-on-year reduction in
efficiency savings for 2011/12, spend on talent, artists andon top of £999million
contributors – just over 4%.
already achieved.

Future challenges
Reflecting on our financial performance in 2010/11 and thestrength of our balance sheet, we are in a good position toshape our own destiny. We have faced considerable financial
risks to our plans in the past year and have managed theserisks to date, whilst continuing to meet our primary purposeof serving the licence fee payer. To continue to do so, weneed to show the same belief in our strategy and to continue
to focus on delivering the priorities of the business – the five
editorial priorities set out in Putting Quality First.
Next year carries its own challenges and for the first time, wehave published a summary of our budget which sets them out
and how we intend to meet them. Uppermost in these are
the moves to Salford and Broadcasting House which will be
logistically demanding but I am pleased to confirm the financial
risk is included in our plans.
We are also preparing for the major broadcasting events tocome in 2012 (Olympics, Diamond Jubilee) and our further
investment in digital production initiatives. These costs arealso budgeted.
There are challenges arising from the funding limits set for the
BBC World Service in the Government’s Comprehensive
Spending Review last year, which reduced Grant-in-Aid fundingby 16% over three years. A number of savings initiatives
to meet these challenges were announced in January 2011.
These included the closure of five language services (Albanian,
Serbian, Macedonian, Portuguese for Africa and English for
the Caribbean), the cessation of radio broadcasting in otherservices (for example Russian and Turkish) in orderto focus on online and new media content, savings in
distribution and support costs, and changes to the English
schedule. More than 400 posts will close as a result of thesechanges and cost of these post closures has been provided
for in this year’s accounts.
Most significantly, in a separate announcement in October,the government also set out the medium term future forthe licence fee which will stay at its current value for theremainder of the Charter period and, in future years will
also be used to fund the BBC World Service and S4C. We
estimate that the loss of any increase in the licence fee andthe use of income to fund services previously funded bygovernment will equate to around 20% of our ongoing licencefee funding. We believe we cannot accommodate that sizeof a reduction in spending power by efficiency savings alone.
We are now engaged in a major exercise reaching across thewhole of the BBC’s operations to determine what the shapeof the organisation should be – what services should we be
providing; what should we be doing less of or even stopping.
We exist to inform, to educate and to entertain the UK public,so we will also be seeking, through the Trust, viewer andlistener feedback on these ideas.
As described above, 2011/12 will see significant changes tothe BBC’s operations, and combined with the efficiencies wehave delivered and financial strategies we have pursued, theBBC is in a strong, resilient position as it sets out to Deliver
Quality First.
F13

Independent auditor’s report to the Trustees of the
British Broadcasting Corporation (BBC)We have audited the group financial statements of the BBC
for the year ended 31 March 2011. The financial reporting
framework that has been applied in their preparation isapplicable law and International Financial Reporting Standards(IFRSs) as adopted by the EU.
In addition to our audit of the financial statements, theTrustees have engaged us to audit the information in the
Trustees and Executive Board Remuneration Reports thatis described as having been audited, which the directors
have decided to prepare as if the BBC were required tocomply with the requirements of Schedule 8 to The Large
and Medium-sized Companies and Groups (Accounts andReports) Regulations 2008 (SI 2008 No. 410) made under
the Companies Act 2006.
This report is made solely to the Trustees on terms that havebeen agreed. Our audit work has been undertaken so that
we might state to the BBC’s Trustees those matters we are
required to state to them in an auditor’s report and, in respectof the separate opinions in relation to the Remuneration
Reports and reporting on Corporate Governance, thosematters that we have agreed to state to them in our report,
and for no other purpose. To the fullest extent permitted bylaw, we do not accept or assume responsibility to anyone otherthan the BBC and the BBC’s Trustees as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Trustees’ and Executive Board
responsibilities Statements set out on page F83, the directors
are responsible for the preparation of the group financial
statements and for being satisfied that they give a true andfair view.
Our responsibility, in accordance with the terms of ourengagement letter, is to audit the financial statements inaccordance with relevant legal and regulatory requirements
and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing
Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to givereasonable assurance that the financial statements are freefrom material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting
policies are appropriate to the BBC’s circumstances andhave been consistently applied and adequately disclosed; thereasonableness of significant accounting estimates made by
the directors; and the overall presentation of the financial
statements. In addition we read all the financial and nonfinancial information in the Annual Report to identify materialinconsistencies with the audited financial statements. If we
become aware of any apparent material misstatements orinconsistencies we consider the implications for our report.

Opinion on financial statements
In our opinion the group financial statements:• give a true and fair view of the state of the Group’s affairs
as at 31 March 2011 and of its surplus for the year thenended; and• have been properly prepared in accordance with IFRSs
as adopted by the EU
Opinion on other matters prescribed by the termsof our engagement
In our opinion:• the information given in the Chairman’s Foreword and theTrustees’ performance review in Part One of the Annual
Report and Accounts, the Director-General’s Introduction,
the Executive Board’s performance review and financial
overview and highlights, the Corporate GovernanceStatement and the unaudited parts of the Remuneration
Reports in Part Two of the Annual Report and Accounts
is consistent with the group financial statements; and• the parts of the Remuneration Reports which wewere engaged to audit have been properly prepared inaccordance with Schedule 8 to The Large and Medium-sizedCompanies and Groups (Accounts and Reports) Regulations
2008, as if those requirements were to apply to the BBC
Matters on which we are required to report by exception
by the terms of our engagement
We have nothing to report in respect of the following:
Under the terms of our engagement we are required toreport to you if, in our opinion, we have not received all theinformation and explanations we require for our audit
In addition to our audit of the financial statements, theTrustees have engaged us to review the Corporate
Governance statement as if the BBC were required to comply
with the Listing Rules of the Financial Services Authority inrelation to these matters. Under the terms of our engagement
we are required to review:• the directors’ statement, set out on page F83, in relation togoing concern; and• the part of the Corporate Governance statement included
in Part Two of the Annual Report and Accounts relating to
the BBC compliance with the nine provisions of the June2008 Combined Code specified for our review.

Scott Cormack
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London E14 5GL
23 June 2011

F14

Group financial statements

Consolidated income statement
For the year ended 31 March 2011
Note

Licence fee income
Other income
Total income
Operating costs excluding restructuring costs and exceptional pension income
Exceptional pension income
Restructuring costs
Total operating costs
Group operating surplus
Gain on sale and termination of operations
Gain on disposal of fixed assets
Share of results of associates and joint ventures
Financing income
Financing costs
Net financing income/(cost)
Surplus before taxation
Taxation
Surplus for the year

1a
1a
1a
4b
4c
3
5
6
11
7
7
7
8

Attributable to:BBC
Non-controlling interests
Surplus for the year

2011
£m

2010
Restated*£m3,513.4
1,479.6
4,993.0(4,789.4)
250.4(63.3)(4,602.3)
390.7
96.4
–
26.6
613.6
(606.8)6.8
520.5(37.6)
482.9

3,446.8
1,343.0
4,789.8(4,540.5)
334.1(61.9)(4,268.3)
521.5
2.0
39.0
36.9
445.8
(533.5)(87.7)
511.7(34.7)
477.0

477.6
5.3
482.9

472.7
4.3
477.0

The surplus for the financial year is the result of deducting all items of expenditure recognised in the year from all income
receivable for the year. For the BBC Group, as a public benefit entity, any surplus arising does not represent a ‘profit’
that can be returned to an entity’s funders, but a timing difference relating to past or future expenditure.

Consolidated statement of comprehensive income/(loss)
For the year ended 31 March 2011
Note

Group surplus for the year
Other comprehensive income/(loss):
Exchange differences on translation of foreign operations
Cash flow hedges
Tax on items taken directly to other comprehensive income
Actuarial gain/(loss) on defined benefit pension schemes
Fair value gain on available-for-sale asset
Other
Other comprehensive income/(loss) net of tax
Total comprehensive income/(loss) for the year
Attributable to:BBC
Non-controlling interests
Total comprehensive income/(loss) for the year*

23biii
12

2011
£m

2010
Restated*
£m

482.9

477.0

(5.8)
(0.2)
–
303.6
76.9
0.9
375.4
858.3

5.0
1.0
(0.3)
(1,871.4)––(1,865.7)(1,388.7)

853.0
5.3
858.3

(1,394.1)
5.4(1,388.7)

Further details of adjustments made to previously reported balances are provided in Note 19.

F15

Group financial statements

Consolidated balance sheet
For the year ended 31 March 2011

Note

31 March
2011£m

31 March
2010
Restated*£m

1 April2009
Restated*£m

Non-current assets
Intangible assets (including goodwill)
Property, plant and equipment
Interests in associates and joint ventures
Other receivables
Available-for-sale investments
Derivative financial instruments
Deferred tax asset

9
10
11
15a
12
24b
8d

265.6
1,513.9
36.5
25.9
76.9
1.9
25.9
1,946.6

290.0
1,131.3
57.8
25.7
–
6.7
21.5
1,533.0

255.9
1,162.4
83.7
430.9
–
12.2
27.1
1,972.2

Current assets
Programme-related assets and other inventories
Trade and other receivables
Assets classified as held for sale
Derivative financial instruments
Cash and cash equivalents

14
15b
13
24b
2e

619.2
861.5
50.3
8.0
513.4
2,052.4

682.3
1,253.8
30.0
11.9
263.9
2,241.9

615.5
747.7
0.6
10.9
124.3
1,499.0

16a
17a
18
13
24b

(1,130.6)(23.2)(103.7)(36.5)(5.8)(14.6)(1,314.4)(1,400.9)(7.4)(59.3)(8.4)(8.9)(12.8)(1,497.7)(773.1)(14.2)(87.0)–(22.5)(15.1)(911.9)

16b
17b
18
24b
8d
23bi

(197.2)(1,089.4)(45.7)(7.6)(16.9)(926.8)(2,283.6)
401.0(175.1)(814.6)(75.1)(13.3)(6.3)(1,647.1)(2,731.5)(454.3)(513.1)(877.5)(63.5)(21.8)(9.3)(143.3)(1,628.5)
930.8

286.0
–
76.9
0.5
31.1
394.5
6.5
401.0

(469.7)(36.3)–
0.5
35.6(469.9)15.6(454.3)928.5(32.3)
–
–
23.6
919.8
11.0
930.8

Current liabilities
Trade and other payables
Borrowings
Provisions
Liabilities classified as held for sale
Derivative financial instruments
Current tax liabilities
Non-current liabilities
Other payables
Borrowings
Provisions
Derivative financial instruments
Deferred tax liabilities
Pension liability
Net assets/(liabilities)
Attributable to the BBC:Operating reserve
Other reserve
Available-for-sale reserve
Hedging reserve
Translation reserve
Non-controlling interests
Total capital and reserves*

Further details of adjustments made to previously reported balances are provided in Note 19.

The financial statements were approved by the Executive Board on 23 June 2011 and signed on its behalf by:

Mark Thompson Director-General

Zarin Patel Chief Financial Officer
F16Group Financial statements

Consolidated statement of changes in equity
For the year ended 31 March 2011

At 1 April 2009 restatedTotal comprehensive(loss)/income for the year
Adjustment on acquisition of
2entertain
Dividends paid
Adjustment in respect of put
optionTransfer of foreign exchange
movement on put option
At 31 March 2010
Total comprehensive
income/(loss) for the year
Dividends paid
Exercise of put option over noncontrolling interests
Transfer of foreign exchange
movement on put option
At 31 March 2011
Represented by:General Group reserves
BBC World Service and BBC
Monitoring reserves*

Operatingreserve£m

Otherreserve£m

Available-forsale reserve£m

Hedging
reserve£m

Translation
reserve
£m

Total
£m

Noncontrollinginterests£m

Total
equity£m

928.5(32.3)

–

–

23.6

919.8

11.0

930.8

(1,398.7)

–

–

0.5

4.1

(1,394.1)

5.4(1,388.7)

0.5
–

–
–

–
–

–
–

–
–

0.5
–

–
(0.8)

0.5
(0.8)

–

3.9

–

–

–

3.9

–

3.9

–

(7.9)

–

–

7.9

–

–

–

(469.7)(36.3)

–

0.5

35.6

(469.9)15.6(454.3)

782.1
–

–
–

76.9
–

(0.3)
–

(5.7)
–

853.0
–

5.3
(3.0)

858.3
(3.0)

(26.4)

37.5

–

0.3

–

11.4

(11.4)

–

–
286.0

(1.2)
–

–
76.9

–
0.5

1.2
31.1

–
394.5

–
6.5

–
401.0

138.5

–

76.9

0.5

31.1

247.0

6.5

253.5

147.5
286.0

–
–

–
76.9

–
0.5

–
31.1

147.5
394.5

–
6.5

147.5
401.0

Further details of adjustments made to previously reported balances are provided in Note 19.

UK Public Service Broadcasting, BBC World Service and BBC Monitoring are funded from different sources. As such, the reserves
relating to BBC World Service and BBC Monitoring are maintained separately from the rest of the Group and are restricted foruse solely on BBC World Service or BBC Monitoring activities.

F17

Group Financial statements

Consolidated cash flow statement
For the year ended 31 March 2011
Note

Operating activities
Cash generated from operating activities*
Tax paid
Net cash from operating activities
Investing activities
Interest received
Dividends received from associates and joint ventures
Dividends paid to non-controlling interests
Proceeds from sale of operations
Proceeds from disposal of property, plant and equipment
Acquisition of non-controlling interests
Acquisition of subsidiary net of cash acquired with subsidiary
Acquisition of interests in associates and joint ventures
Drawdown of loan to joint venture
Purchases of other intangible assets
Purchases of property, plant and equipment
Net cash used in investing activities
Financing activities
Interest paid
Proceeds from increase in borrowings
Repayments of borrowings
Payments of obligations under finance leases
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of foreign exchange rate changes on cash and cash equivalents
Movement in cash held as restricted funds
Cash classified as held for sale
Cash and cash equivalents at the end of the year
*

21

5

10

2e

2e

2011
£m

2010
£m

506.4
(31.5)
474.9

474.9(33.7)
441.2

9.0
43.8
(3.0)
109.5
–
(41.7)–(3.7)
2.2(115.1)(149.6)(148.6)

2.4
10.7
(0.8)
2.0
44.3
–
20.0
(0.7)
1.3
(100.8)(125.2)(146.8)(13.9)
100.0(102.3)(94.0)(110.2)
216.1
263.9
(0.6)
34.0
–
513.4

(14.3)
101.0(174.1)(57.4)(144.8)
149.6
124.3
(1.7)
–
(8.3)
263.9

See Note 21 for reconciliation of operating surplus to cash generated from operating activities.

** Further details of adjustments made to previously reported balances are provided in Note 19.

F18

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
The BBCThe BBC is incorporated in the United Kingdom under Royal Charter (the Charter).

Statement of accounting policies
This section explains the BBC’s main accounting policies, which have been applied consistently throughout
the year and in the preceding year.

Basis of preparation
These consolidated financial statements for the BBC Group (the Group) have been prepared in accordancewith International Financial Reporting Standards issued by the International Accounting Standards Board(IASB) and interpretations issued by the IFRS Interpretations Committee of the IASB as adopted by the
EU (IFRS).
The financial statements are principally prepared on the historical cost basis. Areas where other bases areapplied are identified in the accounting policies below.
Where items are sufficiently significant by virtue of their size or nature, they are disclosed separately
in the financial statements in order to aid the reader’s understanding of the Group’s financial positionand performance.

Adoption of new and revised accounting standards
IFRS 3 “Business Combinations (2008)” and IAS 27 “Consolidated and Separate Financial
Statements (2008)”
These standards have been applied prospectively for all business combinations and acquisitions of noncontrolling interests occurring in the financial year starting 1 April 2010. Under the new accounting policy,
all transactions with non-controlling interests are recorded in equity as a transaction with equity holders if
there is no change in control and these transactions no longer result in goodwill or gains and losses being
recognised. Previously, goodwill was recognised arising on the acquisition of a non-controlling interest in a
subsidiary, which represented the excess of the cost of the additional investment over the carrying amountof the interest in the net assets acquired at the date of acquisition.
The adoption of IFRS 3 (revised) has had no impact in the current year as no acquisitions have occurred.
The Group has applied IAS 27 (revised) to the acquisition of non-controlling interests in the year, seenote 20 for further details.

Amendment to IAS 17, Leases
The amendment was issued as part of Improvements to IFRSs 2009 and has been applied retrospectively to
all unexpired leases as at 1 April 2010. Under this amendment leases of land are no longer presumed to be
operating leases but are classified in accordance with the substance of the related transaction. Applicationof the amended standard has resulted in the granting of a number of long leasehold interests in land to third
parties being reclassified as sales. Previously these transactions had been treated as prepaid operating leases
with the proceeds received being recognised over the life of the lease.
The adjustment results in an increase in opening equity of £77.9million (2010: £78.4million), a reduction inland and buildings and trade and other payables at 31st March 2011 of £25.8million (2010: £25.8million) and£103.1million (2010: £103.7million) respectively and a reduction in other revenue for the year ended 2011of £0.6million (2010: £0.6million)

F19

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
Going concern
The financial statements are prepared on a going concern basis. The Directors have prepared cash flow
forecasts for a period in excess of a year from the date of approval of these financial statements. In the
Directors’ judgement, the key factors in these forecasts are: the continuity of the Charter and licence fee(the quantum of which has been agreed until 2016), the results of the triennial actuarial valuation of the
BBC pension scheme and the resultant deficit recovery payments agreed with the pension scheme Trustees
and the realisation of planned cost savings under the ‘Continuous Improvement’ programme.

The directors are
required to make astatement that the BBC
is a going concern
which means it canmeet its debts for aperiod of 12 months
from the date of signing.

The Charter and licence fee give the Group a guaranteed source of income, however, the timing of cash
flows is an important factor in the consideration of going concern, given the relatively small borrowing
restrictions imposed by the Department of Culture, Media and Sport (DCMS) on both UK Public Sector
Broadcasting (£200million) and the commercial operations of the BBC (£350million).
The Group has external funding available, including a £200million Sterling revolving credit facility which is inplace until June 2013 and which is currently unutilised, and a £350million multicurrency revolving credit facility
available to the BBC commercial operations in place until June 2012, of which £190million was drawn down
at 31 March 2011 (2010: £187million). The £350 million facility available to the BBC commercial operations
is due to expire in June 2012. A new facility, of an equivalent amount, is being agreed with a syndicate ofbanks and is expected to be in place from early July 2011 with maturity in July 2016.
The Directors of the Group have reviewed these forecasts taking all above factors into consideration,
together with the sensitivities and mitigating factors in the context of available funds and expect the Groupto be able to meet its debts as they fall due for the foreseeable future.
As a result, the Directors are satisfied that the going concern basis is appropriate for the preparation of these
the annual financial statements.

Basis of consolidation
The Group accounts include the results of the BBC and all businesses controlled by the BBC (subsidiaries)
together with the BBC’s share of the results of businesses over which the BBC has significant influence but
not control (associates) and those which the BBC jointly controls (joint ventures).
The Group accounts for its interests in joint ventures and associates using the equity method. Changes in theGroup's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
The carrying amounts of non-controlling interests are adjusted to reflect any changes in their, and theGroup's, relative interests in the subsidiaries. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognised directlyin equity and attributed to the BBC.
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference
between (i) the aggregate of the fair value of the consideration received and the fair value of any retainedinterest and (ii) the previous carrying amount of the net assets of the subsidiary (including attributable
goodwill) and any non-controlling interests. Amounts previously recognised in other comprehensive income
in relation to the subsidiary are reclassified to the income statement or transferred directly to retained
earnings as appropriate. The fair value of any interest retained in the former subsidiary at the date whencontrol is lost is regarded as the cost on initial recognition of an investment in a joint venture or associate.

Put option
Equity put options held by minority interest holders are recognised as financial liabilities at the present valueof the fair value of amounts payable on their exercise. The Group continues to recognise minority interests
in respect of these equity investments where the risks and rewards of ownership are deemed to have beenretained by the minority interest holders.

An associate isan entity other thana subsidiary or joint
venture, over which theGroup has significant
influence. Significant
influence is the power
to participate in thefinancial and operating
decisions of an entity
but is not control
or joint control overthose policies.
A joint venture isan entity in which theGroup holds an interest
under a contractual
arrangement where
the Group and one
or more other parties
undertake an economic
activity that is subject tojoint control.

F20

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of an acquisition ismeasured at the aggregate of the fair values, at the date of exchange, of assets given by the Group in
exchange for control of the acquiree. The acquiree’s identifiable assets, liabilities and contingent liabilities
that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition
date. Subsequent adjustments to the fair values of net assets acquired are made within 12 months of theacquisition date where original fair values were determined provisionally. These adjustments are accounted
for from the date of acquisition Transaction costs that the Group incurs in connection with a businesscombination, such as legal fees, due diligence fees and other professional and consulting fees, are expensed
as incurred. The Group, on an acquisition, recognises any non-controlling interest either at fair value or at
the non-controlling interest’s proportionate share of net assets.
When control is obtained in successive share purchases (a ‘step acquisition’) it is accounted for using theacquisition method at the acquisition date. The previously held interest is remeasured to fair value at theacquisition date and a gain or loss is recognised in the income statement.

A subsidiary is anentity that is directly or
indirectly controlled by
the Group. Control
exists where the Group
has the power togovern the financial andoperating policies of theentity so as to obtainbenefits from its
activities. In assessing
control, potential voting
rights that are currently
exercisable orconvertible are taken
into account.

Segmental analysis
In accordance with IFRS 8 Operating Segments, the Group’s operating segments are reported in a mannerconsistent with the internal reports provided to the chief operating decision maker (‘CODM’). The CODM,
who is responsible for allocating resources and assessing performance of the operating segments has been
identified as the BBC Executive Board. The Executive Board comprises executive and non-executive
Directors, and is responsible for making strategic decisions.

Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated into sterling at the rates of exchange ruling at the dateof the transactions.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into
sterling at the rate of exchange ruling at that date. Foreign currency gains or losses arising from the translationof assets and liabilities at these rates of exchange, together with exchange differences arising from transactions
settled during the year, are included in the income statement. Non-monetary assets and liabilities measured athistorical cost are translated into sterling at the rate of exchange on the date of initial recognition.

As these financial
statements areprepared in sterling,
the BBC’s foreign
currency transactions
and balances mustbe translated, atappropriate exchange
rates, into sterling.

Financial statements of foreign operations
The assets and liabilities of foreign operations are translated into sterling at the rate of exchange ruling at thebalance sheet date. The income and expenses of foreign operations are translated into sterling at averagemonthly rates of exchange ruling during the financial period, which is a good approximation for the actual
rate. Exchange differences arising on translation are recognised directly in the translation reserve.
On disposal of an investment in a foreign operation the associated translation reserve balance is released
to the income statement.

F21

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
IncomeIncome includes licence fee income, external revenue, other operating income (including government grants
and Grant-in-Aid) (together ‘total income’).

Licence fee income
Income derived from television licences is recognised as a receivable from the relevant Government
department, principally the Department for Culture, Media and Sport. This represents the value of licences
issued in the year, subject to deductions for refunds made and cancellations.
Where an element of the licence fee income has been ring-fenced by the Government for a specific purpose,that income is recognised when receivable, except that if it becomes virtually certain that the BBC’s
expenditure on the ring-fenced purposes will be less than the ring-fenced income already received. In thiscase, the relevant amount of licence fee income, as agreed with the Government, will be repayable andrecognised in the year the obligation to repay arises.

Other income

The distinction between
the various income
sources is important.
The BBC is careful not
to cross-subsidisecommercial, UK PublicService Broadcasting or
Grant-in-Aid and grant
funded activities. Moreinformation on the
BBC’s fair trading
requirements andpolicies can be found inthe ‘Managing theBusiness’ section in Part
Two of the BBC Annual
Report and Accounts
2010/11.

Other income, or revenue, arises from activities such as the sale of goods, provision of services and grantingof licences. Revenue is measured after deductions for value added tax, any other sales taxes, trade discounts
and sales between Group companies.
• Sale of goods
Revenue is recognised once the significant risks and rewards of ownership of the goods have been passed
to the customer and the BBC has released all managerial involvement surrounding the goods. Sales ofgoods are stated after deduction of the sales value of actual and estimated returned goods. Examplesof goods sold include magazines, books and DVDs.
• Sale of services
Revenue is recognised at the point the service has been delivered and the receipt of the income isprobable. Where the delivery is over a period of time, the revenue is recognised on a straight line basis.
Examples of services sold include advertising and commercial, licences for specific rights associated with
TV programmes.
• Royalties
Royalty income is recognised on an accruals basis in accordance with the detail of the relevant
agreements.
• Rental income
Rental income is recognised on a straight line basis over the term of the lease.
• Grants from Government departments
The BBC World Service receives Grant-in-Aid from the Foreign and Commonwealth Office and BBC
Monitoring receives a grant from the Cabinet Office. These grants are drawn down to meet estimatedexpenditure in the year but unexpended amounts for the year, within predetermined limits, are not liable
to surrender. The grants are recognised as income in the financial year that they relate to.
• Grants from other Government organisations
Other grants from Government organisations are recognised as income consistently with the related
costs, provided that there is reasonable assurance that the BBC will comply with any conditions attachedto the grant and the grant will be received.

F22

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
Lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis overthe lease term.
Payments made under finance leases are apportioned between financing costs and the reduction of theoutstanding liability. The financing costs are allocated to each period so as to produce a constant periodic
rate of interest on the remaining balance of the liability.

Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets (thosenecessarily taking a substantial period of time to get ready for their intended use) are added to the cost of
those assets, until such time as the assets are ready for their intended use.
Originated programmes can be qualifying assets, but those necessarily taking a substantial period of timeto get ready for broadcast are a small proportion of overall programme investment. Any borrowing costs
that could be attributed to those programmes are not significant and, therefore, no borrowing costs
are capitalised.

An operating leaseis a lease in which thelessee has not taken
on substantially all therisks and rewardsof ownership of theleased asset.
A finance lease isa lease that transfers
substantially all therisks and rewards ofownership of theleased asset to thelessee, which isaccounted for as
if it were an assetof the lessee.

All finance income and other borrowing costs are recognised in income and expense in the period in which
they are incurred.

Taxation
The tax charge for the period comprises both tax currently payable and deferred tax. Taxation is recognisedin the income statement except to the extent that it relates to items recognised directly in reserves, in whichcase it is recognised in reserves.
Current tax is the expected tax payable for the year, using tax rates that are enacted or substantively enacted
at the balance sheet date, and any adjustment to tax payable in respect of previous years. In respect of tax
currently payable:•

The BBC (UK Public Service Broadcasting, BBC World Service and BBC Monitoring) is not liable tocorporation tax on any surplus licence fee income or grants received from Government departments.
However, it is fully liable for corporation tax on capital gains and on all its other external income. Expenditureon capital assets is not eligible for capital allowances giving rise to temporary differences that would lead todeferred tax assets or liabilities. Movements of fair value adjustments in the income statement give rise todeferred tax balances.

•

The BBC’s commercial subsidiaries are liable for corporation tax based on taxable profit for the year.

Deferred tax is provided using the balance sheet liability method on any temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. The amount of deferred tax provided is based on the tax rates expected to apply in the period
when the liability is settled or the asset is realised using tax rates enacted or substantively enacted at thebalance sheet date.

Deferred tax is
corporation tax which is
expected to be payable(or receivable) in the
future as a result ofdifferences between the
carrying amounts ofassets and liabilities, forfinancial reporting
purposes, and thecorresponding tax bases
used to calculate thecorporation tax
currently payable.

Deferred tax assets and liabilities are disclosed net to the extent that they relate to taxes levied by the sameauthority and the Group has the right of set off.

F23

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
Intangible fixed assets
Goodwill
Goodwill is measured as the fair value of the consideration transferred including the recognised amountof any non-controlling interests in the acquiree, less the net fair value of the identifiable assets acquired andliabilities assumed, all measured at the acquisition date. If the fair value of consideration transferred is lessthan the fair value of net assets acquired, the difference is recognised immediately in the income statement.

Acquisitions prior to 1 April 2007 – as part of the adoption of IFRS, in accordance with IFRS 1 ‘First-time
adoption of IFRS’, the Group elected to restate only those business combinations that occurred on or after
1 April 2007. In respect of acquisitions prior to 1 April 2007, goodwill is recognised at deemed cost being
the amount previously recognised under UK accounting standards, subject to being tested for impairment
at that date. Goodwill arising in periods up to 1 April 1998 remains offset against the operating reserve, as
was permitted by UK GAAP at the time.

Goodwill is thedifference between
the value paid fora business and the fairvalue of its net assets.
It represents thepremium the purchaser
is prepared to pay forthe business.

Goodwill arising on the acquisition of joint ventures and associates – this is included in the carrying amountof the joint venture or associate and is tested for impairment as part of the overall balance.
Subsequent measurement of separately recognised goodwill – goodwill is tested annually for impairment
and is measured at cost less any accumulated impairment losses. For the purposes of impairment testing
the goodwill is allocated to cash-generating units on the basis of those expected to benefit from the relevantbusiness combination.

Programme-related intangible assets
Programme-related intangible assets, which include programme rights and residual programme rights, arestated at cost, after writing off the costs of programmes that are considered irrecoverable, less accumulated
amortisation. The cost and accumulated amortisation of programme-related intangible assets are reduced
by programmes which are fully written off.

Research and development expenditure – internally-generated intangible assets
Expenditure on research activities is written off in the income statement when incurred.
Expenditure on development activities is capitalised only if all of the following conditions are met:•

An identifiable asset is created;•

It is probable that the asset will generate future economic benefits; and•The development costs of the asset can be measured reliably.

The assets are measured at cost less accumulated amortisation and any accumulated impairment losses.
For UK PSB Group it is generally unlikely that future economic benefits in the form of cash inflows will bereceived, and as a result, other than assets created for use by the business in delivering its public purposes,
development costs are only capitalised by the Group’s commercial businesses.

Other intangible assets
Other intangible assets acquired separately by the Group are stated at cost less accumulated
amortisation and any accumulated impairment losses. The identifiable intangible assets acquired as partof a business combination are shown at fair value at the date of acquisition (in accordance with IFRS 3
Business combinations) less accumulated amortisation and any accumulated impairment losses.

F24

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
Amortisation
Amortisation is charged to the income statement on a systematic basis over the estimated useful lives ofintangible assets, from the date that they are available for use, unless such lives are indefinite. The useful lives
and amortisation methods for each major class of intangible asset are as follows:•

Programme rights and residual programme rights – charged to the income statement to match the averagerevenue profile of the programme genre over the estimated average marketable life, generally between 2 and10 years•

Other intangibles:– Lonely Planet masthead

Straight line

20 years– UK.TV carrier agreements

Straight line

unexpired term of agreement– Software

Straight line2 – 5 years– Other

Straight line

3 – 8 years

Amortisation methods, useful lives and residual values are reviewed at each balance sheet date and adjusted
if appropriate.

Property, plant and equipment
Owned assets
Other than as noted below, items of property, plant and equipment are stated at cost less accumulated
depreciation and any accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset.

Leased assets
Assets held under finance leases are capitalised within property, plant and equipment and depreciation isprovided as appropriate. On initial recognition the asset is measured at the lower of its fair value and thepresent value of the minimum lease payments.

Depreciation
Depreciation is provided to write off the cost of each item of property, plant and equipment, less its
estimated residual value, on a straight line basis over its estimated useful life. The major categories ofproperty, plant and equipment are depreciated as follows:• Land and buildings
Freehold land – not depreciatedFreehold and long-leasehold buildings – 50 years
Short-leasehold land and buildings – unexpired lease term
• Plant and machinery
Computer equipment – 3 to 5 years
Electrical and mechanical infrastructure – 10 to 25 years
Other – 3 to 10 years• Furniture and fittings – 3 to 10 years
Depreciation methods, estimated useful lives and residual values are reviewed at each reporting date.

F25

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
Non-current assets held for saleNon-current assets (and disposal groups comprising assets and liabilities) are classified as held for sale if theircarrying amount will be recovered principally through sale rather than continuing use, they are available for
immediate sale and sale is highly probable.
On initial classification as held for sale, non-current assets or disposal groups are measured at the lower of
their previous carrying amount and fair value less costs to sell. No amortisation or depreciation is charged
on non-current assets (including those in disposal groups) classified as held for sale.

Programme-related assets and expenditure, and other inventory
Completed originated programmes, programmes in production and prepayments
to acquire future programme related
rightsOriginated programmes are stated at the lower of cost and net realisable value, and the full value is written
off on first transmission.
Cost includes all direct costs, production overheads and a proportion of other attributable overheads. The
proportion of programmes necessarily taking a substantial period of time to produce is small and as such noborrowing costs are included in cost.
Net realisable value is based upon arm’s length contract prices negotiated between the channel controllers
and programme makers. Where, exceptionally, a programme is unable to be broadcast, as soon as it isvirtually certain that this is the case, the full value of the programme will be written off to the income
statement.
Programme development costs are expensed to the income statement until such time as there is a strong
indication that the development work will result in a commissioned programme, when any further costs arerecognised as programme-related assets.
Originated programmes that are still in production at the balance sheet date are recognised as programmes
in production, except that prepayments to acquire future programme-related rights are shown separately
where the BBC has made payments to independent producers, or the holders of certain rights (for example,
rights to broadcast sporting events), to receive the programme on completion.

Rights to broadcast acquired programmes and films
The rights to broadcast acquired programmes and films are recognised at cost. The costs of acquired
programmes and films are written off on first transmission except to the extent that the numbers of further
showings are contractually agreed, when it is written off according to its expected transmission profile. Assets
and liabilities relating to acquired programmes are recognised at the point of payment or commencementof the licence period, whichever is earlier. Agreements for the future purchase of rights whose licence period
has not commenced and where there has been no payment by the balance sheet date are disclosed aspurchase commitments.
Where the BBC has invested in independent productions, in addition to broadcasting rights the BBC may
obtain rights to future royalties from the sale of rights associated with the production. These residual interests
are recognised initially at cost subject to amortisation as royalties are received and impairment if anticipatedroyalties do not materialise.

Other inventories
Raw materials and other physical inventory, including finished goods, are stated at the lower of cost and net
realisable value.

F26

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of less than three months.
Cash and cash equivalents also includes licence fee funds collected on behalf of HM Treasury, which are
excluded from the group’s net funds and in respect of which a separate creditor is recognized.

Impairment of assets
Non-financial assets
At each balance sheet date, the Group reviews the carrying amount of those assets that are subject toamortisation to determine whether there is an indication that any of those assets has suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine theextent of any impairment loss.
For goodwill the recoverable amount is estimated each year at the same time.

An impairment
occurs when an asset
would otherwise berecorded in the financial
statements at an
amount less than isrecoverable from its
use or sale.

The recoverable amount of an asset is the higher of fair value less costs to sell and value in use. For the
purposes of impairment testing, assets are grouped at the lowest level at which they generate separately
identifiable cash flows (cash-generating units). In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments ofthe time value of money and the risks specific to the asset for which the estimates of future cash flows havenot been adjusted.
An impairment loss is recognised in the income statement for the amount by which the asset’s carrying
amount exceeds is recoverable amount. Where a cash-generating unit is impaired the impairment loss will
first be allocated to reduce goodwill and then to the other assets of the cash-generating unit on a pro rata
basis, except that the carrying amount of any individual asset will not be reduced below its separately
identifiable recoverable amount.
Impairment losses in respect of goodwill are not reversed. In respect of assets other than goodwill, an
impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss has been recognised.

Financial assets
Financial assets are assessed at each balance sheet date to determine whether there is any objective evidenceof impairment. Factors considered in determining whether there is objective evidence of an impairment include
significant financial difficulty of the counterparty and breach of contract. Individually significant financial assets aretested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups thatshare similar credit risk characteristics.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present valueof estimated future cash flows discounted at the financial asset’s original effective interest rate. All impairment losses
are recognised in the income statement.

F27

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
Financial instruments
The Group’s holds various derivative and non-derivative financial instruments (including assets such as trade
investments and liabilities such as borrowings). The accounting policy for major categories of financial
instruments is set out below.

Derivative financial instruments
The Group does not enter into speculative derivative contracts. However some derivative financial
instruments are used to manage the BBC’s exposure to fluctuations in interest rates (interest rate swaps, caps
and collars) and foreign currency exchange rates (foreign currency forwards contracts, currency options).
Derivative financial instruments, excluding derivatives held as qualifying hedges are initially recognised at fairvalue and are subsequently remeasured to fair value at the balance sheet date with movements recorded in
the income statement.
The fair value of interest rate swaps, caps and collars is the estimated amount that the Group would receiveor pay to terminate the swap, cap or collar at the balance sheet date, taking into account current interest
rates and the current creditworthiness of swap, cap or collar counterparties.

Financial
instruments include
all contractual
arrangements todeliver or receive cash.
Therefore they include
trade receivables andpayables and loans aswell as more complex
instruments such asderivatives.
Forward exchange
contracts allow you
to buy or sell a currency
at a fixed exchange ratewith delivery made on
a given date or dates
in the future.

The fair value of foreign currency forward contract rates is determined by using forward exchange rates atthe balance sheet date.

Hedge accounting
Where a financial instrument is designated and effective as a net investment hedge of a foreign operation
or a cash flow hedge of purchases or sales in a foreign currency, any exchange differences arising on theretranslation of the financial instrument will be recognised directly in the statement of comprehensive income.
Any ineffective portion is recognised immediately in the income statement.

Embedded derivatives
Derivatives which are embedded in other financial instruments or other host contracts are treated as
separate derivatives when their risks and characteristics are not closely related to those of the host contracts,
and the host contracts are not carried at fair value. Embedded derivatives are carried on the balance sheet atfair value from inception of the host contract. Unrealised changes in fair value are recognised as gains/losses
within the income statement during the period in which they arise.

Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised costusing the effective interest method.

Interest rate caps
protect against interest
rates rising, by setting
an upper limit (cap)on the floating interest
rate, while still allowing
the benefit of fallinginterest rates.
Interest rate collars
are the same as interest
rate caps except that
there is also a lower
limit set to the floatinginterest rate.
Interest rate swaps
effectively swap afloating rate loan into
a fixed rate loan, or
vice versa.

Trade and other receivables
These are recognised initially at fair value and subsequently measured at fair value directly attributabletransaction costs less an allowance for estimated impairment. The allowance is based on objective evidence
that the Group will not be able to recover all amounts due. Changes in the carrying amount of the allowance
are recognised in the income statement.

Investments in equity securities
Investments in equity securities held by the Group are classified as being available-for-sale and are stated atfair value, with any resultant gain or loss being recognised in the statement of comprehensive income, except
for impairment losses. When these investments are derecognised the cumulative gain or loss previously
recognised in the statement of comprehensive income is recognised in the income statement.

F28

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation
arising from past events, it is probable that an outflow of economic benefits will be required to settle theobligation and the amount can be reliably estimated. Provisions, other than deferred tax, that are payable
over a number of years are discounted to net present value at the balance sheet date using a discount rate
appropriate to the particular provision concerned.

Employee benefits
Defined contribution plans
The amounts charged as expenditure for the defined contribution plans represent the contributions payable
by the BBC for the accounting period.

Defined benefit plans
The defined benefit plans, of which the majority of staff are members, provide benefits based on pensionable
pay. The assets of the BBC’s pension scheme are held separately from those of the Group.
Pension scheme assets are measured at fair value. Pension scheme liabilities are measured using a projected
unit credit method. The present value of scheme liabilities is calculated by discounting estimated future cashout flows at the current rate of return on a high quality corporate bond of equivalent term and currency tothe liabilities.
The difference between the fair value of the pension scheme assets and the present value of the pension scheme
liabilities is a surplus or a deficit. A pension scheme surplus is recognised to the extent that it is recoverable and apension scheme deficit is recognised in full. The movement in the scheme surplus/deficit is split between operating
charges, finance items and, in the statement of comprehensive income, actuarial gains and losses. Generally,
amounts are charged to operating expenditure on the basis of the current service cost of the present employeesthat are members of the BBC Pension Scheme.

On retirement,
members of the BBC’s
main pension
scheme are paid theirpensions from a fundwhich is kept separate
from the Group. The
BBC makes cash
contributions to thatfund in advance ofmembers’ retirement.

The Group recognises a curtailment when it is demonstrably committed to a significant reduction in
employees covered by the scheme or amends the scheme's terms such that a significant element of futureservice will qualify for no or reduced benefits. Curtailment gains and losses are recognised in the income
statement.

Termination benefits
Termination benefits are a component of restructuring provisions and are payable when employment isterminated before the normal retirement date. They are recognised as an expense when the group isdemonstrably committed to termination being when there is a detailed formal plan to terminate employment
without possibility of withdrawal.

Other employee benefits
Other short and long term employee benefits, including holiday pay and long service leave, are recognised
as an expense over the period in which they accrue.

Reserves
The operating reserve is the accumulated surplus to date.
Other reserves include the value of put options exercisable by non-controlling shareholders and available-forsale reserve includes fair value gains and losses on available-for-sale financial assets.
The hedging reserve is used to record the effective portion of the cumulative net change in the fair valueof cash flow hedging instruments related to hedged transactions that have not yet occurred (net of tax).
The translation reserve is used to record exchange differences arising from the retranslation of the net
assets and results of overseas subsidiaries.

F29

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
Service licence reporting
Service licences are used by the BBC Trust to regulate the BBC’s services and ensure that each aims toprovide public value and contribute to delivering the BBC’s public purposes. Note 2 provides more detailon how costs are allocated to individual services.

Use of estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires the Executive Board to exercise judgement in applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions or
estimates are significant to the consolidated financial statements are disclosed below:

Post-retirement benefits
The pension costs and obligations of the Group’s defined benefit schemes are calculated on the basis of arange of assumptions, including the discount rate, inflation rate, salary growth and mortality. Differences arising
as a result of actual experience differing from the assumptions, or future changes in the assumptions will bereflected in subsequent periods. A small change in assumptions can have a significant impact on the valuationof the liabilities. More details on sensitivity of pension assumptions are given in Note 23cviii.

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 toestimate the future cash flows expected to arise from the cash-generating unit and a suitable discount ratethat reflects current market assessments of the risks specific to the asset and the time value of money, inorder to calculate present value. Please refer to Note 9 for further details on the impairment loss calculation
for the current year.

LeasesIn assessing whether a lease is an operating lease or a finance lease, judgement needs to be exercised indetermining whether or not substantially all the risks and rewards of ownership of the leased asset are heldby the Group. Given that finance leases are recognised as liabilities, and operating leases are not, this canhave a significant effect on the reported financial position of the BBC. Other key judgements include thedetermination of the commencement date of a lease and the estimate of RPI to be included in the minimum
lease payments.

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 theGroup 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.

Provisions
Judgement and estimation techniques are employed in the calculation of the best estimate of the amountrequired to settle obligations, including determining how likely it is that expenditure will be required by theBBC. This can be very complex, especially when there is a wide range of possible outcomes.

F30

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
New standards and interpretations not yet adopted
At the date of authorisation of these financial statements, the following Standards and Interpretations whichhave not been applied in these financial statements were in issue but not yet effective.
Endorsed by the EU:
IAS 24 (Revised)

Related party disclosures

IFRIC 19

Extinguishing Financial Liabilities with Equity Instruments

Improvements to IFRSs (May 2010)
Not yet endorsed by the EU:
IFRS 9Financial instruments

IFRS 10

Consolidated financial statements

IFRS 11

Joint arrangements

IFRS 12Disclosures of interests in other entities

IFRS 13

Fair value measurement

IAS 28 (Revised 2011)

Associates and joint ventures

The Group currently does not expect that the adoption of these Standards and Interpretations in future periods
will have a material impact on the financial statements of the Group.

F31

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
1 Segment reporting
The Executive Board, the Group’s Chief Operating Decision Maker (CODM), has determined thereportable segments based upon the reports it regularly reviews and uses to make strategic decisions
and allocate resources.
Segmental information provided to the BBC Executive Board is based on the BBC Group’s primary
income sources. The reportable segments are:•

UK PSB Group – This primarily receives licence fee income and is responsible for the Group’s public
sector activities. This includes delivery of its obligations under the Service Licence Operating Framework
issued by the BBC Trust.

•

BBC World Service and BBC Monitoring – These are funded by Grant-in-aid from the Foreign andCommonwealth Office and the Cabinet Office.

•

BBC Worldwide and the Commercial businesses – These generate revenue from exploiting thevarious assets of the BBC, for example licensing formats, selling international rights, merchandising andproduction facilities.

The BBC’s Other Commercial activities have been aggregated for reporting purposes as they meetthe quantitative thresholds set out in IFRS 8.
Inter-segment pricing is determined on an arm’s length basis in accordance with the BBC’s Fair
Trading policy.
Information regarding reportable segment assets and liabilities is not reported to the Executive Board.
The UK PSB’s expenditure by service licence is also presented in Note 2c.

1a Analysis of income

2011

Licence fee income
Joint venture income
Rental income
Royalties
Other revenue*
Grant-in-aid
Other grant income
Less intra-group income
Other income
Total income including
joint ventures
Less joint venture
incomeTotal income
*

Note

2a

UK PSBGroup£m

BBC World
Serviceand BBC
Monitoring£m

BBCWorldwide£m

Other
Commercials
£m

Group
Adjustments
£m

Group
£m

3,513.4
4.6

–
–

–
150.6

–
–

–
–

3,513.4
155.2

30.5
2.9
291.3
–
5.1
(225.4)
104.4

–
–
30.5
266.3
–
(0.4)
296.4

–
52.9
954.2
–
–
–
1,007.1

–
0.3
132.0
–
–
(49.0)
83.3

–
–
–
–
–
(11.6)(11.6)

30.5
56.1
1,408.0
266.3
5.1(286.4)
1,479.6

3,622.4

296.4

1,157.7

83.3(11.6)

5,148.2(4.6)
3,617.8–
296.4(150.6)
1,007.1–
83.3–(11.6)(155.2)
4,993.0

Other revenue arises from activities such as the sale of goods, provision of services and granting of licences. The principle products
within BBC Worldwide and Other Commercials are the sale of TV rights and advertising income.

Note 1 provides
analysis of the different
segments within theBBC. These reflect theway that management
looks at theorganisation.
UK Public Service
Broadcasting Group
comprises the UK
Public Services (asdefined in theAgreement) and thosesubsidiary companies
incorporated to act
solely on behalf of
those public service
operations.
BBC World Service
and BBC
Monitoring comprise
broadcasting and media
monitoring activities.
BBC Worldwide
and Other
Commercials
comprise stand alone
businesses which
generate external
income from
exploitation of theBBC’s programmes,
other assets andskill base.

F32

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
1a Analysis of income continued

2010

Note

Licence fee income
Joint venture income

2aRental income
Royalties
Other revenue
Grant-in-aid
Other grant income
Less intra-group income
Other income
Total income including
joint ventures
Less joint venture
incomeTotal income*

UK PSBGroup
Restated*£m

BBC World
Serviceand BBC
Monitoring£m

BBCWorldwide£m

Other
Commercials
£m

Group
Adjustments
£m

Group
Restated*

3,446.8
4.9

–
–

–
185.9

–
–

–
–

3,446.8
190.8

19.3
3.9
283.2
–
5.0
(219.6)
91.8

–
–
7.9
293.0
–
(1.5)
299.4

–
45.3
843.0
–
–
–
888.3

–
0.6
122.0
–
–
(48.9)
73.7

–
–
–
–
–
(10.2)(10.2)

19.3
49.8
1,256.1
293.0
5.0(280.2)
1,343.0

3,543.5

299.4

1,074.2

73.7(10.2)

4,980.6(4.9)
3,538.6–
299.4(185.9)
888.3

–
73.7

–
(10.2)(190.8)4,789.8

Further details of adjustments made to previously reported balances are provided in Note 19.

1b Analysis of income, surplus/(deficit) by activity

2011

IncomeRestructuring costs
Depreciation andamortisation
Other operating costs
Total operating costs
Group operating
surplus/(deficit)
Gain on saleand termination ofoperations
Share of resultsof associates andjoint ventures
Operating segment
resultFinancing income
Financing costs
Net financing income
Surplusbefore taxation
Taxation
Surplus for the year*

Note

UK PSBGroup£m

BBC World
Serviceand BBC
Monitoring£m

BBCWorldwide£m

Other
Commercials£m*GroupAdjustments
£m

Group
£m

1a
4c

3,617.8(29.6)

296.4(23.7)

1,007.1
(1.8)

83.3
(8.2)

(11.6)–

4,993.0(63.3)

3(109.8)(3,398.2)(3,537.6)(28.0)(261.8)(313.5)(95.2)(820.4)(917.4)(3.2)(55.3)(66.7)

–
232.9
232.9

(236.2)(4,302.8)(4,602.3)

80.2(17.1)

89.7

16.6

221.3

390.7

5

–

–

96.4

–

–

96.4

11

(1.0)

–

27.6

–

–

26.6

79.2

(17.1)

213.7

16.6

221.3

7
7

513.7
613.6
(606.8)
6.8

8

520.5
(37.6)
482.9

Group adjustments,
finance income andcosts and taxation
are not split between
reportable segments
because they are
managed centrally
across the Group and
it is not possible toallocate them on
a consistent basis.

Group adjustments include £306.7million (2010: £387.9million) for the defined benefit pension scheme, of this balance£250.4million relates to a gain on settlements and curtailments (2010: £334.1million relates to past service income arising froma change to early retirement terms and conditions).

F33

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
1 Segment reporting continued
1b Analysis of income, surplus/(deficit) by activity continued

2010

IncomeRestructuring costs
Depreciation andamortisation
Other operating costs
Total operating costs
Group operating
surplus/(deficit)
Gain on saleand termination ofoperations
Gain on disposalof fixed assets
Share of resultsof associates andjoint ventures
Operating segment
resultFinancing income
Financing costs
Net financing costs
Surplusbefore taxation
Taxation
Surplus for the year*

Note

UK PSBGroup
restated*£m

BBC World
Serviceand BBC
Monitoring£m

BBCWorldwide£m

Other
Commercials
£m

Group
Adjustments
£m

Group
restated*
£m

1a
4c

3,538.6(36.9)

299.4
(6.3)

888.3
(6.8)

73.7
(11.9)(10.2)–

4,789.8(61.9)

3(106.1)(3,376.2)(3,519.2)(32.9)(215.8)(255.0)(92.4)(691.2)(790.4)(3.5)(79.6)(95.0)

0.1
391.2
391.3

(234.8)(3,971.6)(4,268.3)

19.4

44.4

97.9

(21.3)

381.1

521.5

5

–

–

2.0

–

–

2.0

6

39.0

–

–

–

–

39.0

11

(3.1)

–

40.1

–

(0.1)

36.9

55.3

44.4

140.0

(21.3)

381.0

7
7

599.4
445.8
(533.5)(87.7)

8

511.7(34.7)
477.0

Further details of adjustments made to previously reported balances are provided in Note 19.

F34

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
1 Segment reporting continued
1c Geographical location of income and non-current assets

2011

Non-current assets excluding
deferred tax and financial
instruments:
UK
Rest of world
Additions includedin fixed assets and investments
External income:UK
Rest of world2010

Non-current assets excluding
deferred tax and derivative
financial instruments:
UK
Rest of world
Additions includedin fixed assets and investments
External income:UK
Rest of world2009

Non-current assets excluding
deferred tax and derivative
financial instruments:
UK
Rest of world
Additions includedin fixed assets and investments
External income:UK
Rest of world*

UK PSBGroup£m

BBC World
Serviceand BBC
Monitoring£m

BBCWorldwide£m

Other
Commercials
£m

Group
Adjustments
£m

Group
£m

1,471.8
1.9
1,473.7

55.6
95.9
151.5

196.3
115.9
312.2

13.2
–
13.2

(31.8)–(31.8)

1,705.1
213.7
1,918.8

514.3

19.5

112.4

4.3

–

650.5

3,617.8–
3,617.8

291.9
4.5
296.4

389.2
617.9
1,007.1

15.1
68.2
83.3

(11.6)–(11.6)

4,302.4
690.6
4,993.0

UK PSBGroup
restated*£m

BBC World
Serviceand BBC
Monitoring£m

BBCWorldwide£m

Other
Commercials
£m

Group
Adjustments
£m

Group
restated*£m

1,002.8
3.5
1,006.3

57.5
101.7
159.2

169.9
173.5
343.4

14.8
–
14.8

(18.9)–(18.9)

1,226.1
278.7
1,504.8

98.8

25.3

130.6

5.0

–

259.7

3,538.6–
3,538.6

295.5
3.9
299.4

351.1
537.2
888.3

14.8
58.9
73.7

–
(10.2)(10.2)

4,200.0
589.8
4,789.8

UK PSBGroup
restated*£m

BBC World
Serviceand BBC
Monitoring£m

BBCWorldwide£m

Other
Commercials
£m

Group
Adjustments
£m

Group
restated*£m

1,433.1
3.6
1,436.7

69.9
99.0
168.9

167.4
162.1
329.5

9.4
–
9.4

(11.6)–(11.6)

1,668.2
264.7
1,932.9

103.6

31.3

162.4

2.7

–

300.0

3,587.8–
3,587.8

292.9
3.6
296.5

286.4
418.2
704.6

17.9
60.9
78.8

–
(7.5)
(7.5)

4,185.0475.2
4,660.2

Further details of adjustments made to previously reported balances are provided in Note 19.

F35

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
2 UK Public Service Broadcasting Group additional reporting
This note includes BBC Trust and Department of Culture, Media and Sport (DCMS) regulatory reports
and voluntary reports providing additional information on licence fee income and related expenditure.
The regulatory reports are presented on the basis upon which the regulations were set.

2a Licence fee income
Licence fee
2011£

Colour
Monochrome
Concessionary
Over 75s

145.50
49.00
7.50
–

Licencesin force
2011
Number‘000

Total
income2011£m

Licencefee
2010£

Licences inforce 2010
Number‘000

Total
income2010£m21,23515
188
4,156
25,5943,080.2
1.0
1.4
579.4
3,662.0

142.50
48.00
7.50
–

21,171
19
181
4,088
25,4593,002.3
1.2
1.4
556.4
3,561.3

Quarterly payment
scheme premium
Digital switchover help scheme
under-spend (Note 2d)
Total licence fee income

17.1

17.5

(165.7)3,513.4(132.0)3,446.8

During the year 3.4 million (2010: 3.5 million) colour licences were issued under the quarterly payment
scheme at a premium of £5 each (2010: £5).
Households in which one or more persons over the age of 75 reside, as their primary residence, areentitled to a free licence. The BBC is reimbursed for these free licences by the relevant Government
department.

2b Reconciliation of UK Public Service Broadcasting Group expenditure to the basis
for service licence reporting purposes
Service licences are used by the BBC Trust to regulate the BBC’s services and ensure that each service
provides public value and contributes to the delivery of the BBC’s public purposes. The annual
assessment of performance compares actual costs for content against an agreed and authorised baselinebudget. A reconciliation between total UK Public Service Broadcasting Group expenditure and UK PublicService Broadcasting Group expenditure for service licence reporting purposes is provided below. The
adjustments reflect the basis on which service licence baseline budgets are set.
Actual costs may vary by up to 10% of the baseline budget to permit management flexibility in its
commissioning decisions.
UK Public Service Broadcasting Group expenditure
Adjustments:
Lease reclassification
Employee benefits
UK Public Service Broadcasting Group expenditure
for service licence reporting purposes

2011
£m

2010
£m

3,537.6

3,519.2

58.2
–

38.2
2.8

3,595.8

3,560.2

F36

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
2 UK Public Service Broadcasting Group additional reporting continued
2c UK Public Service Broadcasting Group expenditure by service
During the year there were 28 service licences in operation. Service licences show the cost to the licencefee payer of providing the relevant service and therefore exclude any costs funded by a third party coproducer. A number of television programmes are broadcast on more than one channel and in general
the full cost of the programme is recognised as a cost of the channel when the programme is firstbroadcast. Where a programme is commissioned by two channels the cost of the programme isrecognised as a cost of the primary channel irrespective of the channel holding first transmission.
Accordingly, the costs of individual service licences are not necessarily equivalent to the costs which
would be incurred by such a service on a stand-alone basis.
For BBC HD, BBC Online and BBC Red Button, the licence reflects only the incremental costs of getting
content to air unless the content is specifically commissioned for one of these three services. The costof the original content is allocated to the service on which it is first transmitted.
Following redefinition of the CBBC and CBeebies licences for 2010/11, these licences now include allcontent expenditure on Children’s programmes, and not only the cost of programmes aired on CBBC
and CBeebies. Accordingly BBC One and BBC Two no longer include the content costs of children’s
programmes. Prior year service licence costs have not been restated.

F37

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
2 UK Public Service Broadcasting Group additional reporting continued
2c UK Public Service Broadcasting Group expenditure by service continued
Content(i)£mDistribution(ii)£mInfrastructure/
support£m

Other items
£m

Total
£m

1,130.9
421.0
84.7
50.8
78.3
28.5
2.1
5.0
47.1
2.0
14.9
1,865.3
36.7
46.7
37.3
92.8
55.4
2.5
7.4
7.3
5.3
8.6
114.8
23.8
3.8
13.0
11.8
16.2
483.4
125.8
125.8

50.8
21.0
3.9
2.9
3.2
3.3
8.2
1.5
6.2
4.7
19.5
125.2
4.8
4.9
4.9
9.9
6.2
1.1
1.2
1.2
1.1
1.4
10.1
3.3
1.4
1.2
1.6
1.8
56.1
21.1
21.1

221.2
86.3
21.5
13.4
17.8
7.9
1.5
1.1
7.8
1.3
5.1
384.9
6.6
7.6
8.5
17.1
11.3
1.3
2.4
2.3
1.8
2.6
22.6
5.3
0.9
2.8
2.7
3.6
99.4
47.3
47.3

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

1,402.9
528.3
110.1
67.1
99.3
39.7
11.8
7.6
61.1
8.0
39.5
2,375.4
48.1
59.2
50.7
119.8
72.9
4.9
11.0
10.8
8.2
12.6
147.5
32.4
6.1
17.0
16.1
21.6
638.9
194.2
194.2

Spend regulated by service licence

2,474.5

202.4

531.6

–

3,208.5

Licence fee collection costs
Orchestras and performing groups
S4C
Development spend
Costs incurred to generate third party income
Other
Restructuring costs
Total UK public services expenditure
Digital switchover (Digital UK Limited)
Digital switchover (DSHS Limited)
Total UK Public Service BroadcastingGroup expenditure

–
20.2
26.9
27.6
–
74.7
–
2,549.2
–
–

–
–
–
–
–
–
–
202.4
–
–

–
3.9
5.3
5.3
–
14.5
–
546.1
–
–

123.6
–
–
–
64.6
188.2
29.6
217.8
25.0
55.3

123.6
24.1
32.2
32.9
64.6
277.4
29.6
3,515.5
25.0
55.3

2,549.2

202.4

546.1

298.1

3,595.8

2011 Service

BBC One
BBC Two
BBC Three
BBC Four
CBBC
CBeebies
BBC HDBBC ALBA
BBC News channel
BBC Parliament
BBC Red Button
Television
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Radio Five Live Sports Extra
BBC 1Xtra
BBC 6MusicBBC 7
BBC Asian Network
BBC Local RadioBBC Radio Scotland
BBC Radio nan Gàidhael
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foyle
Radio
BBC Online
Online

Note

v

iv

vi

x

vii
viii

4c
ix
ix

F38

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
2 UK Public Service Broadcasting Group additional reporting continued
2c UK Public Service Broadcasting Group expenditure by service continued
Content£m

Distribution
restated*£m

Infrastructure/
support£m

Other items
£m

Total
restated*£m

BBC One
BBC Two
BBC Three
BBC Four
CBBC
CBeebies
BBC HDBBC ALBA
BBC News channel
BBC Parliament
BBC Red Button
Television
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Radio Five Live Sports Extra
BBC 1Xtra
BBC 6MusicBBC 7
BBC Asian Network
BBC Local RadioBBC Radio Scotland
BBC Radio nan Gàidhael
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foyle
Radio
BBC Online
Online1,113.1
450.0
87.5
54.5
39.9
18.1
1.6
4.3
47.8
2.4
14.2
1,833.4
32.2
40.4
40.8
86.7
55.0
2.5
6.5
6.5
5.0
8.9
110.2
24.9
4.2
13.1
12.3
14.4
463.6
126.7
126.7

43.4
30.6
6.8
3.8
6.0
4.2
7.8
0.8
8.4
6.5
20.4
138.7
4.9
5.1
5.4
9.5
6.5
1.0
1.1
1.1
1.0
1.2
9.9
3.0
1.2
1.1
1.3
1.5
54.8
22.3
22.3

217.1
95.0
24.3
15.7
11.2
6.4
1.5
1.0
7.8
1.4
4.7
386.1
6.7
7.7
8.5
16.5
11.2
1.4
2.5
2.4
1.8
2.8
21.4
5.2
0.9
2.5
2.3
3.0
96.8
50.3
50.3

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

1,373.6
575.6
118.6
74.0
57.1
28.7
10.9
6.1
64.0
10.3
39.3
2,358.2
43.8
53.2
54.7
112.7
72.7
4.9
10.1
10.0
7.8
12.9
141.5
33.1
6.3
16.7
15.9
18.9
615.2
199.3
199.3

Spend regulated by service licence

2,423.7

215.8

533.2

–

3,172.7

Licence fee collection costs
Orchestras and performing groups
S4C
Development spend
Costs incurred to generate third party income
Other
Restructuring costs
Total UK Public Services expenditure
Digital switchover (Digital UK Limited)
Digital switchover (DSHS Limited)
Total

–
20.3
30.0
31.2
–
81.5
–
2,505.2––
2,505.2

–
–
–
–
–
–
–
215.8
–
–
215.8

–
3.8
6.6
5.9
–
16.3
–
549.5
–
–
549.5

126.5
–
–
–
41.5
168.0
36.9
204.9
29.2
55.6
289.7

126.5
24.1
36.6
37.1
41.5
265.8
36.9
3,475.4
29.2
55.6
3,560.2

2010 Service

*

Note

Distribution costs relating to Digital text and DAB digital radio spend have previously been disclosed on the face of Note 2c.
These costs are now apportioned by service within distribution expenditure and consequently the 2009/10 position has been
restated. Note – all of the Digital Text related costs are reported exclusively against the BBC Red Button service

F39

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
2 UK Public Service Broadcasting Group additional reporting continued
2c UK Public Service Broadcasting Group expenditure by service continued
Infrastructure/support costs

Note

MarketingPress and publicity
Libraries, learning support and community events
Overheads (excluding restructuring)
BBC Trust Unit (excluding restructuring)

iii
iii

2011
£m

2010
£m

60.7
11.8

74.5
5.0

38.6
421.0
14.0
546.1

49.8
406.3
13.9
549.5

(i) Content costs are made up of the direct programme and service specific costs of production and an apportionment of otherproduction related costs that are managed centrally, for example, newsgathering and copyright costs. Of the total content costs
regulated by service of £2,474.5million (2010: £2,423.7million) direct costs were £2,295.2million (2010: £2,247.7million) andthe centrally managed and allocated costs were £179.3million (2010: £176.0million).
(ii) The cost of distribution represents the transmission and carriage of the BBC’s UK public services (television, radio andinteractive) on digital and analogue broadcast platforms – this includes Digital Terrestrial Television (DTT), satellite, cable,
broadband, digital text and DAB digital radio. Of the distribution costs, £57.7million relates to analogue services (2010:£67.7million) and £144.7million to digital services (2010: £148.1million). Distribution expenditure is apportioned toeach service.
(iii) Overheads represent expenditure on the BBC’s central functions, for example the Director-General’s office, BBC People, BBC
Finance, Policy and Legal departments. Spend incorporates accommodation and staff costs relating to those functions. The
proportion of these costs which are directly attributable to programme-making are included within total content spend, whilst
costs of services provided across the BBC as a whole or managed at a corporate level (for example marketing, press andpublicity) are shown as infrastructure and support expenditure and are subsequently apportioned across all relevant activities.
(iv) BBC 1Xtra’s content costs were under the baseline budget by more than the 10% tolerance due to efficiencies generated
through better alignment of the service with BBC Radio 1.
(v) Included within BBC News channel content costs are production costs of £29.8million, newsgathering costs of £17.1million
and other costs of £0.2million (2010: production costs of £30.0million, newsgathering costs of £17.3million and other costsof £0.5million).
(vi) The service licence for BBC Local Radio covers all of the individual stations in England.
(vii)The BBC is required to provide Welsh language programming to S4C (the Welsh language channel) as part of the StrategicPartnership Agreement between the BBC Trust and the S4C Authority.
(viii) Development spend is not regulated by service licence and, as such, is separately identified. The 2011 figure includes costs
relating to the production of the recently launched Radioplayer, improvements to the iPlayer (now in version 3), new features
for the World Cup and General Election, and next generation applications for iPTV television devices.
(ix) Under the terms of the current licence fee settlement, a proportion of licence fee income is set aside to help pay for wider
industry costs of relating to digital switchover. This includes a marketing and awareness campaign run by Digital UK Limited
and the Digital Switchover Help Scheme administered by DSHS Limited.
As set out in Note 2d the BBC controls 56% of the voting rights of the company Digital UK Limited, and therefore
consolidates its results with those of the BBC. As a result, these costs represent the full expenditure by Digital UK Limited,which is financed by contributions from the BBC and other broadcasters. The BBC contributed £23.6million (2010:£27.5million) being 100% of the communication expenditure (which is ring-fenced, see Note 2d) and 58.02% (2010: 56%)of all other costs incurred by Digital UK Limited. £1.4million (2010: £1.7million) was contributed by other broadcasters.
The BBC contributed £45.8million (2010: £48.5million) to DSHS Limited with £9.5million (2010: £7.1million) being
contributed by third parties.

F40

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
2 UK Public Service Broadcasting Group additional reporting continued
2c UK Public Service Broadcasting Group expenditure by service continued(x) BBC Online spend is monitored by annexe (editorial areas of the service). Non-annexe spend refers to costs relating to central
editorial activities (e.g. BBC homepage), technologies which operate across the service and overheads. The spend for each isshown in the table below:

AnnexeNews and Sport
Audio & Music
Nations & Regions
Formal Learning
Knowledge, Childrens & Entertainment
iPlayer
Non-annexe spend

2011
£m

2010
£m

29.1
13.3
21.2
8.6
26.6
2.9
101.7
24.1
125.8

27.0
15.1
21.8
10.9
28.5
3.2
106.5
20.2
126.7

2d UK Public Services Group ring-fenced expenditure
DCMS has ring-fenced the following amounts within the Charter and six-year licence fee settlement(2008 to 2013):

Digital Switchover

Cumulative
spend to 2010£m

Cumulative
spend to 2011£m

Outstanding
amountrepayable£m

Cumulative
amountrepaid
£m

Total
£m

Six-yearring- fenced
funding
£m

78.0
77.7
155.7

123.8
105.3
229.1

213.2
52.9
266.1

31.6
–
31.6

368.6
158.2
526.8

603.0
201.0
804.0

Help for the elderly anddisabled
Digital UK Limited
Total

The Secretary of State has agreed with the BBC that the £603million estimated cost of the Digital
Switchover Help Scheme (operated by DSHS Limited) will be ring-fenced and set aside from the licencefee for the purpose of funding the Scheme over the six-year life of the licence fee settlement. Thisagreement specifies that in the event that the costs of the project exceed this limit due to higher
than anticipated demand, this will not be at the expense of the BBC’s programmes, services orother resources.
Digital underspend

At 1 April 2010
Underspend in the year
Repayment of underspend to DCMS
At 31 March 2011

2011

Note

2a

132.0
165.7
(31.6)
266.1

Of the £266.1million (2010: £132.0million) cumulative under spend as at 31 March 2011, £99.4million(2010: £89.1million to be repaid in 2010-11) will be repaid in 2011-12, £95.0million (2010: £42.9million
to be repaid in 2011-12) in 2012-13 and £71.7million (2010: £nil) in later years. Confirmed under-spends
arising in future periods will become available for repayment in the following year. Responsibility forensuring value for money for funds repaid will pass from the BBC Trust to the Government. The funds
will be used for purposes not inconsistent with the purposes of the licence fee.
The Framework Agreement between the BBC and DCMS states that the BBC is committed to leading
certain aspects of the digital switchover programme, through Digital UK, and the licence fee settlement
includes a ring-fenced amount of up to £201million from the inception of Digital UK until the end of thesix-year life of the licence fee settlement for communication activities. The ring-fenced amount is only
part of the BBC’s annual contribution to Digital UK.

F41

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
2 UK Public Service Broadcasting Group additional reporting continued
2e Analysis of net (debt)/funds for Department of Culture, Media and Sport (DCMS)
borrowing ceilings
Total cash and cash equivalents
Less restricted cash*
Bank overdrafts
Gross funds
Cash classified as held for sale
Loans and loan notes
Derivatives associated with loans
Finance leases
Leases not included in DCMS
borrowing limits
Net (debt)/funds
Made up of:
Public Service Broadcasting
Centre House Productions
BBC Worldwide
Other commercial businesses
Net (debt)/funds*

At 1 April
2010
£m

Cash
flows
£m

Non-cashchanges£m

Exchange£m

At 31 March
2011
£m

263.9
–
(1.7)
262.2
8.3
(211.4)(8.3)(608.9)250.1(34.0)
1.4
217.5
–
1.0
–
–

–
–
–
–
(8.3)
(0.3)
1.1
(288.5)

(0.6)
–
–
(0.6)
–
(4.2)
–
–

513.4
(34.0)
(0.3)
479.1
–
(214.9)(7.2)(897.4)

555.5

–

298.1

–

853.6

(2.6)

218.5

2.1

(4.8)

213.2

168.1
(10.7)(23.0)(137.0)

375.0
(8.3)
(56.3)(97.2)

(2.6)

213.2

The DCMS definitionof ‘borrowings’ excludes
leases which would beclassified as operating
under UK GAAP, butwhich are classified as
finance leases under
IFRS. These leases are
therefore excluded
when comparing net
debt/funds to DCMS
borrowing ceilings.

Restricted cash relates to licence fee funds collected on behalf of HM Treasury.

The debt and repayments on finance leases held by Centre House Productions Limited are offset directly
by cash held on matching deposits, and the income from them, such that there is no long-term cash
effect.

2f Reconciliation of net funds/(debt) to the Department of Culture, Media and Sport(DCMS) borrowing ceilings
Commercial
Businesses

Public Services
Current
expenditure on
Capital or
Digitalcurrent
Switchover
expenditure* Help Scheme**
£m
£m

***
£m

2011

Note

Net funds/(debt)
Borrowing ceiling
Headroom

24e

375.0
(200.0)575.0–(25.0)
25.0(153.5)(350.0)
196.5

24e

168.1
(200.0)368.1–(25.0)
25.0(160.0)(350.0)
190.0

Public Services inthis context represent
the UK Public Service
Broadcasting Group(excluding Centre
House Productions
Limited – see Note24b), BBC World
Service and BBC
Monitoring.

2010
Net funds/(debt)
Borrowing ceiling
Headroom*

The Public Service borrowing limit of £200million is set by the Secretary of State in accordance with the Framework
Agreement between the BBC and DCMS. As at 31 March 2011, 31 March 2010, and throughout both financial years, theBBC was in compliance with the borrowing ceilings.

** £25million may only be used in respect of borrowing to fund current expenditure on meeting the responsibilities placed on the
BBC by any scheme agreed under clause 39 of the Framework Agreement (targeted help schemes).
*** Under the terms of the DCMS agreement, BBC Commercial Holdings Limited must satisfy two financial covenants. Thesecovenants are required to be met at 31 March each year. As at 31 March 2011 and 31 March 2010, BBC Commercial
Holdings Limited was in compliance with both of these covenants. Under a direction granted by the Secretary of State for the
DCMS a borrowing limit of £350million has been set for the BBC commercial group.

F42

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
3 Total operating costs
Note

Intangible fixed assets, property, plant and equipment
and other investments
Depreciation– owned assets– leased assets
Write off of property, plant and equipment
Amortisation of intangible fixed assets
Impairment of investments in joint ventures and associates
Impairment of goodwill

1099Inventories
Write-downs of programme-related assets recognised
as an expense
Other operating costs
Payments under operating leases– land and buildings– plant and machinery– other
Profit on disposal of tangible fixed assets*
Loss on disposal of tangible fixed assets*
Programme research costs
Research costs
Audit and non-audit fees paid to KPMG (see below)
Fair trading auditor’s remuneration (Deloitte LLP)Net exchange differences on settled transactions
Impairment of trade debtors
Fair value gains on embedded derivatives
Fair value losses/(gains) on open forward foreign currency
contracts
Staff costs
Exceptional pension income (defined benefit)
Other operating costs**
Total
*

4b
4b

2011
£m

2010
£m

103.2
27.4
4.0
105.6
2.1
33.8
276.1

110.6
28.9
6.7
95.3
1.7
17.5
260.7

10.0
10.0

3.7
3.7

61.6
42.9
17.0
(0.7)
4.0
24.6
44.6
7.1
0.2
(5.1)
2.4
(1.3)

43.0
38.4
12.8
(0.1)
1.9
28.7
50.1
3.6
0.2
(2.6)
4.1
(7.1)

2.3
1,332.1(250.4)
3,034.9
4,316.2
4,602.3(14.0)
1,286.0(334.1)
2,893.0
4,003.9
4,268.3

The (profit)/loss on disposal of tangible fixed assets represent adjustments to depreciation on disposals in the ordinary courseof business. Exceptional profit on disposals is disclosed separately in Note 6.

** Other includes the direct programme/service specific costs of production and other production related costs excluding items
disclosed separately including staff costs.

F43

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
3 Total operating costs continued
The analysis of auditor’s remuneration is as follows:
Fees payable for the audit of the BBC’s annual accounts
Fees payable to the BBC’s auditor and its associates for other services– The audit of the BBC’s subsidiaries pursuant to legislation– Other services relating to taxation– Services relating to corporate finance transactions– Services relating to information technology– Valuation and actuarial advice*– All other services
Other services provided to the BBC Pension Scheme
Total
*

2011
£m

2010
£m

0.6

0.6

0.9
0.4
0.6
–
3.5
1.0
7.0
0.1
7.1

1.0
0.3
0.2
0.1
0.5
0.8
3.5
0.1
3.6

The actuarial services provided relate primarily to advice regarding the changes to the BBC Pension Scheme announced during
the year.

4 Employees and remuneration
4a Persons employed
The average number of persons employed in the year was:Average for the year
2011
2010
NumberNumberUK Public Service Broadcasting GroupBBC World Service and BBC Monitoring
BBC Worldwide
Other commercial businesses
Group total

17,242
2,525
2,689
443
22,89917,238
2,448
2,598
577
22,861

Within the averages above, 2,993 (2010: 2,870) part-time employees have been included at their fulltime equivalent of 1,726 (2010: 1,647).
In addition to the above, the Group employed an average full-time equivalent of 724 (2010: 746)
persons on a casual basis and the BBC Orchestra and BBC Singers, employed on programme contracts,
totalled 377 (2010: 379) full-time equivalents.

F44

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
4 Employees and remuneration continued
4b Staff costs
Note

Salaries and wages*
Social security costs
Pension costs*– main scheme excl. exceptional pension income(defined benefit)**– Exceptional pension income (defined benefit)***– Gain on settlements and curtailments (defined benefit)****– other schemes
Restructuring costs
Comprising:
UK Public Service Broadcasting GroupBBC World Service and BBC Monitoring
BBC Worldwide
Other commercial businesses
Pension schemes additional operating cost (defined benefit)***

23bii
23bii
23bii
23bii
4c

2011
£m

2010
£m

1,021.7
84.9

1,012.3
84.0

157.9
–
(250.4)4.3
63.3
1,081.7

124.6(334.1)
–
3.2
61.9
951.9

961.2
119.0
196.8
37.9
(233.2)
1,081.7

1,004.8
106.2
182.1
46.7
(387.9)951.9*

The contributions to the scheme are paid via a salary sacrifice arrangement. These have been treated as employer
contributions, and a corresponding reduction in salary. The total salary sacrificed in accordance with this arrangement was£46.6million (2010: £43.5million).

**

The actual employer cash contributions to the defined benefit pension scheme are borne by each business. The additional
operating cost is the cost to the Group over and above these contributions. It is not possible to allocate this to each businesson a reasonable and consistent basis.

***

The 2011 balance has arisen due to the change in the defined benefit plan terms which has resulted in a significant elementof future service by current employees qualifying for reduced benefits. Pension costs in 2010 includes a one-off benefit of£334.1million resulting from the changes to the early retirement terms and conditions within the defined benefit pension
scheme.

**** This balance has arisen due to the change in the defined benefit plan terms which has resulted in a significant element of
future service by current employees qualifying for reduced benefits.

4c Restructuring costs
UK Public Service Broadcasting GroupBBC World Service and BBC Monitoring
BBC Worldwide
Other commercial businesses

2011
£m

2010
£m

29.6
23.7
1.8
8.2
63.3

36.9
6.3
6.8
11.9
61.9

UK Public Service Broadcasting Group restructuring costs include the Continuous Improvement
Programme and costs resulting from our commitment to relocate and increase investment out of
London. Also included in restructuring costs are the effects of the reduction of grant-in-aid funding
within World Service and redundancy and severance costs incurred as part of a review process aimed
at achieving more efficient operations within Commercial Businesses.

F45

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
4 Employees and remuneration continued
4d Remuneration of the BBC Trust members and the Executive Board
The total emoluments of the members of the Executive Board and the BBC Trust are disclosed in the
Executive Board Remuneration Report. The details of emoluments of the members of the BBC Trust are
disclosed in Part One of the Annual Report and Accounts.

4e Key management personnel compensation
Key management personnel are those people that have authority and responsibility for planning, directing
and controlling the activities of the BBC. This includes all members of the Executive Board, including the
Non-Executive Directors (see BBC executive remuneration report), the Trustees and the Directors of
the Trust Unit (see Trust report and remuneration table), and the Chief Executive Officer of BBC
Worldwide (see BBC Worldwide Annual Report and Accounts).
Information about the BBC’s structure, senior staff salaries and expenses are published on the BBC’s
website. This unaudited information can be found at www.bbc.co.uk/aboutthebbc/running/executive/eb.
Key management personnel compensation is as follows:
Short term employee benefits
Post-employment benefits
Other long term benefits
Loss of office

2011
£m

2010
£m

7.0
0.6
0.2
1.4
9.2

7.0
0.3
0.2
–
7.5

2011
£m

2010
£m

–
96.4
96.4

2.0
–
2.0

5 Gain on sale and termination of operations
Project Kangaroo sale
Animal Planet Europe and People & Arts
Gain on sale and termination of operations

BBC Worldwide disposed of its interests in Animal Planet Europe and People & Arts on 12 November
2010 for a total consideration of £97.9million. These were classified as assets held for sale as at 31 March2010 and have not therefore been equity accounted for during the year to 31 March 2011. As a resultof the cessation of equity accounting, the Group's share of the results of these joint ventures is includedin the gain on disposal. Similarly, dividends received during the year have been included within thecalculation of the gain on disposal.
In the year ended 31 March 2008, an independent joint venture (‘UK VOD LLP’) was created by BBC
Worldwide, ITV and Channel 4 to develop a new UK on-demand service known to the industry as
Kangaroo. On 4 February 2009, the Competition Commission reported that it believed the proposed
venture would create a lessening of competition in the emerging video on demand industry in the UK,
and blocked the joint venture from continuing. As a result BBC Worldwide terminated its investment.
In July 2009, UK VOD LLP sold all of the Project Kangaroo’s assets, resulting in a gain of £2.0million.

F46

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
6 Gain on disposal of fixed assets
Disposal of properties
Gain on disposal of fixed assets

2011
£m

2010
£m

–
–

39.0
39.0

The gain on disposal of properties in 2010 relates to the sale of Woodlands £22.5million, Victoria Road
£5.0million and Kingswood Warren in Surrey £11.5million.
Gains or losses on the disposal of property, plant and equipment in the ordinary course of business, that
represent an adjustment to depreciation, are recognised within operating surplus and disclosed inaggregate in Note 3.

7 Net financing income/(costs)
Note

Financing income
Interest income
Expected return on pension plan assets
Fair value gains on interest rate swaps and caps

23bii

Financing costs
Interest expense
Interest on obligations under finance leases
Fair value movement on financial liabilities
Fair value losses on interest rate swaps and caps
Unwinding of discount on provisions
Interest cost on pension plan liabilities
Net financing income/(costs)

18
23bii

2011
£m

2010
£m

9.1
603.4
1.1
613.6

2.4
443.4
–
445.8

(13.9)(58.5)(4.0)–(76.4)(0.5)(529.9)(606.8)6.8(12.0)(46.3)(4.9)(3.5)(66.7)(3.1)(463.7)(533.5)(87.7)

2011
£m

2010
£m

(58.5)
73.5
(8.2)
6.8

(46.3)(20.3)(21.1)(87.7)The expected returnon pension plan assets
comprises estimates
based on predictions of
future performance andeconomic conditions.

The interest cost
represents the increaseduring the year in thevalue of the plan
liabilities because thebenefits are one year
closer to settlement.

The net cost of financing can be analysed as follows:

Net financing costs of leasing arrangements
Net financing income/(cost) related to pension obligations
Net financing costs related to loans and financial instruments

F47

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
8 Taxation
8a Recognised in the income statement
The charge for the year, based on the rate of corporation tax of 28% (2010: 28%) comprised:
2011
£m

2010
£m

30.2
(4.9)
25.3
12.2
37.5

19.7
(4.5)
15.2
14.7
29.9

8d

–
0.3
(0.2)
0.1

5.1
–
(0.3)
4.8

8b

37.6

34.7

Note

Current tax
UK corporation tax
Adjustments in respect of prior years
Foreign tax
Total current tax
Deferred tax
Origination and reversal of timing differences
Tax rate increase
Adjustments in respect of prior years
Total deferred tax
Total taxation expense in the consolidated
income statement

Deferred tax is
corporation tax which is
expected to be payable(or receivable) in the
future as a result ofdifferences between
the carrying amountsof assets and liabilities,
for financial reporting
purposes, and thecorresponding tax
bases used to calculate
the corporation tax
currently payable.

8b Reconciliation of taxation expense
The Group is only liable to taxation on those activities carried out with a view to making a profit and onrent, royalties and interest receivable. The BBC does not therefore receive relief for all its expenditure,and the tax assessed for the year consequently differs from the standard rate of corporation tax in the
UK. The differences are explained below:
Note

Surplus before tax
Share of Joint Venture and Associates
Surplus before tax multiplied by standard rate of corporation
tax in the UK of 28% (2010: 28%)
Effects of
Public Services activities
Public services taxable external income
Disallowable costs of Public Services/(Non-Taxable Licence Income)
Commercial activities
Disallowed expenditure (including goodwill impairment)
Animal Planet saleTax differential on overseas earnings
Tax differential in Joint Ventures and Associates
Tax rate increase
Adjustments in respect of prior years
Total tax charge for the year
Share of tax of Joint Venture and Associate
8a

2011
£m

2010
£m

520.5
9.2

511.7
6.0

529.7

517.7

148.3

145.0

7.2
(90.0)

5.4(112.8)13.5(27.7)
0.5
(0.2)
0.3
(5.1)
46.8
(9.2)
37.6

4.7
–
0.3
2.9
–
(4.8)
40.7
(6.0)
34.7

F48

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
8 Taxation continued
8b Reconciliation of taxation expense continued
There is no capital gains tax arising on the sale of property referred to in Note 6 due to the availabilityof indexation allowance.
The tax charge is driven by the results of the commercial businesses, as the group's public sector 'freeto-air' broadcasting activities are not subject to taxation.
The increase in tax differential on wholly owned overseas earnings is primarily due to the higher rates
of tax in overseas jurisdictions. The lower effective tax rate (total tax charge for the year as a percentage
of Group profit excluding tax) arises from the sale of investments that are exempt from capital gains tax.

8c Factors that may affect future tax charges
Prior to the balance sheet date, the UK Government announced a phased reduction in the main
UK corporation tax rate from 28% to 24%, with the first 1% reduction taking effect from 1 April 2011(and substantively enacted on 20 July 2010). On 23 March 2011, the UK Government announced an
additional 1% reduction in the main UK corporation tax rate to 26% taking effect from 1 April 2011(and substantively enacted on 29 March 2011). A further three reductions of 1% will follow annually,
reducing the corporation tax rate to 23% from 1 April 2014. The impact of the future rate reductions
will be accounted for in future periods, to the extent that they are enacted at the balance sheet date;however it is estimated that this will not have a material effect on the Group.

8d Deferred tax asset/(liability)

At 1 April 2010
Charge to income statement
Acquired on acquisition of subsidiary,
JV and Associates
Exchange differences
At 31 March 2011
Deferred tax asset/(liability) presented within:

Non-current assets
Non-current liabilities

Fixed asset
temporarydifferences£m

Provisions£mFinancial
instruments
£m

Other
£m

Net deferred
tax asset/(liability)
£m

(3.2)
3.8

10.3
(3.6)

0.3
(1.0)

7.8
0.7

15.2
(0.1)

(0.3)
(3.9)
(3.6)

–
(1.1)
5.6

–
–
(0.7)

–
(0.8)
7.7

(0.3)
(5.8)
9.0

2011
£m

2010
£m

25.9
(16.9)
9.0

21.5
(6.3)
15.2

Deferred tax assets are recognised for tax loss carry-forwards to the extent that the realisation of therelated tax benefit through future taxable profit is probable. The Group has unrecognised deferred tax
assets arising on capital losses totalling £22.9million (2010: £24.4million). These assets are not recognisedon the basis that there is insufficient certainty that capital or operating gains will arise against which theGroup can utilise these losses.
At the balance sheet date, the aggregate amount of temporary differences associated with undistributed
earnings of subsidiaries for which deferred tax liabilities have not been recognised was £nil (2010:£3.1million). No liability has been recognised in respect of these differences because the Group is in theposition to control the timing of the reversal of the temporary differences and it is probable that suchdifferences will not reverse in the foreseeable future.
Temporary differences arising in connection with the Group’s interest in the undistributed earnings
of associates and joint ventures for the year are insignificant (2010: insignificant).

8d Deferred tax asset/(liability)
Deferred tax relating to cash flow hedges amounting to £nil (2010: £0.3million) has been included
in other comprehensive loss and charged to equity.

F49

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
9 Intangible assets
9a Intangible assets carrying amount and amortisation
Goodwill£m

Programmerights£m

Residualprogrammerights£m

Other*
intangibles
£m

Total
£m

Cost
At 1 April 2009
Additions on acquisition
AdditionsElimination of fully amortised programme rights
Disposals
Classified as held for saleExchange differences
At 31 March 2010
AdditionsElimination of fully amortised programme rights
Disposals
Classified as held for saleExchange differences
At 31 March 2011

87.0
25.3
–
–
–
(5.6)
13.6
120.3
0.1
–
–
(5.1)
4.6
119.9

55.6
–
6.0
(1.7)
–
–
0.3
60.2
21.6
(2.2)
–
–
(0.2)
79.4

141.6
–
84.5
(47.3)
–
(2.5)
(4.1)
172.2
64.5
(55.1)
–
(1.5)
(3.2)
176.9

160.8
–
17.3
–
(8.0)
(0.7)
10.7
180.1
29.0
–
(2.8)
(2.2)
4.1
208.2

445.0
25.3
107.8
(49.0)
(8.0)
(8.8)
20.5
532.8
115.2
(57.3)
(2.8)
(8.8)
5.3
584.4

Amortisation and impairment
At 1 April 2009
Charge for the year
Elimination of fully amortised programme rights
Disposals
Impairment
Classified as held for saleExchange differences
At 1 April 2010
Charge for the year
Elimination of fully amortised programme rights
Disposals
Impairment
Classified as held for saleExchange differences
At 31 March 2011

–
–
–
–
17.5
–
–
17.5
–
–
–
33.8
–
(1.1)
50.2

44.3
5.5
(1.7)
–
–
–
0.3
48.4
13.1
(2.2)
–
–
–
–
59.3

78.3
66.9
(47.3)
–
–
(2.3)
(3.4)
92.2
60.9
(55.1)
–
–
(0.6)
(3.2)
94.2

66.5
22.9
–
(5.9)
–
(0.6)
1.8
84.7
31.6
–
(2.1)
–
(0.7)
1.6
115.1

189.1
95.3
(49.0)
(5.9)
17.5
(2.9)
(1.3)
242.8
105.6
(57.3)
(2.1)
33.8
(1.3)
(2.7)
318.8

Net book value
At 31 March 2011

69.7

20.1

82.7

93.1

265.6

At 31 March 2010
At 31 March 2009

102.8
87.0

11.8
11.3

80.0
63.3

95.4
94.3

290.0
255.9

Net book value

2011
£m

2010
£m

SoftwareAcquired masthead
Acquired carrier agreements
Other

54.7
27.0
9.3
2.1
93.1

58.1
26.8
7.6
2.9
95.4

*

Goodwill is thedifference between thevalue paid for a businessand the fair value of its
net assets. It represents
the premium thepurchaser is preparedto pay for the business.

Other intangibles includes:

F50

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
9 Intangible assets continued
9b Goodwill
All goodwill is recognised in BBC Worldwide.
Goodwill, allocated by cash generating unit (CGU), is analysed as follows
Goodwill by cash generating unit

Lonely Planet
DVD Distribution business
Other CGUs

2011
£m

2010
£m

34.5
25.3
9.9
69.7

64.2
25.3
13.3
102.8

The recoverable amounts of the cash generating units (CGUs) are determined from value in use
calculations. The key assumptions used for these calculations are those regarding discount rates andgrowth rates. Management estimates discount rates using pre-tax rates that reflect current market
assessments of the time value of money and the risks specific to each CGU.
BBC Worldwide tests goodwill for impairment in the accounting period in which a business combination
takes place, thereafter annually, or, more frequently, if there are indications that goodwill might be
impaired.
Lonely Planet
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 2011, the carrying value of thisCGU has been written down to its recoverable amount, resulting in a charge to the income statementof £33.8m.
The Lonely Planet business is based in Australia, where most of its costs are incurred. Accordingly,
the CGU's cost base is primarily denominated in Australian dollars. However, the business operates
internationally and earns revenues in a wide variety of jurisdictions, with material revenue streams being
earned in sterling and in US dollars. The strength of the Australian dollar in recent years has led tochallenging sales conditions for the Lonely Planet business. This has been compounded by declines since2008 in key travel guide markets suffering from the impact of the Global Financial Crisis. Further adverse
movements in currency pairings during the course of the year have weakened the commercial
environment in which the business operates.
The Group is now in the process of identifying areas where efficiencies can be achieved and greatersynergies made with its other operations. Included in the Group's plans are reductions in the local costbase - which will reduce the exposure of the business to Australian dollars - expansion of the business
into new geographical markets and exploitation of the Lonely Planet brand in generating new sourcesof revenue. In accordance with IAS 36 Impairment of Assets, some of these plans, which were approvedby management subsequent to the balance sheet date, have not been reflected in the forecast future
cash flows used in determining value in use.
Had foreign exchange rates at the date of the Group's impairment tests remained unchanged since theprior year, the impairment recorded in respect of the Lonely Planet business would have been reducedby £20.7m. The remaining impairment of the business reflects the ongoing challenges facing the industry.
As described above, management is currently in the process of implementing plans which will seek toaddress these ongoing challenges.
The future cash flows used by management in determining the value in use are based on the most recent
financial budgets 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 traditional print towards mobile and online
content, supported by ongoing investment in a proprietary content management system. Beyond thisperiod, forecast cash flows have been extrapolated based on an estimated growth rate of 3% (2010: 3%).
This growth rate does not exceed the average long-term growth rate for the markets in which theLonely Planet business operates.
The rate used to discount forecast cash flows is 13.4% (2010: 12.8%).

F51

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
9 Intangible assets continued
DVD distribution business
The goodwill in this CGU arose as a result of the acquisition of 2 entertain on 6 August 2009. Prior
to this date, 2 entertain had operated as a joint venture between BBC Worldwide and Woolworths
Group plc ('Woolworths'). The Group gained control of the business on the above date following theadministration of Woolworths, at which point it began accounting for the business as a subsidiary. The
cash flow projections used in determining value in use are based on the current business plan approvedby management, which covers a five year period after which cash flows have been extrapolated using an
expected growth rate of 2% (2010: 1%).
A discount rate of 12.4% (2010: 12.3%) has been applied to the cash flows.
Management are of the view that any reasonably possible change in key assumptions would not cause
the carrying amount to exceed its recoverable amount.
Australian Channels business
The goodwill in this CGU arose as a result of the acquisition of UK.TV on 1 July 2008. Cash flow
projections used in the recoverable amount calculation are based on financial budgets approved bymanagement covering a period of seven years (2010: eight years) and a discount rate of 13.8% (2010:
13.7%). UK.TV’s cash flows beyond the forecast period have been extrapolated using an expected
growth rate of 1% (2010: 2%). The terminal growth rate assumes contractual rates remaining in place
and a modest growth of subscribers as per external sources. Cash flow projections are consistent withthe business acquisition plans and those used in the previous year.
The main assumption on which the forecast cash flows are based is license fee rates. In forming its
assumptions about license fee rates, the Group has used a combination of long term trends and recent
contracted terms.
Management believes that any reasonably possible change in the key assumptions on which the value in
use of UK.TV is based would not result in any impairment.
UK Magazines businessOn 1 October 2010, the board resolved to dispose of the Group's Magazines operations. Accordingly,
assets associated with the Magazines business, including goodwill, have been classified as held for sale at
31 March 2011 (see Note 13).

F52

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201110 Property, plant and equipment
10a Property, plant and equipment carrying amount and depreciation
Land andbuildings£mPlant andmachinery£m

Furniture andfittings£m

Assets underconstruction
£m

Total
£m

Cost or valuation
At 1 April 2009 restated*
Additions on acquisition
Additions
Brought into service
DisposalsWrite off**

843.9
–
25.0
10.5
(20.3)
–

986.6
0.7
39.7
40.3
(64.7)
–

152.8
–
12.2
5.1
(2.6)
–

90.7
–
48.3
(55.9)(0.6)(6.7)

2,074.0
0.7
125.2–(88.2)(6.7)

Assets held for saleExchange movements

(0.7)
(0.1)

(0.5)
2.8

(0.8)
0.8

–
0.5

(2.0)
4.0

858.3
387.7
9.1
(5.7)
–
(11.2)(0.1)
1,238.1

1,004.9
10.3
38.0(15.5)–(4.4)
0.4
1,033.7

167.5
4.8
2.1
(4.1)
–
(0.4)
0.4
170.3

76.3
128.8
(49.2)
(1.5)
(4.0)
–
–
150.4

2,107.0
531.6–(26.8)(4.0)(16.0)
0.7
2,592.5

209.8
30.2(10.1)
(0.4)
(0.1)

622.0
91.6
(63.8)
(0.4)
1.5

79.8
17.7
(2.4)
(0.7)
1.0

–
–
–
–
–

911.6
139.5
(76.3)(1.5)
2.4

At 31 March 2010
Charge for the year
Disposals
Assets held for saleExchange adjustments
At 31 March 2011
Net book value
At 31 March 2011

229.4
33.1
(2.3)
(5.6)
(0.1)
254.5

650.9
81.2
(14.1)
(3.2)
0.2
715.0

95.4
16.3
(2.5)
(0.4)
0.3
109.1

–
–
–
–
–
–

975.7
130.6
(18.9)(9.2)
0.4
1,078.6

983.6

318.7

61.2

150.4

1,513.9

At 31 March 2010 restated*
At 31 March 2009 restated*

628.9
634.1

354.0
364.6

72.1
73.0

76.3
90.7

1,131.3
1,162.4

At 31 March 2010 restated*
Additions***
Brought into service
DisposalsWrite off**
Assets held for saleExchange movements
At 31 March 2011
Depreciation
At 1 April 2009
Charge for the year
Disposals
Assets held for saleExchange adjustments*

Further details of adjustments made to previously reported balances are provided in Note 19.

** The write off at cost of £4.0million (2010: £6.7million) in UK PSB ‘assets under construction’ is due to a further review of theDigital Media Initiative (DMI) project.
*** £382million of additions occurred upon the handing over of the Broadcasting House building in accordance with the planned
refurbishment programme during 2011. The assets under construction balance of £150.4million predominantly relates to the fit
out of Broadcasting House and Media City, Salford.

F53

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201110 Property, plant and equipment continued
10b Property, plant and equipment held under finance leases
Land andbuildings£mPlant andmachinery£m

Furniture andfittings£m

Assets underconstruction
£m

Total
£m

Net book value
At 31 March 2011

809.3

24.3

–

–

833.6

At 31 March 2010

448.7

28.7

–

–

477.4

11 Interests in associates and joint ventures
Details of significant joint ventures and associates along with principal subsidiary undertakings, including
their activities, are provided in Note 26.
Group share of joint ventures
2011
2010
£m
£m

Group share of associates
2011
2010
£m
£m

Total
2011
£m

2010
£m

Current assets:
Non-current assets
Total assets

100.0
21.6
121.6

107.6
24.2
131.8

14.6
1.4
16.0

33.0
13.0
46.0

114.6
23.0
137.6

140.6
37.2
177.8

Current liabilities
Non-current liabilities
Total liabilities(73.2)(60.1)(133.3)(53.0)(84.0)(137.0)(27.6)(0.3)(27.9)(41.0)(192.3)(233.3)(100.8)(60.4)(161.2)(94.0)(276.3)(370.3)

20.9
–
9.2

34.6
2.6
32.0

15.8
10.9
14.8

185.4
13.5
11.6

36.7
10.9
24.0

220.0
16.1
43.6

21.7
(12.5)
9.2

46.2(14.2)
32.0

14.8
–
14.8

11.6
–
11.6

36.5
(12.5)
24.0

57.8(14.2)
43.6

Income

161.2

190.8

20.1

72.9

181.3

263.7

Profit/(loss) after tax
Adjustment to reflect effective
obligation*
Other

24.6

22.5

1.5

6.9

26.1

29.4

–
–
24.6

0.8
–
23.3

0.5
–
2.0

5.2
0.4
12.5

0.5
–
26.6

6.0
0.4
35.8

Adjustment to reflect effective
obligation
Goodwill
Total net book value
The net book value ispresented within:
Interest in associates and joint
ventures
Provisions*

Under the terms of the agreements with the other investors in certain of the Group’s joint ventures and associates the Group
has no obligation to fund losses incurred by those entities or to make good their net liabilities. As a result no share of any
relevant losses is included in the financial statements.

F54

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
12 Available-for-sale investments
2011
£m

2010
£m

Cost or valuation
At 1 April
Fair value gains transferred to equity
At 31 March

4.0
76.9
80.9

4.0
–
4.0

Provision
At 1 April
Charge for the year
At 31 March

4.0
–
4.0

4.0
–
4.0

Net Book Value

76.9

–

Daunus Limited is the entity that is redeveloping Broadcasting House. The BBC holds a 10% share of theissued share capital of that company which it classes as an available for sale investment, due to maturein 2033. Following the completion of phase two of the development and the handover of Broadcasting
House for technical fit out, the value of that investment has been re-assessed which is capped at£90million plus RPI. As the cash flows underlying the ultimate realization of the BBC’s 10% interest are
now more certain, a gain of £76.9m (2010: nil) has been recognized. The estimated growth rate used
was 2.5% and the rate used to discount the future cash flows was 4.15%.
The other available-for-sale investment relates to the Group’s 20% unquoted investment in the ordinary
share capital of Radio Mid-Day (West) India PVT. Limited, a company registered in India. The principal
activity of the company is to obtain and operate FM radio licences in India.
This investment is classified as available-for-sale as the Group has no significant influence over thecompany. This is because the Group does not have Board representation and has limited influence
due to Indian regulations applicable to foreign investors.

13 Assets and liabilities classified as held for saleInterests in associates and joint ventures
Non-current assets:
Programme-related assets and other inventories
Intangible assets
Property, plant and equipment
Current assets:
Programme-related assets and other inventories
Trade and other receivables due within one year
Cash and cash equivalents
Total assets classified as held for sale

Trade and other payables
Current tax liabilities
Total liabilities classified as held for sale

2011
£m

2010
£m

6.1

7.2

–
7.5
7.1

0.2
4.6
0.5

1.4
28.2
–
50.3

2.4
6.8
8.3
30.0

2011
£m

2010
£m

(36.5)–(36.5)

(8.1)
(0.3)
(8.4)

On 1 October 2010, the BBC Worldwide Board resolved to dispose of the Group's Magazines
operations subject to limited titles being retained on a contract publishing basis. Negotiations withinterested parties have subsequently taken place and the Group was in exclusive discussions witha potential partner at the date of approval of the financial statements. These operations, which are
expected to be sold within 12 months, have been classified as a disposal group held for sale andpresented separately in the balance sheet. The proceeds of the disposal are expected to substantiallyexceed the book value of the related net assets and accordingly no impairment losses have beenrecognised on the classification of these operations as held for sale.
F55

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201113 Assets and liabilities Classified as held for sale continued
In March 2011, the BBC had agreed the sale and exchanged contracts on its Oxford Road property(£5.6million net book value) in Manchester. At the balance sheet date the BBC continued to occupy
the premises and the risks and rewards of ownership have not passed to the purchaser.
As at 31 March 2010 the Group held its 50% interest in Animal Planet Europe (£7.2million) as held forsale. The Group’s interest was disposed of during the year (Note 5).

14 Programme-related assets and other inventories
Programme-related assets– Rights to broadcast acquired programmes and films– Prepayments to acquire future programme-related rights– Completed originated programmes– Programmes in production
Total programme-related assets
Other inventories
Total programme-related assets and other inventories

2011
£m

2010
£m

118.0
241.1
67.8
153.3
580.2
39.0
619.2

132.2
285.7
71.2
159.8
648.9
33.4
682.3

Within other inventories is £4.1million (2010: £4.9million), 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.

15 Trade and other receivables
15a Other receivables due after more than one year
Other receivables
Amounts owed by associates and joint ventures
Prepayments and other assets
Total

2011
£m

2010
£m

20.7
2.5
2.7
25.9

17.1
5.7
2.9
25.7

2011
£m

2010
£m

228.9
413.0
47.4
29.7
27.3
115.2
861.5

174.4
410.8
30.1
36.1
32.3
570.1
1,253.8

15b Trade and other receivables due within one year
Trade receivables
Licence fee debtors
Amounts owed by associates and joint ventures
VAT recoverable
Other receivables
Prepayments and other assets*
Total*

See ‘other payables’ for explanation of balance.

Included in the Group’s trade and other receivables at 31 March 2011, are balances of £34.9million(2010: £37.3million) which are past due at the reporting date but not impaired. The aged analysis ofthese balances is as follows:
Trade receivables past due but not impaired

Up to 3 months
3 to 6 months
Over 6 months

2011
£m

2010
£m

26.1
5.0
3.8
34.9

28.7
5.2
3.4
37.3

F56

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201115 Trade and other receivables continued
In determining the recoverability of a trade receivable the group considers any change in the credit
quality of the trade receivable from the date credit was initially granted up to the reporting date. Trade
receivables are provided for based on estimated irrecoverable amounts, determined by reference topast default experience of the counterparty and an analysis of the counterparty’s financial situation.
There are no significant impairment provisions relating to balance of any individual debtor. Amounts
charged to the impairment provision are written off when there is no expectation of recovery.
Subsequent recoveries of amounts previously written off are credited to the Income Statement.
The impairment provision stands at £5.6million at 31 March 2011 (2010: £9.1million).
The movement in the allowance for doubtful debts is set out below:
2011
£m

2010
£m

9.1
2.4
(4.0)
(1.8)
–
(0.1)
5.6

12.5
3.0
(1.2)
(6.4)
1.1
0.1
9.1

2011
£m

2010
restated*£m2009
restated*
£m

420.7
17.3
26.1
124.5
175.6
266.1
34.0
66.3
1,130.6

490.6
2.3
26.8
522.6
158.0
132.0
–
68.6
1,400.9

396.0
7.1
27.4
45.8
225.3
–
–
71.5
773.1

Balance at the beginning of the year
Impairment losses recognised
Amounts written off as uncollectible
Amounts recovered during the year
Additions due to acquisition of subsidiaries
Exchange differences on revaluation
Balance at the year of the year

16 Trade and other payables
16a Trade and other payables due within one year

Trade payables**Amounts owed to associates and joint ventures
Other taxation and social security
Other payables***
Accruals and deferred income
Cash balance payable to DCMS (see Note 2d)
Cash balance payable to the Consolidated Fund
Licence savings stamp deposits and direct debit instalments
Total*

Further details of adjustments made to previously reported balances are provided in Note 19** Trade payables also include programme-related payables, residual copyright payments, and salaries and wages.
*** In 2010 ‘other payables’ includes a £382.0million liability for the BBC’s contracted obligation in respect of the Broadcasting
House lease arrangement. This liability has been measured at its fair value. A corresponding asset was also recognised in‘Prepayments and other assets’. These amounts have been transferred to finance lease creditors and fixed assets respectively
upon the handing over of the Broadcasting House building in accordance with the planned refurbishment programme during
2011. Other payables also includes £7.5million (2010: £37.8million) relating to put options over non-controlling interests.

16b Other payables due after more than one year
Other payables
Total

2011
£m

2010
£m

2009
£m

197.2
197.2

175.1
175.1

513.1
513.1

It is the BBC’s policy to comply with the Better Payment Practice Code in relation to the paymentof suppliers, provided that the supplier is complying with the relevant terms and conditions of theircontracts. The BBC monitors compliance against the terms of this code. Payments for programmeacquisitions are made in accordance with contractual terms. The Group’s number of days outstanding
in respect of other trade payables at 31 March 2011 was 28 days (2010: 29 days). Residual payables andassociated costs have been excluded for the purpose of this calculation, as they relate to payments toartists and contributors other than trade creditors.
F57

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201117 Borrowings
17a Borrowings due within one year
2011
£m

2010
£m

20.7
2.5
23.2

1.7
5.7
7.4

2011
£m

2010
£m

194.5
894.9
1,089.4

211.4
603.2
814.6

Minimum
lease
payments£m

Interest£mPrincipal
£m

84.9
351.7
1,890.4
2,327.0

82.4
322.4
1,024.8
1,429.6

2.5
29.3
865.6
897.4

51.0
210.2
1,138.4
1,399.6

45.3
175.3
570.1
790.7

5.7
34.9
568.3
608.9

Bank loan and overdraft
Obligations under finance leases
Total

17b Borrowings due after more than one year
Bank loan
Obligations under finance leases
Total

17c Finance lease obligations
Finance lease liabilities are payable as follows:

2011
Not later than one year
Later than one year but not later than five years
Later than five years*
2010
Not later than one year
Later than one year but not later than five years
Later than five years

A finance lease is alease where the lessee
has substantially takenon the risks andrewards of ownershipand operating the asset.
As such, both the asset
and future liability arerecognised on thebalance sheet.

* See ‘Other payables’ in Note 16a

Under the terms of the leasing agreements, the BBC has the right to share in the residual value of its key
finance lease properties (Broadcasting House, Pacific Quay and White City). This share will be passed to
the BBC as either a cash flow at the end of the lease arrangement, or a reduction in rentals if the leaseagreement is extended for a further term. In addition, the BBC has the right to repurchase each property
at the end of the respective lease agreement.
When determining the accounting for a finance lease, the BBC has assessed whether it has the rightto use the leased asset at the inception of the lease, or whether this right passes at a later date (‘thecommencement date’). In the case of a property lease, the BBC considers that leased assets and liabilities
should be recognised in accordance with its occupancy of the site unless there is significant evidence
to suggest that the right to use the asset has passed at an earlier date. Where a significant site is being
redeveloped, occupation may occur in distinct phases; consequently, the leased asset and liabilities arerecognised based on the proportion of the site occupied at each commencement date.
Further, the recognition of finance lease assets and liabilities requires certain judgements to be made.
A key judgement relates to the treatment of any uplifts in annual rental payments due to RPI. Where
this has a material impact on the amounts recognised, the BBC has included an estimate of RPI indetermining the minimum lease payments.
Interest rates are fixed at the contract date. Leases with a carrying value of £851.6million (2010:£552.5million) have contingent elements included within their contracts and resulted in contingent
rents of £13.2million (2010: £16.3million) being reflected in operating costs.

F58

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201118 Provisions and contingent liabilities

Restructuring
Litigation and insurance
Property
Share of joint ventures net
liabilities
Other
Total
Included in current liabilities
Included in non-current
liabilities
Total

Restructuring
Litigation and insurance
Property
BBC jam suspension
Share of joint ventures net
liabilities
Other
Total
Included in current liabilities
Included in non-current
liabilities
Total

At
1 April
2010£m

Charge forthe year£m

Utilisedduringthe year£m

Released during
the year£m

Unwindingof discount£m

At
31 March
2011
£m

81.1
13.1
21.4

66.6
10.9
1.3

(47.9)
(4.3)
(2.2)

(3.3)
(2.3)
(0.1)

0.5
–
–

97.0
17.4
20.4

14.2
4.6
134.4

2.0
2.0
82.8

(3.7)
(1.3)
(59.4)

–
(3.2)
(8.9)

–
–
0.5

12.5
2.1
149.4

59.3

103.7

75.1
134.4

45.7
149.4

At
1 April
2009£m

Charge forthe year£m

Utilisedduringthe year£m

Released during
the year£m

Unwindingof discount£m

At
31 March
2010
£m

95.6
12.6
19.6
0.3

64.5
8.0
1.8
–

(79.5)
(2.6)
–
(0.3)

(2.6)
(4.9)
–
–

3.1
–
–
–

81.1
13.1
21.4
–

20.3
2.1
150.5

0.9
3.5
78.7

–
(0.2)
(82.6)(7.0)(0.8)(15.3)

–
–
3.1

14.2
4.6
134.4

87.0

59.3

63.5
150.5

75.1
134.4

The restructuring charge for the year mainly relates to the restructuring programme within World
Service Broadcasting, Studios and Post Production and Home Services.
Litigation and insurance provisions relate to self-insurance and production related insurance based on
previous experience as well as potential legal claims. The Group has a number of contingent liabilities
arising from litigation. The BBC makes specific provision for its best estimate of any damages and costs
which may be awarded. Provision is only made to the extent that the Group consider it probable that
there will be an outflow of economic benefits and the amount can be reliably estimated.
Property provisions relate to the cost of returning leasehold properties (accounted for as operatingleases) to their original condition at the end of the lease. The average life of these leases is 12 years,
and the actual amount payable will depend on the extent of leasehold improvements made over theremainder of the lease.
Other provisions consist of a number of insignificant balances arising across the BBC in the normal courseof business.
Share of joint ventures net liabilities represents the amount held in provisions relating to the Group shareof joint ventures with net liabilities (see Note 11).
At 31 March 2011 the Group had contingent liabilities estimated to be £0.1million (2010: £0.6million)
in respect of guarantees and indemnities.

F59

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201119 Amendment to IAS 17 - Leases
The amendment was issued as part of Improvements to IFRSs 2009 and has been applied retrospectively
to all unexpired leases as at 1 April 2010. Under this amendment leases of land are no longer presumed
to be operating leases but are classified in accordance with the substance of the related transaction.
Application of the amended standard has resulted in a number of long leasehold interests in land granted
to third parties prior to 2003 being reclassified as sales. Previously these transactions had been treated as
prepaid operating leases with the proceeds received being recognised over the life of the lease.
The effect on the consolidated income statement and balance sheet can be seen below.

Other income
Total income
Group operating surplus
Surplus before taxation
Surplus for the year

2010
Reported£m

Adjustment£m2010
Restated£m

1,343.6
4,790.4
522.1
512.3
477.6

(0.6)
(0.6)
(0.6)
(0.6)
(0.6)

1,343.0
4,789.8
521.5
511.7
477.0

2010
Reported£m

Adjustment£m2010
Restated£m

At 1 April 2009
Reported£

Adjustment£m

At 1 April 2009
Restated£m

Non-current assets
Property, plant and equipment
Current liabilities
Trade and other payables

1,157.1(25.8)

1,131.3

1,188.2(25.8)

1,162.4(1,504.6)

103.7
77.9

(1,400.9)(877.4)

104.3
78.5

(773.1)

Capital and reserves
Operating reserve(547.6)77.9
77.9(469.7)

850.0

78.5
78.5

928.5

20 Reserves
Operating reserve
At 31 March 2011, the cumulative goodwill written off to reserves on acquisitions prior to 1999
amounted to £6.8million. This amount is unchanged on prior year and remained in equity upon transition
to IFRS as permitted by IFRS1.

Other reserve
Other reserves at 31 March 2010 comprised the cost on initial recognition of a put option over 25%of the issued share capital of Lonely Planet. The put option was exercised by the non-controllingshareholders on 4 January 2011.

Available-for-sale reserve
The balance as at 31 March 2011 relates to the fair value of the BBC’s investment in Daunus Limited(see Note 12).

F60

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
21 Reconciliation of group surplus before tax to cash generated
from operations
Group operating surplus
Depreciation, amortisation and impairment
Difference between pension charge and cash contribution
Fair value impact of derivatives associated with loans
Fair value impact of other derivatives
Profit on disposal of tangible fixed assets
Loss on disposal of tangible fixed assets
Gain on sale and termination of operations
Share of results of associates and joint ventures
Financing income
Financing costs
Decrease/(increase) in stocks
Increase in debtors
Increase in creditors
Decrease/(increase) in provisions
Cash generated from operations
*

2011
£m

2010
restated*
£m

520.5
276.1
(343.2)
(1.1)
1.5
–
8.6
(96.4)(26.6)(613.6)606.8
61.6(16.0)
111.7
16.5
506.4

511.7
260.7
(387.9)3.5(19.6)(39.0)
7.3(2.0)(36.9)(445.8)533.5(54.5)(67.1)
227.1(16.1)
474.9

Further details of adjustments made to previously reported balances are provided in Note 19.

22 Long term commitments not reflected in the balance sheet
22a Contracts placed for future expenditure

Fixed asset additions
Programme acquisitions and sports rights
Independent programmes
Other fixed payments on long term outsourcing arrangements

2011
£m

2010
£m

72.8
866.6
195.4
3,303.4
4,438.2

50.9
1,026.2
148.8
3,432.7
4,658.6

Represents amounts
which the BBC iscontractuallycommitted to, butwhich should not berecognised on thebalance sheet as they
do not meet therecognition criteria as
defined by theaccounting standards.

The BBC has outsourced certain non-core functions, including IT support, content distribution andtransmission, facilities management and elements of finance support.
Following the provisions of s410A of the Companies Act 2006 the Group has included amounts
committed under agreements that are not reflected in the balance sheet, or disclosed elsewhere in thefinancial statements. The Group has interpreted this disclosure to include fixed payments due underoutsourcing and similar arrangements for the duration of those arrangements. The amounts disclosed
do not include variable payments.

F61

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201122 Long term commitments not reflected in the balance sheet continued
22b Operating leases
The total future minimum lease payments under non-cancellable operating leases are payable as follows:
Not later than one year
Later than one year and not later than five years
Later than five years

2011
£m

2010
£m

114.4
300.8
613.7
1,028.9

110.1
344.9
453.4
908.4

An operating leaseis a lease where thelessee has not takenon the risks andrewards of owning andoperating the asset.
The lessee (the BBC)is hiring rather thanbuying an asset.

The BBC’s operating lease agreements primarily relate to office space, land, computers and other IT
equipment. Certain contracts include renewal options, stepped rents or annual RPI uplifts (which areaccounted for on a straight line basis) or periodic rent reviews. All leases have been entered into oncommercial terms.

22c Post balance sheet events
There are no material events after the balance sheet date to disclose.

F62

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201123 Pension plans
23a Group pension plans
The Group operates several pension plans. The BBC Pension Scheme, to which most employees belong,
and a small unfunded plan (the Unfunded Scheme), which is closed to new members, are contributory
defined benefit plans. Additionally the Group Personal Pension Scheme, LifePlan and several small
schemes are defined contribution plans.
Note 23b sets out the assets and liabilities and charges for the period for each plan. Note 23c provides
further details on the BBC Pension Scheme.

23b Pension charges and balances within the financial statements
23b i Pension liability included in the balance sheet
Pension liability
2011£m(920.5)(6.3)(926.8)BBC Pension Scheme
Unfunded Scheme
Total

2010
£m

(1,640.9)(6.2)(1,647.1)

23b ii Pension income/(charges) in consolidated income statement
Defined benefit schemes

2011
Current service cost
Past service costs
Gain on curtailments*
Total operating income/(charge)**
Expected return on pension plan assets
Interest on pension plan liabilities
Net finance income/(cost)
Net income/(cost) in consolidated loss statement
2010
Current service cost
Past service costs
Exceptional past service income***
Total operating income/(charge)**
Expected return on pension plan assets
Interest on pension plan liabilities
Net finance cost
Net income/(cost) in consolidated loss statement*

BBC Pension
Scheme£m

Unfunded
Scheme£m

Definedcontribution
scheme£m

All schemes£m(192.8)(19.3)
250.4
38.3
603.4
(529.6)
73.8
112.1

–
–
–
–
–
(0.3)
(0.3)
(0.3)

(4.3)
–
–
(4.3)
–
–
–
(4.3)

(197.1)(19.3)
250.4
34.0
603.4
(529.9)73.5
107.5(128.2)(32.6)
334.1
173.3
443.4
(463.4)(20.0)
153.3

–
–
–
–
–
(0.3)
(0.3)
(0.3)

(3.2)
–
–
(3.2)
–
–
–
(3.2)

(131.4)(32.6)
334.1
170.1
443.4
(463.7)(20.3)
149.8

The current service
cost is the underlying
cost to the BBC ofpension rights earned
by employees during
the year.
The past service
charges arises fromchanges to the terms
and conditions relating
to members defined
retirement benefits,
resulting in a credit
for years of service
already given.
The expected returnon pension plan
assets comprises
estimates based on
predictions of future
performance andeconomic conditions.

This balance has arisen due to the change in the defined benefit plan terms which has resulted in a significant element of futureservice by current employees qualifying for reduced benefits. See Note 23cviii.

** Of the total net operating income of £38.3million for 2011 (2010 net income £173.3million), £54.2million (2010 £36.2million
expense) was recognised as an expense in earlier years as part of redundancy costs in accordance with IAS 37. The remaining
income of £92.5million (2010: income £209.5million) was recognised in the current year.
*** This balance relates to past service income arising from a change to early retirement terms and conditions.

F63

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201123 Pension plans continued
23b Pension charges and balances within the financial statements continued
23b iii Movement in deficit during the year

Deficit in scheme at the start of
the year
Movement in the year:
Current service cost
Contributions (fromemployer)*
Past service (costs)/income
Gain on curtailments
Net finance income/(cost)
Actuarial gain/(loss) recognisedin the consolidated statementof comprehensive loss
Deficit in scheme at the end of
the year*

BBC Pension
Scheme2011£mUnfundedscheme
2011
£m

Total
2011
£m

BBC Pension
Scheme2010£mUnfundedscheme
2010
£m

Total
2010
£m

(1,640.9)(6.2)(1,647.1)(138.6)(4.7)(143.3)(192.8)–(192.8)(128.2)–(128.2)304.6(19.3)
250.4
73.8

0.3
–
–
(0.3)

304.9
(19.3)
250.4
73.5

214.3
301.5
–
(20.0)

0.3
–
–
(0.3)

214.6
301.5
–
(20.3)

303.7

(0.1)

303.6

(1,869.9)(1.5)(1,871.4)(920.5)(6.3)(926.8)(1,640.9)(6.2)(1,647.1)

The defined
contribution plans
do not give rise tobalance sheet pension
assets/ liabilities as
there is no ongoing
liability for the employer
from these plans oncethe contributions
due for the year havebeen settled.

The contribution shown for the unfunded scheme represents the pensions paid to members during the year.

The assumptions for pension plan liabilities of the unfunded scheme are the same as the main scheme.
As the scheme is unfunded there are no assets and hence no expected return on assets.

23c BBC Pension Scheme
The BBC Pension Scheme is the main pension plan of the Group and covers the majority of employees.
This plan provides pensionable salary related benefits on a defined benefit basis funded from assets heldin separate trustee-administered funds.
The pension scheme trustees manage the plan in the short, medium and long term. They make funding
decisions based on valuations which take a longer-term view of the assets required to fund the scheme’s
liabilities.
Valuations of the scheme are performed by Towers Watson, consulting actuaries. Formal valuations areundertaken at least every three years.
23c i Scheme financial position
IAS 19 valuation

Scheme assets
Scheme liabilities
Deficit
Percentage by which scheme assets
cover liabilities

2011
£m

2010
£m

2009
£m

2008
£m

2007
£m

8,835.8(9,756.3)(920.5)

8,154.8(9,795.7)(1,640.9)

6,454.0(6,592.6)(138.6)

8,042.0(7,513.6)
528.4

8,117.9(7,788.6)
329.3

91%

83%

98%

107%

104%

The IAS 19 valuation
takes assets at theirmarket value anddiscounts the accrued
liabilities by reference
to the discount rateof an AA rated
corporate bond.

Key movements in the year are shown in Note 23b iii.
A deferred tax asset or liability in relation to the scheme will not arise for the Group because mostof the Group’s public service activity is not subject to taxation.

F64

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201123 Pension plans continued
23c BBC Pension Scheme continued
23c ii Scheme financial position
The table below illustrates the movement on the scheme liabilities during the year. The key things which
affect this are the additional year of pension benefits earned (and employee contributions made), any
gains or losses relating to participants leaving the pension scheme, changes in assumptions made andbenefits paid out during the year.
Opening present value of plan liabilities
Current service cost
Past service cost/(income)
Gains on curtailments
Interest on pension plan liabilities
Experience gains arising on plan liabilities
Changes in assumptions underlying plan liabilities
Contributions by plan participants
Benefits paid and expenses
Closing present value of plan liabilities

2011
£m

2010
£m

9,795.7
192.8
19.3(250.4)529.6(71.7)(138.9)7.1(327.2)9,756.3

6,592.6
128.2(301.5)–463.4(33.2)
3,266.1
7.2(327.1)
9,795.7

The plan liability
represents the
expected amount ofmoney that will beneeded in the future to
pay employees for theircurrent and futureservice to the company
Changes inassumptions
underlying plan
liabilities represents
the changes in estimatesused to value the future
liability. Key assumptions
include the discountrate, future increase insalaries and mortality.

23c iii Changes in the fair value of plan assets
The table below illustrates the movement on the plan assets during the year. The key things which affectthis are the additional year of contributions made, changes in the value of the pension plan assets(including the investment return) and benefits paid during the year.
The contributions to the scheme are paid via a salary sacrifice arrangement. These have been treated as
employer contributions.
Opening fair value of plan assets
Expected rate of return on plan assets
Actuarial gains on plan assets
Contributions by employer
Contributions by plan participants
Benefits paid and expenses
Closing present value of plan assets

2011
£m

2010
£m

8,154.8
603.4
93.1
304.6
7.1
(327.2)
8,835.8

6,454.0443.4
1,363.0
214.3
7.2(327.1)
8,154.8

Actuarial
gains/losses on plan
assets represent theamount by which theassets held by thescheme (such as
equities, bonds andproperty) have
performed better orworse than the
expected prior year
value.

F65

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201123 Pension plans continued
23c BBC Pension Scheme continued
23c iv Plan assets
The allocation of assets by the Trustees is governed by a need to manage risk against the desire forhigh returns and any liquidity needs. A high percentage of assets are held in equities which the Trustees
expect will produce higher returns in the long term. The target allocation, based on market values,for equities is 50% (UK equities 25% and overseas equities 25%), bonds 30%, property 10% andalternatives 10%.
2011£m

Type of asset

4,480
1,938
1,080
1,324
14
8,836

Equities
Bonds
Property
Alternatives*
Cash
Total assets
Actual return on pension
plan assets**
*

2010
£m

%

51
22
12
15
0
100

697

%

4,573
1,825
787
719
251
8,155

56
22
10
9
3
100

1,806

Alternatives include private equity, debt and currency.

** This constitutes realised gains from the receipt of investment income (e.g. dividends and rent), transactions where assets are
sold and unrealised fair value changes.

23c v Pension gains/(losses) in consolidated statement of comprehensive loss
2011
£m

2010
£m

Actual return less expected return on pension plan assets
Experience gains arising on plan liabilities
Changes in assumptions underlying the present value of plan liabilities
Net gain/(loss) recognised in the consolidated statement of comprehensive gains

93.1
71.7
138.9
303.7

1,363.0
33.2(3,266.1)(1,869.9)

Cumulative loss recognised in the consolidated statement of comprehensive gains(4,091.6)(4,395.3)

These gains andlosses arise from actual
performance being
different from thatpredicted. Only defined
benefit schemes giverise to gains and losses
in the statement ofcomprehensive income.

23c vi History of experience gains and losses
Experience adjustments on plan assets:
Amount (£million)
Percentage of plan assets
Experience adjustments on plan liabilities:
Amount (£million)
Percentage of plan liabilities
Total actuarial gain/(loss) recognised inconsolidated statement of comprehensiveloss
Amount (£million)
Percentage of plan liabilities

2011

2010

2009

2008

2007

93.1
1.1%

1,363.0
16.7%(2,094.0)
32.4%(584.6)
7.3%(121.0)
1.5%

71.7
0.7%

33.2
0.3%

171.3
2.6%

(149.1)2.0%(164.6)
2.1%

303.7
3.1%

(1,869.9)
19.1%(784.6)
11.9%

52.3
0.7%

136.1
1.7%

F66

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201123 Pension plans continued
23c BBC Pension Scheme continued
23c vii Funding the Scheme
The 2010 actuarial valuation by Towers Watson of the pension scheme showed a funding shortfall of£1,131million. Consequently a recovery plan has been agreed between the BBC and the pension scheme
Trustees where additional contributions totalling £905million will be paid by the BBC over the next 11
years. The first contribution of £110million was paid on 28 March 2011. It was also agreed that employer
contributions would decrease from 17.85 to 15.2% on 1 April 2011 and then to 14.2% from 1 January
2012. Employee contributions for Old and New Benefit members rose from 6.75% to 7.5% from 1 April
2010. Employee contributions for the Career Average Benefit 2006 members are 4% and for the Career
Average Benefit 2011 members are 6%.
The contributions to the scheme are paid via a salary sacrifice arrangement. These have been treated as
employer contributions.
The next formal actuarial valuation is expected to be performed as at 1 April 2013.
Contribution rates

Employer
Employee (Old and New Benefits)
Employee (Career Average Benefits 2006)*
Employee (Career Average Benefits2011)**
Underlying cost of scheme to BBC as %of pensionable salaries****

Projections
2012
%

2011
%

14.2/15.2
7.5
4.0

17.85
7.5
4.0

6.0

–

14.2/15.2

17.85

2010
%

2009
%

2008
%

18.6 18.8/19.35
6.75
6.0
4.0
4.0

18.8
6.0
4.0

–

–

–

18.6 18.8/19.35

18.8

The Career Average Benefit 2006 section started on 1 November 2006.

** The Career Average Benefit 2011 section started on 1 April 2011.
*** Excludes the cost effectively paid for by the employee and the salary sacrifice element.

On the basis assumed above, contributions totalling £152.6million are expected to be paid in 2012.

F67

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201123 Pension plans continued
23c BBC Pension Scheme continued
23c viii Principal actuarial assumptions
The calculation of the scheme liabilities and pension charges, for IAS 19 purposes, requires a numberof assumptions, both financial and demographic, to be made. The principal assumptions used by theactuaries, at the balance sheet date were:Principal financial assumptions

Rate of increase in salaries
Rate of increase in pension payments:
Old Benefits
New Benefits
Career Average Benefits (2006)
Career Average Benefits (2011)
Inflation assumption (RPI)
Inflation assumption (CPI)*
Expected take up rate**
Discount rate
*

2011
%

2010
%

1.0

3.7

3.7
3.5
2.4
2.7
3.7
2.9
40.0
5.5

3.7
3.5
2.4
–
3.7
–
–
5.5

The discount rate
for the IAS 19 valuation
is taken as the rate
for an AA rated
corporate bond.

The CPI rate is only relevant to the CAB 2011 section. All other sections continue to use the RPI rate, adjusted for the change instatutory revaluation. This has been treated as a change in assumptions and reflected through the consolidated loss statement.

** Following the changes to various pension plans in the current financial year, it is expected that a proportion of members willtransfer out of the current sections into either the CAB 2011 or defined contribution plans.

As a consequence of the level of net pension deficit reported in 2009/10 and the 2010 actuarial
valuation, changes have been made to future benefits available to scheme members. From 1 April 2011,
future increases in pensionable salary will be limited to a maximum of 1% per annum. This has resulted
in a curtailment gain of £250.4million. Old, New and CAB 2006 members can choose to opt out of theircurrent section of membership and join the Career Average Benefits Section (CAB 2011) for future
pension benefits with pension benefits earned to date being deferred in the Scheme. These deferredpension benefits would increase each year broadly in line with inflation.
Scheme members may opt to make this change at any time between 1 April 2011 to 31 December
2011. In calculating the present value of scheme liabilities as at 31 March 2011, the BBC has made anassumption as to the expected level of member changes during this time window. Based on the best
available information as at 31 March 2011, the BBC assumes that 40% of the Old, New and CAB 2006
members will leave their current section. A sensitivity analysis surrounding this assumption is shown in
the table below.
The sensitivities of the scheme's liabilities to changes in the principal assumptions are set out below:

Discount rate
Discount rate
Mortality rate
Proportion of members expecting to transfer schemes

Movement

Impact on
Schemeliabilities%

Impact on
Schemeliabilities£m

Decrease 0.1%
Increase 0.1%
Increase/decrease 1 year
Increase/decrease 10%

2.0
1.6
3.0
0.4

194
157
295
47

F68

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201123 Pension plans continued
23c BBC Pension Scheme continued
23c viii Principal actuarial assumptions continued
The average life expectancy assumptions, for members after retirement at 60 years of age, are as follows:
Principal demographic assumptions

Retiring today
Male
FemaleRetiring in 20 years
Male
Female2011
Number of
years

2010
Number of
years

27.8
28.4

27.0
29.7

30.2
30.1

29.0
31.8

The longevity assumptions have been selected to reflect the characteristics and experience of themembership of the scheme. This has been done by adjusting standard mortality tables (‘S1’ series oftables, published by the CMI) which reflect recent research into mortality experience in the UK witha long-term rate of improvement of 1.5% per annum for males and 1.0% per annum for females.
Expected long-term rate of return (per annum)*

2012
%

2011
%

Equities
Bonds and gilts
Property
Alternatives
CashTotal expected rate of return

8.6
4.2
6.4
8.6
3.7
7.4

8.8
4.4
6.6
8.8
4.4
7.5

*

As at the beginning of the financial year.

The expected return on plan assets for the next year is determined by considering the expected returns
available on the major asset classes held by the Scheme at the end of each reporting period. Expected
returns on bonds are determined by reference to the redemption yield on Government bonds of long
duration. Expected returns on equity investments and other assets reflect long-term real rates of return
expected by the market. The expected rate of return adopted for property investments is chosen to be
mid-way between the return on equities and the return on bonds.
23c ix Scheme membership analysis and maturity profile
Contributors
Pensioners
Dependants
Deferred pensioners

2011
Number

2010
Number

18,03218,805
3,971
19,591

17,883
18,776
3,920
18,971

The maturity of ascheme provides anindication of the cash
requirements of thescheme and the likely
attitude of the Trustees
to risk within theirinvestment policy. The
more mature a scheme,
the more likely that
Trustees will favour low
risk investments.

F69

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201123 Pension plans continued
23c BBC Pension Scheme continued
23c x Scheme cash flows (day-to-day liquidity)
The first additional contribution of £110million was paid in March 2011 to address the funding shortfall
identified in the 2010 actuarial valuation by Towers Watson. Allowing for this payment, the net cash
inflow saw a decrease of £30million compared to 2010. This movement includes an increase on thepensions paid to members in the year of £16million.

Contributions including additional voluntary (employer and employee)
Investment income
Cash inflows
Payments of pensions and transfers out
Expenses
Net cash inflow
*

2011
£m

2010
Restated*
£m

317.4
214.8
532.2
(326.1)(53.0)
153.1

226.9
232.3
459.2
(333.3)(52.6)
73.3

The comparative figures have been restated to reflect an amendment made to the accounting policy for overseas property
portfolios.

24 Financial instruments
24a Financial risk management
The Group’s financial risk management operations are carried out by a Group Treasury function, withinparameters defined formally within the policies and procedures manual agreed by the Executive Board.
Group Treasury’s activity is routinely reported and is subject to review by internal and external auditors.
Group Treasury uses financial instruments to raise finance and to manage financial risk arising from theBBC’s operations in accordance with its objectives which are:•to ensure the business of the BBC, both Public Services and Commercial, is funded in the most efficientmanner and remains compliant with borrowing ceilings•

to protect the value of the BBC’s assets, liabilities and cash flows from the effects of adverse interest rates
and foreign exchange fluctuations•

to maximise the return on surplus funds, whilst ensuring sufficient cash is retained to meet foreseeableliquidity requirements.

The Group’s financial instruments, other than those used for treasury risk management purposes,
comprise cash and cash equivalents, borrowings and various items such as trade receivables and payables
that arise directly from its operations. The Group finances its operations from these financial instruments.
The Group does not undertake speculative treasury transactions.
The Group takes a risk averse approach to the management of foreign currency trading and has
implemented a clear economic hedging policy to minimise volatility in the financial results. A small
number of the forward foreign currency contracts entered into by the Group were designated as
hedging instruments in effective cash flow hedges. Corresponding fair value movements have, accordingly,
been recorded within other comprehensive income. For forward foreign currency contracts notdesignated as hedging instruments, movements in fair value are recorded directly in the income
statement within 'total operating costs'.

F70

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201124 Financial instruments continued
24a Financial risk management continued
Market risk
Currency risk: The Group is principally a domestic organisation with the majority of transactions, assets
and liabilities arising in the UK and being sterling based. However, the Group undertakes some transactions
in currencies other than sterling. Due to movements in exchange rates over time, the amount the Group
expects to receive or pay when it enters into a transaction may differ from the amount that it actually
receives or pays when it settles the transaction.
Some contracts may also contain clauses whereby changes in currency rates outside an agreed range impact
on the contract price; in the majority of cases the value of the individual contracts and other features within
the contract limit the currency risk exposure to a level that is not significant to the Group.
The most significant currency exposure by total value of transactions is US dollars, however due to therelative size of this exposure in comparison to the Group’s sterling-denominated business; the BBC does
not consider this to be significant for the Group. The Group does, however, generally enter into forward
currency contracts to manage, or hedge, this currency risk, which allows the Group to settle transactions
at known exchange rates, reducing further any uncertainty.

Market risk
comprises currency risk
and other price risks.
A forward currency
contract is a contract
to buy or sell foreign
currency in exchange
for sterling at a specificrate on a specific date.
By locking into aparticular exchange
rate, the currency riskthat may be associatedwith a future purchaseor sale is eliminated.

The overall income or expenditure to be recognised in relation to contracts denominated in foreign currency(and the related hedges) is therefore fixed, however where these contracts span financial years, therecognition of the fair value of the forward currency contracts results in timing gains/losses in each financial
year. These timing gains/losses are therefore a result of market conditions as opposed to variances inunderlying contract value. As a result of this certainty of cash flows the Group has mitigated its underlying
sensitivity to currency fluctuations and therefore has not presented sensitivity analysis as any potential
variation is insignificant.
Interest rate risk: The Group’s main exposure to interest rate fluctuations arises on external borrowings.
Since March 2003 the Group has been borrowing at floating rates of interest and then using interest rate
swaps, caps and collars to manage the Group’s exposure to interest rate fluctuations and provide greatercertainty of cash flows. Interest rate swaps, caps and collars are taken out based on projected borrowing
requirements, therefore differences will occur between the notional amount of the swaps, caps and collars
and the actual borrowing requirements. The effect of taking out the interest rate swaps, caps and collars isthat in the longer term the Group has no significant underlying sensitivity to interest rate fluctuations andhence no sensitivity analysis has been presented.

An interest rate
swap is a contract
between two parties
to change the basisof their interest rate
payment or receipt
either from fixed tofloating rates or viceversa. By fixing a floatinginterest rate certainty
about the level of futureinterest payments canbe achieved.

F71

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201124 Financial instruments continued
24a Financial risk management continued
Other price risk of financial assets: The Group only invests surplus cash in money market funds andmoney market deposits, therefore there is very limited price risk.

Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. Credit risk arises from cash and cash equivalents, derivative financial
instruments, available-for-sale financial assets and trade and other receivables.
The carrying amount of these financial assets included in the financial statements represents the Group’s
maximum exposure to credit risk.

Other price risk is any
price change other thanthose arising fromchanges in currency orinterest rates.
Credit risk is the riskof financial loss to theGroup if a customer
or counterparty to afinancial instrument
fails to meet its
contractual obligation.

The Group’s credit risk management policy in relation to trade receivables involves regularly assessing thefinancial reliability of customers, taking into account several factors such as their financial position andhistorical performance. Credit terms, where given, are generally for a 30-day period.
Trade and other receivables: The largest element is the licence fee debtor, £413.0million (2010:£410.8million).The amount of income that the BBC receives from is directly related to the amount of licencefee collected from households in the UK.
Investments: The Group generally limits its exposure to credit risk by investing in liquid securities and withcounterparties that have a minimum credit rating of A-, with a higher minimum rating up to AA- required
depending upon the duration and amount.
Guarantees: In order to assist employees relocating as part of an enforced move within the UK, the BBC
operates a 'Homeowners Guaranteed Support Scheme'. After professional valuations, the beneficial interestof the employees' property is transferred to a third party to sell, allowing the employee to find a newproperty, chain-free within their relocation area. The BBC offers a guarantee to the third party for part of themarket value of the property and is therefore exposed to fluctuations in the property market between thetime the property is valued and sold. Only three employees entered this scheme during 2010/11 (2009/10
two) and one property was unsold at 31 March 2011 valued at £0.3m (2009/10 £nil).
Other than this scheme, the Group enters into financial guarantees for intra-Group purposes only.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
BBC is subject to ceilings on its borrowings set by the Secretary of State in accordance with the Agreement
between the BBC and DCMS (see Note 2f). In order to comply with these ceilings together with the termsof any individual debt instruments the BBC’s Group Treasury manages the Group’s borrowings bycontinuously monitoring Group cash flow forecasts. The BBC holds its surplus liquidity in term deposit
accounts with highly rated financial institutions.

Liquidity risk is therisk that the Group will
not be able to meet its
financial obligations as
they fall due.

F72

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201124 Financial instruments continued
24b Fair values of financial instruments
The following table shows the fair value and carrying value of the Group’s financial instruments, incategories according to how the financial instrument is measured. It also shows the maturity profile
for each category of financial asset and liability.
Amountsdue inless than
one year£m

Amountsdue between
two andfive years£mAmounts
due after
more than
five years
£m

Total
£m

8.0

1.9

–

9.9

Loans and receivables
Trade and other receivables

642.3

–

6.6

648.9

Cash and cash equivalents

513.4

–

–

513.4

-

–

76.9

76.9

(5.8)

(7.6)

–

(13.4)(20.7)(372.4)(2.5)(194.5)(7.5)(29.3)––(865.6)(215.2)(379.9)(897.4)2011 – Carrying value and fair value
Financial assets at fair value throughincome and expenditure
Derivative financial instruments

Available-for-sale financial assets
Other investments*
Financial liabilities at fair value throughincome and expenditure
Derivative financial instruments
Financial liabilities measured at amortised cost
Bank loans, overdrafts and loan notes
Trade and other payables
Obligations under finance leases* The fair value of the BBC’s investment in the share capital of Daunus Limited is derived from a valuation technique that is not based on observabledata (level 3).

F73

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201124 Financial instruments continued
24b Fair values of financial instruments continued
Amountsdue inless than
one year£m

Amountsdue between
two andfive years£mAmounts
due after
more than
five years
£m

Total
£m

Financial assets at fair value throughincome and expenditure
Derivative financial instruments

11.9

6.7

–

18.6

Loans and receivables
Trade and other receivables

588.6

–

–

588.6

Cash and cash equivalents

263.9

–

–

263.9

–

–

–

–

(8.9)

(13.3)–(22.2)(1.7)(452.8)(5.7)(211.4)(3.5)(34.9)––(568.3)(213.1)(456.3)(608.9)2010 – Carrying value and fair value

Available-for-sale financial assets
Other investments
Financial liabilities at fair value throughincome and expenditure
Derivative financial instruments
Financial liabilities measured at amortised cost
Bank loans, overdrafts and loan notes
Trade and other payables
Obligations under finance leases

As at 31 March 2011 there are no differences (2010: no differences) between the fair value and carrying
value of any of the Group’s financial instruments.
The finance leases include £9.5million (2010: £12.2million) relating to Centre House Productions Limited.
Centre House Productions Limited enters into finance leases as a means of financing drama productions
which result in lower production costs for the BBC. These finance leases are matched by defeasance deposits
which may only be used to settle the finance lease liabilities and therefore do not represent separate assets
and liabilities. The BBC has a right of offset which meets the criteria as set out in IAS 32 (Financial Instruments
Presentation), therefore, the finance lease creditor is presented net of defeasance deposits to arrive at the
net unmatched liability at the year end. These defeasance deposits, £153.1million at 31 March 2011 (2010:£177.9million), are structured such that the principal on deposit and interest earned will be sufficient to cover
the rental obligations on the finance leases until the end of the lease. Accordingly it is not included as
borrowing for the purposes of compliance with the BBC’s borrowing ceilings.

Defeasance deposits
are amounts deposited
with banks which earn
the exact amountof interest needed
to cover the capital
repayment and interest
element of each of thefinance leases. The
defeasance deposits
are ‘ring-fenced’ andtherefore cannot be
used for any
transactions apart fromthe agreed capital andinterest payments.

F74

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201124 Financial instruments continued
24c Derivative financial instruments
The following table provides an analysis of financial instruments that are measured subsequent to initialrecognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value isobservable:– Level 1 fair value measurements are those derived from quoted market prices (unadjusted) in active
markets for identical assets and liabilities;– Level 2 fair value measurements are those derived from inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly(i.e. derived from prices); and– Level 3 fair value measurements are those derived from valuation techniques that include inputs
for the asset or liability that are not based on observable market data (unobservable inputs).
At 31 March 2011 and 31 March 2010 there are no material differences between the fair value andcarrying value of any of the Group’s other financial instruments.
Fair value
hierarchy level

Assets£m

Liabilities£m

2011
Greater than one year
Forward foreign currency contracts
Interest rate swaps, caps and collars
Embedded derivatives
Other payables

2
2
2
3

1.7
–
0.2
–
1.9

(1.2)
(6.3)
(0.1)
(7.5)
(15.1)

Less than one year
Forward foreign currency contracts
Interest rate swaps, caps and collars
Embedded derivatives

2
2
2

8.0
–
–
8.0

(4.8)
(0.9)
(0.1)
(5.8)

2010
Greater than one year
Forward foreign currency contracts
Interest rate swaps, caps and collars
Embedded derivatives
Other payables

2
2
2
3

6.7
–
–
–
6.7

(3.7)
(8.3)
(1.3)
(41.3)(54.6)

Less than one year
Forward foreign currency contracts

2

11.9
11.9

(8.9)
(8.9)

Level 3 financial liabilities recorded at fair value and included within other payables relate to written put
options issued to non-controlling interests. The fair value of such instruments is calculated based on the
strike price of the options and management's best estimate of the date at which options may be
exercised. Options outstanding at 31 March 2011 may be exercised at dates within the period April
2012 to April 2014 (2010: January 2011 to April 2014). Where the strike price of an option is based on
the fair value of the underlying business, this has been estimated based on forecasts of future cash flows
prepared by management. A discount rate of 12.5% (2010: 11%) was applied to the forecast post-tax
cash flows.

F75

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201124 Financial instruments continued
24c Derivative financial instruments continued
Fair Value of Level 3
2011
2010
£m
£m

Opening balanceIssuesSettlements
Unwinding of discount recorded within finance expense
Change in fair value
Foreign exchange translation gains and losses(41.3)
–
41.7
(2.8)
(4.0)
(1.1)
(7.5)

(32.3)(33.0)
36.8
(1.4)
(3.5)
(7.9)
(41.3)Put options over non-controlling interest include a put option over 25% of the issued share capitalof Lonely Planet. This put option was renegotiated in the year to 31 March 2010, resulting in thecancellation and reissue of the option with revised terms of exercise. The revised option was exercisedby non-controlling interests on 4 January 2011 resulting in an increase in the Group's ownership interest
in Lonely Planet from 75% to 100%, effective 14 February 2011.
In accordance with IAS 27 (2008) Consolidated and Separate Financial Statements, the exercise of theLonely Planet put option has been treated as an equity transaction.
At 31 March 2011 the Group had entered into a net commitment to sell foreign currencies amounting
to £161.5million (2010: net commitment to sell £100.1million) that mature in the period through to2016 in order to fix the sterling cost of commitments through this period (mainly Euros and US dollars).
After taking into account the effects of these forward foreign exchange contracts, the Group had no
significant currency exposure.
The Group applies cash flow hedge accounting for trades taken out by certain of its Commercial
subsidiaries in respect of their forecasted foreign currency transactions. Hedge accounting is only applied
where appropriate designation and documentation. Net gains and losses (after tax) recognised in thehedging reserve on forward foreign exchange contracts in cash flow hedge relationships at 31 March2011 were £nil (2010: £0.5m). These amounts will be recognised in the income statement in the
period when the hedged forecast transaction affects the income statement, at various dates over the
next two years.
The fair value movements on foreign exchange forward contracts, currency options and embedded
derivatives, other than those that are effective designated cash flow hedges, are recorded through theincome statement within operating costs.

F76

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201124 Financial instruments continued
24c Derivative financial instruments continued
Interest rate risk is managed by the use of interest rate swaps, caps and collars. Sterling fixed rate borrowings
are achieved by entering into interest rate swap transactions; all outstanding swaps mature by April 2014.
The impact of a change in interest rates can also be limited by entering into interest rate cap and collartransactions; all outstanding caps and collars mature by May 2013. In total, £226.3million (2010:£223.9million) of swaps and £177.8million (2010: £212.2million) of caps and collars were entered. All swaps
and caps were effective at 31 March 2011 to ensure borrowings are suitably covered for the foreseeable
future. This is £189.6million higher (2010: £164.7million higher) than the current level of borrowings of£214.5million (2010: £211.4million).
Fair value movements in respect of interest rate swaps and interest rate options are recorded through theincome statement within financing income/financing costs.
In accordance with IAS 39, the Group has reviewed contracts for embedded derivatives that are required
to be separately accounted for if they do not meet certain requirements set out in the standard. Any such
embedded derivatives have been recognised at fair value.

Depending on how
exchange rates andinterest rates move
between the time theGroup enters into thetransaction and theyear-end, thesederivatives can either be
profitable (‘in themoney’) or loss-making
in their own right.
However, the rationale
in entering into thesederivatives is not to
profit from currency
markets or interest rate
fluctuations, but toprovide stability to theBBC’s cash flows. Other
than where hedge
accounting is applied
the movements relating
to these derivatives (i.e.
where they are either in
profit or loss-making)are taken to theGroup’s statementof income andexpenditure forthe year.

F77

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201124 Financial instruments continued
24d Liquidity risk
The following table details the Group’s remaining contractual maturity for its non-derivative financial
liabilities (including obligations under finance leases) but excludes trade and other payables that weresettled in the normal course of business and are due within one year. The table has been drawn up
based on the undiscounted cash flows of financial liabilities based on the earliest date on which theGroup can be required to pay:
2011
Variable interest rate instruments
Not later than one year
Later than one year but not later than five years
Later than five years
Fixed interest rate instruments
Not later than one year
Later than one year but not later than five years
Later than five years
2010
Variable interest rate instruments
Not later than one year
Later than one year but not later than five years
Later than five years
Fixed interest rate instruments
Not later than one year
Later than one year but not later than five years
Later than five years

Cash flow£mInterest£mPrincipal
£m

186.1
30.1
–

0.9
0.1
–

185.2
30.0
–

84.9
351.7
1,890.4
2,543.2

82.4
322.4
1,024.8
1,430.6

2.5
29.3
865.6
1,112.6

163.9
51.1
–

0.8
1.1
–

163.1
50.0
–

51.0
210.2
1,138.4
1,614.6

45.3
175.3
570.1
792.6

5.7
34.9
568.3
822.0

F78

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 201124e Borrowing facilities

Facility

Interest rate

UK Public Service Broadcasting
Loan – margin of 0.45%
Sterling revolving
credit facility
agreement
Margin of between 0.125%
Uncommitted
money market lines and 0.5% over LIBOR(short-termborrowings)
BBC Commercial Holdings Limited
Multicurrency,
LIBOR* plus 0.275% rising to
revolving credit
LIBOR* plus 0.325% when thefacility agreement
facility is more than 50% utilised.
for loans and letters Letter of credit fee is the sameof credit
as the bank lending margin, butdoes not include LIBOR
Overdraft or
Money market line – margin
money market lines of 0.45%
Overdraft – bank base rates
plus 1%
BBC Worldwide Limited
European Investment Bank’s own
Loan withfunding cost plus a margin ofEuropeanInvestment Bank
0.09% on unsecured loans(50% secured byletters of credit)***Total
available
31 March
2011
£m

Drawn
down at
31 March
2011
£m

Total
available
31 March
2010
£m

Drawn
down at
31 March
2010£mExpiryor review
date

200

–

200

–

June 2013

25

–

25

–

350**

190

350**

187

June 2012

20

–

20

–

November
2011

50

50

50

50

£20m
December
2011 and£30m
May 2012

The base rate used will vary according to the currency drawn. At 31 March 2011 £64.5million (2010: £61.1million) was drawn down in AUS$
and consequently linked to BBSW rather than LIBOR. All other amounts drawn are in sterling and consequently linked to LIBOR.

** Of this amount, up to £100million is available to issue letters of credit in favour of the European Investment Bank to support its lending underfacilities to the Group. At 31 March 2011, total drawn on this facility was £190.1million which consisted of cash drawings of £164.5million(2010: £161.7million) and £25.6million (2010: £25.6million) utilised by way of letters of credit.

There have been no defaults or breaches of covenants on the facilities above during the year (2010: none).
In addition to the facilities above the Group has other smaller facilities of which nothing was drawn at the year end(2010: £nil), used to manage working capital.

F79

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
25 Related party transactions
25a Transactions with related parties excluding key management personnel
Joint ventures, associates and otherinvestments
2011
2010
£m
£m

75.4
(64.4)–
43.8
54.8

Rendering of services
Receiving of services
Pension contributions
Dividends received

83.8(52.0)–
10.7
42.5

Amounts owed by related parties
2011
2010
£m
£m

BBC Pension Scheme
Joint ventures, associates and other investments

–
52.6
52.6

–
35.8
35.8

BBC Pension Scheme
2011
2010
£m
£m

–
–
304.6
–
304.6

–
–
214.3
–
214.3

Amounts owed to related parties
2011
2010
£m
£m

(14.1)(17.3)(31.4)(9.1)(2.3)(11.4)In all transactions, the terms of trade were negotiated on an arm’s length basis.
The BBC Group also enters into various transactions with government and local authorities on an arm’s
length basis. These transactions include council tax agreements and corporation tax payments.

25b Transactions with key management personnel
Close family member
Member of key management employed on standard
personnel
terms and conditions

Artists contracts with closefamily member

Transactions with acompany owned/ controlled
by member and/or closefamily member

Notes

Trustees:
Diane Coyle
Richard TaitMembers of the Executive Board and other members of key management personnel:
Jana Bennett
Juniper
Communications
Limited*
Perfectly Normal
Productions
Limited**Peter Salmon
Samir Shah
Juniper
Communications
Limited**Related parties
include key
management personnel,
their immediate families
and external entities
controlled by them.
Key management
personnel
is the BBC Trustees,
members of the
Executive Board, theChief Executive Officer
of BBC Worldwide andthe Director, Trust Unit.
Transactions between
the BBC and thoserelated parties are
explained in this note.

Juniper Communications Limited is co-owned by BBC non-executive Director Samir Shah (70%), his wife Belkis Shah (20%)
and the husband of Jana Bennett (Director, BBC Vision) Richard Clemmow (10%). During the year the BBC received services
from Juniper Communications Limited to the value of £1,258,089 (2010: £893,503), with £14,328 outstanding at 31 March2011 (2010: £55,757). In addition, Juniper Communications Limited received services from the BBC to the value of £102,325(2010: £109,000), with £23,735 outstanding at 31 March 2011 (2010: nil).

** Perfectly Normal Productions Limited is co-owned by BBC Vision Director Jana Bennett’s husband (25%). During the year
the BBC received services from Perfectly Normal Productions Limited to the value of £132,399 with £5,846 outstandingat 31 March 2011.

Information about the BBC’s structure, senior staff salaries and expenses are published on the BBC’s
website. This unaudited information can be found at www.bbc.co.uk/aboutthebbc/running/executive/eb.

F80

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
26 Interests in joint ventures, associates and subsidiaries
The Group holds (directly and indirectly) interests in the following significant joint ventures, associates
and subsidiaries listed below which, except where otherwise stated, are incorporated in Great Britain
and registered in England and Wales. A full list of joint ventures, associates and subsidiaries is available
on request from the General Counsel and Secretary, BBC, White City Building, 201 Wood Lane,
London W12 7TS.

26a Significant joint ventures and their activities
The group has a 50% equity interest in the following joint ventures which are all incorporated in
Great Britain and registered in England and Wales, unless otherwise stated:
Name of entity

Activity

Commercial joint ventures:
UK Gold Holdings Limited
UK Channel Management Limited
UK VoD LLP*JV Programmes LLC (incorporated in the USA)
Ragdoll Worldwide Holdings Limited*

Holding company
TV channel operator
VoD supplier
Content creation
Holding company

Joint ventures arebusinesses the BBC
jointly controls withother parties.

33% equity holding.

The significant joint ventures are all accounted for up until 31 March except UK VoD LLP and JVProgrammes LLC which are accounted for up to 31 December.

26b Significant associates and their activities

Commercial associates:
Frontline Limited
3sixtymedia Limited*

Holdingof issued
ordinaryshares%Activity

23
10*

Magazine distributor
Production

Associates arebusinesses over which
the BBC exerts
significant influence
but does not haveoverall control.

The BBC holds 10% holding of the total share capital of 3sixtymedia Limited but 20% of the Class A ordinary shares.

F81

Group Financial statements

Notes to the group financial statements
For the year ended 31 March 2011
26 Interests in joint ventures, associates and subsidiaries continued
26c Subsidiary undertakings
Name of entity

Activity

Commercial Subsidiaries: (All 100% owned unless stated)
BBC Commercial Holdings Limited*

BBC Worldwide Limited
BBC World News Limited
BBC Ventures Group Limited

**
**
**

BBC Studios and Post Production Limited
Lonely Planet Pty Limited (incorporated in Australia)
2entertain Limited
BBC Worldwide Australia Pty Limited (incorporated inAustralia)
BBC Magazines Limited
BBC Magazines Rights Limited
BBC Worldwide Americas Inc. (incorporated in the USA)
BBC World Distribution Limited

**
**
**

Holding company
Publishing, channels and programme
distribution
Channels
Holding company
Programme making facilities andservices
Travel Guides Publisher
DVD/video publisher

**
**
**
**
**

Investment company
Publishing company
Holding company
Holding company
Programme distribution

*
*
*
*

Property
Production financing
Digital switchover
Digital switchover

Subsidiaries incorporated to act on behalfof UK Public Service Broadcasting:
BBC Property Limited
Centre House Productions Limited
Digital UK Limited***DSHS Limited*

Subsidiary
undertakings
are businesses the
BBC controls.

Directly owned.

** Indirectly owned.
*** The BBC controls 58.02% of the voting rights of Digital UK Limited. Its results have been consolidated into the Groupaccounts. Digital UK Limited is a company limited by guarantee of which the BBC is a joint member. The other members andtheir voting rights in Digital UK Limited are: ITV plc 11.4%, Channel Four Television Corporation 11.4%, Channel Five
Broadcasting Limited 9.07%, Arquiva Services Limited 6.48% and SDN Limited 3.63%.

F82

Statement of Executive Board responsibilities inrespect of the Annual Report and Accounts
The Charter requires the BBC to prepare an audited annual reportand statement of accounts .
The Trustees’ responsibilities are detailed in Part One of theAnnual Report and Accounts.
The Executive Board has accepted its responsibility for the
preparation of an operating and financial review, statements ofcompliance with applicable codes and regulations (including the
Executive Board Remuneration Report) and the statement ofaccounts which are intended by them to give a true and fair viewof the state of affairs of the BBC and of the income andexpenditure for that period. The Executive Board has prepared
the accounts in accordance with International Financial ReportingStandards (IFRSs) as adopted by the EU.
The Executive Board must not approve the statement of accounts(or ‘financial statements’) unless it is satisfied that they give a trueand fair view of the assets, liabilities and financial position of theGroup and of the surplus or deficit for that period.
In preparing the financial statements the Executive Board has:
• Selected suitable accounting policies and applied themconsistently.
• Made judgements and estimates that are reasonable and prudent.
• Stated whether they have been prepared in accordancewith IFRS as adopted by the EU.
• Prepared the financial statements on the going concern basis
as they believe that the BBC will continue in business.
The Executive Board is responsible for keeping proper accounting
records that are sufficient to show and explain the BBC’stransactions and disclose with reasonable accuracy at any time thefinancial position of the Group and enable them to ensure that thefinancial statements and the Executive Board Remuneration Reportcomply with the Charter. It also has a general responsibility fortaking such steps as are reasonably open to it to safeguard the assetsof the BBC and to prevent and detect fraud and other irregularities.
The Executive Board is responsible for the maintenance andintegrity of the BBC’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
The Executive Board members who held office at the date of
approval of the Annual Report and Accounts, whose names andfunctions are listed in the Governance section of Part Two of theAnnual Report and Accounts, confirm that, to the best of each of
their knowledge and belief:• The financial statements, prepared in accordance with IFRS
as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and surplus of the BBC; and• The operating and financial review includes a fair review of thedevelopment and performance of the business and the positionof the BBC, together with a description of the principal risks anduncertainties that it faces.

Statement of disclosure of information to auditors
The Executive Board members who held office at the date of
approval of the Annual Report and Accounts confirm that, so far as
they are each aware, there is no relevant audit information of which
the BBC’s auditors are unaware; and each Executive Board member
has taken all the steps that they ought to have taken as an Executive
Board member to make themselves aware of any relevant audit
information and to establish that the BBC’s auditors are aware ofthat information.
Going concern
The directors have prepared cash flow forecasts for a period
in excess of a year from the date of approval of these financial
statements, and have reviewed these forecasts, together with thesensitivities and mitigating factors in the context of available funds.
The directors are satisfied that the BBC is well placed to manage
the risks and has adequate resources to continue in operation for
the foreseeable future. As a result the going concern basis has been
adopted in the preparation of the financial statements.
This statement was approved by the Executive Board.

Mark Thompson
Director-General
23 June 2011

F83

British Broadcasting Corporation
Broadcasting House
London W1A 1AA
bbc.co.uk© BBC 20112010