BBC Full Financial
Statements 2015/16

BBC Full Financial
Statements 2015/16

Presented to Parliament by the Secretary of State
for Culture, Media and Sport by command of Her Majesty
The BBC’s Annual Report and Accounts 2015/16, giving narrative context to the numbers contained in this document,
were also laid before Parliament on 12 July 2016 and are available online at bbc.co.uk/annualreportBook 2 of 2

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Full Financial Statements
2015/16
These financial statements comprise both the primarystatements and additional supporting disclosure notes.
Consolidated income statement 28
Consolidated statement of comprehensive (loss)/income

29

Consolidated balance sheet

30

Consolidated statement of changes in equity31

Consolidated cash flow statement

32

Notes to the accounts

34

BBC in the Nations

Performance against public
commitments 2015/16

In this section, we report income, expenditure andperformance for the BBC in the devolved Nations of the
UK – Wales, Scotland and Northern Ireland.

The BBC is accountable for a number of public commitments
each year, including programming and production quotas andservice licence commitments. This section sets out the BBC’s
performance against these.

Wales

94

Ofcom tier 2 quotas

112

Scotland

99

Compliance with service licences

113

Northern Ireland

104

Access services

117

Window of Creative Competition

120

bbc.co.uk

BBC Full Financial Statements 2015/16

01Review of the Managing Director,
BBC Finance and Operations“As we reach the endof the current Charter,
the BBC is undergoinga substantial period ofchange and uncertainty
alongside delivery of the
final year of the DQF
programme. We haveplans in place to ensure
the financial stabilityof the BBC.”
Anne Bulford

Continued drive on
efficiencies as we enter
the final year of DQF
This year we have continued to build on
our impressive track record of delivering
efficiencies.

—— procurement is helping us make savings
from contract negotiations. The pastseven major procurements delivereda total of £649 million in savings overthe life of the contracts

In 2015, the National Audit Office (NAO)
and PricewaterhouseCoopers (PwC)
independently verified the BBC’s progress
2015/16 was the penultimate year of theBBC’s ‘Delivering Quality First’ (DQF) savings against its efficiency targets. The NAO
programme, which has delivered £621 million examined the progress of the DQF
programme, while PwC confirmed that thesustainable savings by 31 March 2016. The
BBC will hit £1.6 billion of recurring costprogramme remains on track to deliver anannual total of £700 million in annual recurring efficiencies in 2016/17, more than 40% of theBBC’s addressable costs. This has beensavings by 31 March 2017. The focus of thepossible in part due to the introduction ofefficiencies has been on people, property
a new efficiency strategy known as Compete
and procurement:or Compare. This ensures that all costs are—— people: pay restraint and headcounteither challenged in the market or rated
reductions has delivered over £150 million
against it, helping establish a culture ofa year in reduced costs and a reduction ofcontinuous efficiency within the BBC. The key
more than 2,000 employees over the past
driver of Compete or Compare is to securenine years. Senior manager pay bill has also
the best value for licence fee payers at every
fallen by more than £31 million since 2009,
opportunity. PwC found that 87% of thethe equivalent of 40%
current cost base controlled by the BBC has—— property has significantly reduced since
now been tested, up from around 80% in
2010, saving the BBC £75 million a year
2014. In 2016/17, we expect 90% of theseby 2016/17
controllable costs to be tested underCompete or Compare.

02

BBC Full Financial Statements 2015/16

In July 2015, PwC also reviewed the calculationof the BBC overheads and compared ouroverhead ratio against industry benchmarks.
In 2015/16, 94% of the BBC’s controllable
spend was focused on content and delivery,
with just 6% spent on running theorganisation. This places us in the top 25% ofregulated organisations, against a public sector
average of 11% and a regulated industry
average of 9%. This focus on reducing ourrunning costs ensures we are investing as
much money as possible into content forlicence fee payers.
When we began the DQF programme in 2011,
the BBC set out the savings needed based on
future licence fee income forecasts. During
2015, the BBC announced that forecast licence
fee income in 2016/17 would be £150 million
lower than the previous DQF forecast. This
represents approximately one million fewer
homes paying the licence fee. As more people
rely on BBC iPlayer, mobiles and online
catch-up, the percentage of households owning
televisions is falling faster than previously
predicted, and a loophole means thathouseholds watching only on-demand
television are not subject to the licence fee.
We welcome the Government’s commitment

bbc.co.uk

02-05
Review of the Managing Director

to close the iPlayer loophole by bringing
BBC on-demand programme services into
the legislation.
In the meantime, the BBC must find savings
to make up this £150 million shortfall that willarise by the end of the current licence fee
period. The Director-General has set out
a package of proposals to save £50 million
by making the BBC simpler and leaner. These
will reduce the number of divisions, reduce
the number of layers from the top to thebottom of the organisation and simplify andstandardise procedures across the BBC. This
work is now well under way. The remaining£100 million in savings will come from a mix ofcontent savings and other pan-BBC initiatives.
The BBC’s sports rights budget will contribute£35 million of the savings, which has alreadybeen achieved from changes, including Open
Golf coverage and the move of Formula 1
to Channel 4.
The 2015 licence fee settlement effectively
requires the BBC to absorb inflation in thecost base equivalent to £400 million a year by
2021/22 and self fund any investment in newservices. In addition, we face superinflationof costs of around £100 million a year by

2021/22 in areas such as sports and drama.
The BBC cannot stand still and this investment
in new services for audiences will require an
additional £150 million by 2021/22. This meansa total saving target of £800 million a year isrequired by 2021/22, representing over 20% of
expected 2016/17 spend, or an average annual
savings target of around 4% a year over the
next five years.

lighting. We are very grateful to our suppliers– they are an important part of our service
delivery and we would not be able to meet
our saving targets without their help.
During the year, the BBC brought its
recruitment services back in-house to unify its
HR function, bringing its 10-year contract with
Capita to an end. This is expected to deliver
a 20% saving. Capita continues to work with
us in other areas, including our successful
partnership for licence fee collection.

This means that tough decisions will have to
be made and we cannot rule out an impact
on services and scope in the long term.

Valued partnerships
In a typical year, the BBC spends £1.4 billion
on goods and services using 12,000 suppliers(excluding freelancers and independent
programme commissions). We are committed
to working with our suppliers to find ways toreduce cost whilst preserving quality andtimeliness. About half of the annual spend ison 11 major service contracts like technology(Atos); facilities management (Interserve); andtransmission (Arqiva). The other half covers
purchasing of regular goods and services
associated with running the business, ranging
from costumes and travel to cameras and

The reprocurement of the BBC’s Business
Process Outsourcing (BPO) services forfinance, accounting, payroll and associatedtechnology completed recently with thecontract being awarded to IBM. The newpartnership with IBM will deliver significant
savings to the BBC through a simplified andinnovative approach. IBM will replace Sopra
Steria from 1 November 2016.
We would like to thank both Capita andSopra Steria for their valuable support overthe past decade.
From April 2017, the BBC will move to a new
IT service model, which will be delivered bya number of suppliers. As part of this, BT has

Use of the licence fee*
2015^

2016
Content,
distribution andTotal
its support£m£mContent,
distribution andits support£m

Generalsupport£m

Television

2,059.4141.8

2,201.2

Radio

608.2

33.9

642.1

BBC Online

224.8

13.2

2,892.4

Orchestras and performing groups
S4C**

Generalsupport
£m

Total
£m

2,186.0

180.4

2,366.4

611.0

41.4

652.4

238.0

187.8

13.1

200.9

188.9

3,081.3

2,984.8234.9

3,219.7

26.2

2.1

28.3

29.7

2.8

32.5

32.3

2.4

34.7

28.5

2.5

31.0

Development spend***

81.2

6.4

87.6

75.6

7.1

82.7

BBC World Service operating licence

246.2

15.0

261.2

236.2

17.2

253.4

3,278.3

214.8

3,493.1

3,354.8264.5

3,619.3

94%

6%

100%

93%

7%

100%

Spend by service licence

Total service spend% spend^ The BBC has reviewed its analysis of PSB Group expenditure support costs during the year and consequently restated this view to make the prior year classification consistent with the current year.
* The licence fee after collection costs is also used to fund the BBC’s obligations to broadband rollout and S4C as well as its pension deficit payments.
** £34.7 million spent with S4C is the cost of content provided to S4C over and above the £75 million new obligation.
*** Development costs fund the near-term development of new platforms and services particularly for BBC Online and Red Button. This is primarily focused on new features for existing services, their related
support and overhead costs. It is distinct from research costs which is focused on longer-term research of new technology and standards that benefit the BBC and the rest of the industry.

bbc.co.uk

BBC Full Financial Statements 2015/16

03

Review of the Managing Director

We will hold conversations with theGovernment over the coming months todiscuss the recommendations in the White
Paper, specifically around the independenceof the new Board and the exact role of the
Looking forward
NAO. It is vital that the final Charter and
The current Charter expires on 31 December Agreement delivers a strong independent
system of governance that attracts wide
2016, with the new Charter in place fromsupport and ensures value for licence fee
1 January 2017. With that in mind, wepayers over the coming 11 years.
welcome the recent publication of theGovernment’s White Paper and the clarity it
The current strong financial position of theprovides on the future of the BBC. The key
BBC, along with the successful delivery ofthings to note from the White Paper, fromcurrent saving plans, leaves us in a gooda financial and governance perspective, are:position to meet our future obligations andbeen appointed as its broadcast network
provider. This contract will also deliverconsiderable savings and is expected to pave
the way for future digital innovation.

—— the next Charter will be an 11-year
period, taking us up to 31 December 2027

continue delivering world-class content toour audiences.

—— the licence fee has been secured for theCharter period and will increase in linewith inflation for the first five years of the
new Charter, which is the first increase innearly a decade—— subject to regulatory approvals, we can
now press ahead with plans to create
BBC Studios as a commercial subsidiary– allowing us, for the first time, to makeprogrammes for others, removing thein-house guarantees that have protected
television production to dateAnne Bulford
Managing Director,
BBC Finance and Operations
16 June 2016—— for the first time, we’ll have a strong
unitary board with an external
regulator: Ofcom

BBC Radio 3’s new regular jazz slot Jazz Now
04

BBC Full Financial Statements 2015/16

Popular crime drama Silent Witness returned for a 19th series
bbc.co.uk

02-05
Review of the Managing Director

Financial achievements

Rationalising the BBC estate

Ongoing savings

There has been a particular focus on rationalising and modernising
the BBC estate. We have exited both Television Centre and parts ofWhite City and continue to move more of our business outside ofLondon. During the year we successfully completed the sale of fouracres of freehold land in London W12 alongside the sublease of six
BBC Media Village buildings, recording a profit on sale of £96 million
and annual recurring savings of £33 million. 55% of our employees
are now based outside of the M25, an increase of 1% on last year.

The Delivering Quality First savings programme delivered£621 million sustainable savings by 31 March 2016. The programme
remains on track to deliver an annual total of £700 million in
annual recurrent savings by 31 March 2017.

Prioritising spend on content
In 2015/16, 94% of our core controllable spend is now spent on content,
distribution and related support with only 6% spent on running theorganisation. This focus on reducing our costs ensures we are investing
as much money as possible directly into content for licence fee payers.

Senior manager remuneration

Talent spend

We have continued to reduce the number of senior managers
and their cost. The senior manager paybill is now £47.0 million ascompared to £78.5 million on 1 August 2009. The total numberof senior managers is 356, 45 fewer than last year and 279 fewer
than 2009.

Total talent spend of £200 million in 2015/16 represents 12%(2014/15: 12.2%) of internal spend on content and has reducedby £8.4 million (4%) on the prior year. We remain committed to
keeping spend on on-screen and on-air talent to no more than
15% of overall internal spend on content (with a 1% tolerance).

bbc.co.uk

BBC Full Financial Statements 2015/16

05

Financial overview
How we use the licence fee

Results for the year

Licence fee collection

Our results for this year once again show that
The way in which the BBC is funded places
we have successfully managed the financial
significant responsibilities on it as anchallenges facing us, giving a sound base toorganisation:
meet our future commitments and deliver our—— to provide value for money by focusing
strategic ambitions. A reduction in operating
expenditure on the programmes andcosts through our efficiency programmes,
services the public most wants fromalong with a significant gain on the Westthe BBC
London Media Village property transaction,—— to ensure that the output is then delivered have resulted in a group surplus of £59 million
for the year (2015: deficit of £125 million).
as cost efficiently as possible—— to ensure effective and efficient collectionof the licence fee

The table below provides a summary of theincome statement.

—— to maximise funding from other sources,
most significantly BBC Worldwide, theBBC’s commercial trading operation, in amanner consistent with the terms of its
Charter and other obligations

IncomeTotal licence fee income increased by
0.2% or £8 million from £3,735 million to£3,743 million due to improved collectionplans and modest household growth.

Effective financial management is a key partof the BBC’s unique relationship with its
audiences. This includes spending the licence
fee efficiently and collecting a television licencefee from everyone who is required tobuy one.
This is the third year of the new licence fee
contract and total cost savings of £220 million
are expected to be delivered over the eight
years of the contract, releasing more funding
to be spent on our programmes and services.
This is a huge achievement that has only beenpossible due to the strong relationship with
Capita, our outsourced provider for collectionof licence fee monies.

Summary consolidated income statement
For year ended 31 March 2016
Income statement classification

What is it?

2016
£m

2015
£m

Licence fee income

The total of licence fees collected

3,743

3,735

Other income and revenue

Commercial (mainly BBC Worldwide) income

Total income
Operating costs

The cost of producing all content and of running
the BBC

Restructuring costs

Sums provided to fund future efficiency
initiatives

What has happened this year?

0.2% increase reflects limited net growth in
the number of households acquiring a licence

1,084

1,070

4,827

4,805

(4,776)(4,903)

Decrease due to major sporting events in2014/15 such as the Commonwealth Gamesand FIFA World Cup

(21)

(11)

Costs to deliver DQF savings andreorganisation costs within BBC Worldwide(4,797)(4,914)

Share of results of associates
and joint ventures

Our share of the profit of the businesses where
we control 50% or less40

33

Increase in 2015/16 reflects a full year share of
the new BBC AMERICA associate following
partial sale during 2014/15

Gain on sale of operations

Profit on disposal of operations–

116

2014/15 reflects the gain on the partial sale of
BBC AMERICA

Gain on disposal of fixed assets

Profit on disposal of fixed assets

968Gain recorded on the sale of freehold land
from the West London Media Village site

Net financing costs

The net interest on the BBC’s pension assets
and liabilities, interest on loans and fair value
movements on derivatives

(107)

(143)

Lower accounting charge for the BBC pension
plan liabilities

Taxation charge

The net tax liability of the BBC on its taxable
profits–(30)

Tax charge arises on commercial activities. An
overprovision in previous years has been used
to reduce this year’s tax charge

59

(125)

Total operating costs

Group surplus/(deficit) for
the year

06

BBC Full Financial Statements 2015/16

bbc.co.uk

06-14
Financial overview

Licence fee statement
As in previous years, the BBC prepares alicence fee revenue statement audited by the
NAO. This account sets out the amounts wecollected in the year and paid over to HM
Government. Alongside their audit work, theNAO examines our collection arrangements
and reports on them to Parliament. More on
the licence fee revenue statement can befound on our website: bbc.co.uk/aboutthebbc

This contribution is increasingly important for
the funding of programmes commissioned by
the public service BBC.

In an increasingly complex world of multiple
content producers and platforms, BBC
Worldwide plays a vital role in supporting andshowcasing the best of British creativity, fromboth the BBC and the wider UK creative
industries. 2015/16 was another strong year
for BBC Worldwide. It delivered headline
sales of £1,029 million (2014/15: £1,002 million),
Commercial trading
a 3% increase from prior year and 7% in
The licence fee is supplemented by income
terms of underlying growth. It achieved thisfrom the commercial exploitation of licenceby growing its position as an active creative
fee funded content and infrastructure through partner and driving forward its growth
three commercial subsidiaries – BBCstrategy. The key drivers of the revenue
Worldwide, BBC Global News and BBC
increase were healthy sales to third parties
Studioworks (previously BBC Studios andsuch as Netflix, which operates Subscription
Post Production).
Video On Demand (SVOD) services, andUKTV. Headline profit of £134 million was
BBC Worldwide£5 million lower than prior year (2014/15:
BBC Worldwide exists to support the£139 million) due to the full year impact of
BBC public service mission and to maximise
income to the Group on its behalf. It returned£222 million to the BBC in 2015/16, well above£200 million for a second year running(2014/15: £227 million). Last year’s record
returns were boosted by the BBC AMERICAUK PSB Grouppart sale proceeds, as were this year’s returns
BBC
Worldwide
to a lesser extent. After adjusting for disposal
Global News
proceeds from both years, this year’s return
BBC Studioworks (Previously S&PP)
showed a 18% year-on-year improvement.

the part-disposal of BBC AMERICA in
October 2014, significant investment in new
channel brands and the rising cost of content.
Removing the BBC AMERICA effect, headline
profit growth was 4%.
BBC Worldwide has delivered progresson each of the three pillars of its strategy:
premium content; global brands; andgradual transformation to digital products
and services.

Premium content
World-class content remains at the heart ofwhat the company does. In 2015/16, it invested£162 million in content (2014/15: £181 million),
which was a reduction from the previous year
due to the part-disposal of BBC AMERICA
during 2014. Investment in BBC commissioned
content remained fairly stable at £93 million(2014/15: £94 million), supporting on-screen
programmes across the BBC’s channels.
BBC Worldwide also continued to build
relationships with the independent sector,
Headline sales
2015/16£m

Headline profit

2014/15£m

2015/16£m

2014/15
£m

181

192

n/a

n/a

1,029

1,002

134

139

101

93

0

(5)

22

29

2

(1)

Global brand Dancing with the Stars retained its position as a Top 10 most watched entertainment programme in the USA
bbc.co.uk

BBC Full Financial Statements 2015/16

07

Financial overview© Silverback films/Jason Roberts

New CBeebies 3D animation Go Jetters rated well in the UK
and internationally

returning £116 million during the year
(2014/15: £113 million) by working with over
250 UK independent producers. 2015/16 alsosaw BBC Worldwide take equity stakes in
Amazing Productions, Mighty Productions,
Red Planet Pictures (Entertainment) andGreenbird Media. These deeper indie
relationships, along with a close strategic
partnership with BBC Studios, are expected
to support the development of UK-owned
intellectual property and secure BBC
Worldwide’s future pipeline ofworld‑class content.

Global brands
Key global brands continued to perform wellduring 2015/16. BBC Worldwide continued
to build its channel genre brands this year,
resulting in 12 of BBC Worldwide’s
33 international channel feeds carrying its
new channel brands by 31 March 2016. New
channel brands were launched during the year
in Poland, the Nordics, South Africa and Latin
America and most of the other thematic BBC
channels are expected to re-brand during
2016/17. BBC Earth and BBC First are now
available in at least 40 countries with BBC Britavailable in 61 countries.
Dancing with the Stars retained its position
as a Top 10 most watched entertainment
programme in the USA and Sherlock: The
Abominable Bride was sold to 216 territories
and also screened in cinemas in over 20
countries. In natural history, BBC Earth Films
and Shanghai Media Group signed the firstdeal under the landmark Sino-UK Film
Co-Production Treaty to co-produce a new
documentary feature film for cinematic
release in 2017.
08

BBC Full Financial Statements 2015/16

Almost three-quarters of Silverback Films’ The Hunt wascommercially funded via BBC Worldwide, including co-production
deals with BBC AMERICA, CCTV-9 and NDRDigital products and services
Progress on BBC Worldwide’s ‘direct toconsumer’ offering included the launch of BBC
Store in November 2015. With over 7,000
hours of contemporary and classic content at
the time of launch, BBC Store allows viewers
in the UK to buy and keep programmes theywant to enjoy beyond the 30-day licencefee-funded BBC iPlayer window. Work
continued on plans for Over The Top (OTT)
services in selected markets outside the UK,with BBC Player announced just after
year-end and expected to launch in Singapore
later this year. The new authenticatedmulti-genre SVOD service will be available toStarhub customers in Singapore and offer
audiences a wealth of BBC titles.
Highlights from BBC Worldwide’s fourbusiness regions in the year included: growthin content sales; the best year to date for
BBC AMERICA viewership and a significant
Doctor Who SVOD deal signed with Amazon
in North America; a strong first full year for
BBC First and an exceptional year for CBeebies
in Australia and New Zealand; and strong
format licensing sales and the launch or relaunchof 11 new channel feeds in global markets.
In a challenging operating environment, BBC
Worldwide continues to transform the way itworks in order to build a world-class company
that attracts and retains the best talent, while
being run in an efficient way. To that end,
an active programme of efficiencies wasdeveloped during 2015/16 to reduce
operating costs and reduce the workforce
by 11%. Nonetheless, a focus on company
culture, training and engagement meant

BBC Worldwide’s staff engagement score
was 70% this year, well above the global
market norm of 55%.
This commitment to running a world-classmedia company, investing in content, anddelivering on its strategy puts BBC Worldwide
in a good place to meet its target of returning£1.2 billion to the BBC over the first five yearsof the new Charter, as well as continuing tosupport the UK’s creative industries during
this time.

BBC Global NewsBBC Global News operates the BBC’s twocommercially-funded international news
services: BBC World News, the 24-hourglobal news TV channel, and the digitalplatform BBC.com (including the BBC.com
website, a News app and a Sport app). BBC
Global News’ mission is to be the best andmost trusted international news provider
in the world, while growing the BBC’sinternational news audiences and operating
as a commercially efficient business.

No.1
The BBC continues to be the world’s
most shared news source on Twitter
bbc.co.uk

06-14
Financial overview

No.1
BBC Global News’ mission is
to be the best and most trusted
international news provider
In 2015/16, BBC World News’ global footprint
expanded significantly, up 11% from previous
year. The channel’s distribution increased
to a record 441 million households (up from
398 million in 2014/15).
Trends in the World News channel viewing
figures varied by region. In Europe, viewingof news channels increased in 2015, bucking
the trend of recent years, with World News
gaining audience reach for the first time since2008 and continuing to close the gap on CNN.
In Asia, viewing of news channels continued to
grow but at a slower pace than the previous
year, with World News narrowing the gap
on CNN. In the US, World News maintained
consistent viewing figures in 2015/16,
outranking Bloomberg TV by the endof the year.
Audience growth for BBC.com was on target
in 2015/16, helped by strong performance inthe US. BBC.com attracted, on average, over89 million monthly unique browsers, up 4%
from 2014/15. Total page views across all
platforms (website, apps and IPTV) averaged
1.1 billion per month, down 7% from theprevious year due to the ongoing shift inbrowsing habits from desktop to mobile.

Digital innovation throughout the year
delivered several enhancements to theBBC.com proposition. The BBC.com website
saw numerous improvements to the video
viewing experience and a major re-designof the News app more than doubled thenumber of videos viewed on it. In October
2015, a new Japanese-language edition of
BBC.com was launched to serve strong
demand in this major market.
Beyond BBC.com, off-platform consumptionof BBC content is playing an increasingly
important role in the Global News content
distribution strategy. In 2015/16, Global News
continued its successful partnerships with
MSN, Yahoo!, AOL, Google, LinkedIn,
Flipboard, Facebook and Apple, andentered into new agreements with Spotify
and Smartnews.
On social media, BBC News has nearly
30 million Facebook fans globally and the
BBC continues to be the world’s most sharednews source on Twitter.

398

2014/15
bbc.co.uk

441

2015/16+11%

BBC Studioworks is a wholly-owned
commercial subsidiary of the BBC serving
both the BBC and external clients. Until May
2016, the company traded as BBC Studios andPost Production. Following the year end, thecompany undertook a full rebranding exercise,
which included changing its name to BBC
Studioworks Limited.
The company has historically been divided
into two operating divisions; Studios and Post
Production Services (S&PP) and Digital Media
Services (DMS). At year end, the Digital Media
Services division was closed as part of a
refocusing exercise, allowing the company toconcentrate on its core strengths in deliveringstudios, post production and related services.
These remaining core areas have returned anunderlying operating profit over each of thelast two years.

In 2015/16, Global News maintained its
position as the most trusted international
news provider. It was recognised for the
excellence of its journalism with a number ofawards, including a Peabody for coverage of
the European Migrant Crisis, and an award
from ENBA India for the best news coverageby an international news channel in India, forthe second year running. The redesigned BBC
News app also won the People’s Voice Webby
Award for the best mobile site or app in theNews category.

In the year ended 31 March 2016, thecompany returned an underlying operating
profit of £1.3 million, representing profit
growth of 33% since 2014/15 on the same
basis. Underlying operating profits exclude
DMS and are stated before the deduction of
non-trading items such as contributions to the
BBC pension deficit.

Global News achieved break-even in 2015/16,
one year ahead of its five-year plan target,
returning an operating profit of £0.2 million(2014/15: loss of £4.6 million). Year-on-yearsales growth was coupled with a significant
cost reduction exercise.

—— many elements of the BBC’s General
Election broadcasting in May 2015.
Elections broadcasting represents one of
the most technically demanding studio
productions to host due to the mix ofvirtual and augmented reality technologies
employed as well as managing a complex
connectivity arrangement

Video continued on its trajectory of rapid
growth, averaging 53 million video views permonth (up 44% from 2014/15).

World News distribution – full and part-timehouseholds (million)

BBC Studioworks(Previously BBC Studios
and Post Production)

During the year, S&PP delivered an impressive
range of creative projects for numerous
broadcasters, media companies and content
owners – including:—— a range of studios and post production
technical services to the BBC’s multiaward-winning continuing drama,
EastEnders

Video views – all platform(monthly average, million)

53
37

2014/15+44%

2015/16
BBC Full Financial Statements 2015/16

09

Financial overview—— post production services for a numberof broadcasters including ITV’s gameshow, Keep it in the Family, and theBBC’s consistent ratings winner,
Strictly Come Dancing—— other successful studio productions
including Sky’s A League of their Own,
Channel 5’s Lip Sync Battle UK, BBC’s
The Voice UK live shows, BBC’s Strictly
Come Dancing as well as comedy panel
quiz shows such as E4’s Virtually Famousand ITV’s Celebrity Juice

During 2015/16, the company has been
overseeing the refurbishment of its studios
on the Television Centre site in West London.
The structural work has been completed
and the technical fit-out is now under way
in anticipation of three Television Centre
studios reopening in 2017.

Results for the year
UK Public Service Broadcasting (UK PSB) Group expenditure2016 Service

Content£m

Distribution£mContent anddistribution
support£m

BBC One1,052.5

35.8

154.1

88.0

1,330.4

BBC Two

399.0

20.2

60.2

34.1

513.5

BBC Three

52.9

7.7

13.5

4.4

78.5

BBC Four

44.2

4.1

7.7

3.8

59.8

CBBC

70.6

7.7

12.4

6.1

96.8
42.3

Generalsupport
£m

Total
£m

CBeebies

29.1

4.1

6.6

2.5

BBC ALBA

5.5

0.9

0.9

0.5

7.8

BBC News channel*

46.6

7.0

6.5

2.2

62.3

BBC Parliament
Television

1.9

6.3

1.4

0.2

9.8

1,702.3

93.8

263.3

141.8

2,201.2

BBC Radio 1

36.2

6.0

5.2

1.3

48.7

BBC Radio 2

44.6

6.0

4.8

2.1

57.5

BBC Radio 3

37.7

6.0

6.3

3.1

53.1

BBC Radio 4

88.6

6.4

13.2

6.6

114.8

BBC Radio 5 Live

45.5

4.4

7.0

3.6

60.5
5.6

BBC Radio 5 Live Sports Extra

2.5

1.6

1.3

0.2

BBC 1Xtra

4.6

1.7

3.0

0.3

9.6

BBC 6Music

7.9

1.7

2.4

0.6

12.6

BBC 4 Extra

3.1

1.7

1.4

0.2

6.4

BBC Asian Network

6.6

2.1

1.8

0.5

11.0

BBC Local Radio

119.8

14.8

15.0

9.3

158.9

BBC Radio Scotland

22.9

2.9

4.3

1.9

32.0

BBC Radio nan Gàidheal

3.9

1.3

0.7

0.3

6.2

BBC Radio Wales

15.1

1.6

3.0

1.2

20.9

BBC Radio Cymru

14.2

1.5

2.9

1.2

19.8

BBC Radio Ulster/BBC Radio Foyle

17.7

1.8

3.5

1.5

24.5

Radio

470.9

61.5

75.8

33.9

642.1

BBC Online and Red Button**
Spend regulated by service licence

153.3

37.9

33.6

13.2

238.0

2,326.5

193.2

372.7

188.9

3,081.3

Orchestras and performing groups

23.2

–

3.0

2.1

28.3

S4C (service spend)

28.0

–

4.3

2.4

34.7

Development spend******

72.0

–

9.2

6.4

87.6

BBC World Service operating licence***

224.3

–

21.9

15.0

261.2

Other service spend

347.5

–

38.4

25.9

411.8

Total service spend

2,674.0

193.2

411.1

214.8

3,493.1

10

BBC Full Financial Statements 2015/16

bbc.co.uk

06-14
Financial overview

Content£m

2016 Service

Distribution£mContent anddistribution
support£m

Generalsupport
£m

Total
£m

Licence fee collection costs

114.6

S4C (direct funding)

75.3

Monitoring

5.8

PSB Group pension deficit reduction payment

95.8

Costs incurred to generate intra-group income

64.5

Costs incurred to generate third-party income

71.3

Restructuring costs

15.1

Total PSB Group content expenditure

3,935.5

Local TV****

3.5

Broadband rollout****150.0

Total PSB Group expenditure

4,089.0

Lease reclassification*****(78.3)PSB Group expenditure

4,010.7*

Included within BBC News channel are production costs of £24.7 million, Newsgathering costs of £21.3 million and other costs of £0.6 million (2015: production costs of £23.5 million, Newsgathering costsof £22.1 million and other costs of £0.6 million).
BBC Online and Red Button spend is monitored by annexe (relating to editorial areas of the service). Non-annexe spend covers costs relating to central editorial activities such as the BBC Homepage,technologies which operate across the service and overheads. The spend for each annexe was: News, Travel & Weather £50.9 million (2015: £43.5 million), Sport, £16.7 million (2015: £17.2 million),Children’s £9.4 million (2015: £9.0 million), BBC Three £10.4 million (2015: nil), Knowledge & Learning £18.6 million (2015: £15.5 million), TV & iPlayer £16.3 million (2015: £13.7 million) and Radio & Music£13.5 million (2015: £14.1 million), giving a total annexe spend of £135.8 million (2015: £113.0 million). Non-annexe spend was £17.5 million (2015: £11.6 million).
***
The BBC World Service operating licence includes distribution spend of £36.6 million. Total Grant-in-aid funding equivalent spend on BBC World Service was £240.2 million.
**** Under the terms of the latest licence fee agreement, the BBC has committed to contribute funding toward broadband rollout across the UK and funding for the development of Local TV channels.
***** In order to reflect the full cost of the PSB Group expenditure by service, finance lease interest is included, although it is not included in the Group operating expenditure.
******Development costs fund the near-term development of new platforms and services particularly for BBC Online and Red Button. This is primarily focused on new features for existing services, their related
support and overhead costs. It is distinct from research costs which is focused on longer-term research of new technology and standards that benefit the whole industry.
**

PSB support costs include the following

2016
£m

Content anddistribution
support£m

Generalsupport^
£m

2015
£m

43.3

111.6

69.5

92.1

161.6

14.0

31.5

45.5

16.5

26.6

43.1

–

9.5

9.5

–

6.6

6.6

10.7

49.1

59.8

19.7

65.4

85.1

Content anddistribution
support£m

Generalsupport£m

Property

68.3

HR and training
Policy and strategy
Finance and operations
Marketing, audiences and communication

86.8

–

86.8

79.6

–

79.6

Total central costs

179.8

133.4

313.2

185.3

190.7

376.0

Technology

106.6

59.8

166.4

115.6

55.2

170.8

Libraries, learning support and community events

28.5

–

28.5

33.0

–

33.0

Production and digital support

25.0

–

25.0

28.3

–

28.3

Research department

17.9

–

17.9

17.0

–

17.0

Contribution to JVs and spend in other PSB entities

28.3

–

28.3

26.1

–

26.1
10.2

–

9.9

9.9

–

10.2

Other

BBC Trust Unit (excluding restructuring)

25.0

11.7

36.7

11.2

8.4

19.6

Total support costs

411.1

214.8

625.9

416.5

264.5

681.0

^ The BBC has reviewed its analysis of PSB Group expenditure support costs during the year and consequently restated this view to make the prior year classification consistent with the current year.

bbc.co.uk

BBC Full Financial Statements 2015/16

11

Financial overview

BBC World Service

Delivering efficiencies

In 2014/15, BBC World Service became
licence fee funded again and, as a result, an
operating licence was established for theservice. The operating licence sets out theremit and scope of BBC World Service, its
annual budget and its main commitments.
The Trust regularly reviews the performanceof the service against its licence, in the same
way as it does for the other BBC services.

2015/16 was the penultimate year of theBBC’s DQF programme that delivered
another £157 million of annual savings,
bringing the total of savings to £641 million(of which £621 million are sustainable savings).
The BBC’s annual savings achievement isreviewed by our auditors, Ernst & Young LLP.
The BBC remains on track to achieve the fullsavings target of £700 million per annum by
31 March 2017.

The current operating licence sets out a target
for total cash spend of at least £245 million
per annum. This year, the total BBC World
Service spend of £240 million was £5 million
lower than the target owing to a reduction
in discretionary and business development
spend and a drive for efficiencies in areas suchas network News. This is a 1% reduction in
spend from prior year. Total expenditure
including depreciation, support costs andother charges was £260 million.
During this year, it was announced that the
BBC World Service will receive new grantfunding from the Government from 2016/17
to 2019/20 to meet the cost of additional
services. Details are still being finalised but the
expectation is to receive a grant of £34 million
in 2016/17 and £85 million a year from2017/18. This new funding is the single biggest
increase in the World Service budget evercommitted by any Government. The funding
will be spent on digital, television and radio
services around the world to build the global
reach of the World Service and increase
access to news and information.

During 2014, the Compete or Compare
framework was introduced by the DirectorGeneral, announcing that the BBC would
formalise market testing and benchmarking
activity through applying a rigorouscomparison across all areas of expenditure.
The aim is to extend competition whereverit can bring greater choice, value for moneyor innovation. The BBC has now establisheda strong culture of market testing andbenchmarking activities and an independent
study undertaken by PwC during the year
concluded that 87% of BBC controllable spend
satisfied the Compete or Compare criteria.
The BBC expects to cover nearly 90% of its
cost base by the end of this Charter period,
either through direct competition or rigorouscomparison and benchmarking.

The PwC study concluded that the BBC wasamongst the most efficient organisations in the
public sector and regulated industries in termsof managing overheads. In 2015/16, 94% of theBBC’s controllable spend was focused oncontent and delivery, with just 6% spent on
running the organisation. This is well below
both the public sector average of 11%, and theregulated industry average of 9%.
During the year, the Director-Generalannounced proposals for modernisation at theBBC, introducing the idea of creating an open
BBC for the internet age. This investment is
expected to cost £150 million a year by
2021/22. Delivering this, at the same time asfinancing a £550 million funding gap, will bea significant challenge.
The BBC is committed to protecting
programmes and services and making the BBC
simpler, leaner and more effective. The totalrequired savings of £800 million per annum
will be partially funded by reprioritisation,changes to services, as well as commercial
income and policy changes. New saving
measures will also be introduced such as
streamlining back office functions, cutting
management and management layers andreducing historic levels of BBC bureaucracy.
1,000 posts are targeted to close by 2017.

BBC Arabic filmmaker Safa Al Ahmad on the front line with anti-Houthi militias in Taiz – Under Seige
12

BBC Full Financial Statements 2015/16

bbc.co.uk

06-14
Financial overview

Focusing spend
The BBC concentrates its expenditure on the
production of programmes and other content
and its delivery to audiences and users, andthe essential infrastructure to support this.
Year-on-year spend can vary significantly
because of the cycle of major sports events.
Total content spend reduced by 2% to £2,674
million (2014/15: £2,728 million) this year,

which was largely due to additional investment reinvented as an online-only service.
in our coverage of the Commonwealth
BBC Three Online offers news and sport inGames and FIFA World Cup in 2014/15.
collaboration with other parts of the BBC. It
No service licences spent above or below the also collaborates with other BBC services toprovide an editorial perspective on major
regulated baseline threshold during 2015/16.
sporting events and festivals, and with Radio 1
Following a detailed and rigorous public value to develop new talent, cross-commission andassessment, BBC Three closed as a linear
produce short-form content.
television channel in February 2016 and was

Summary consolidated balance sheet
For year ended 31 March 2016
2016
£m

2015
£m

Mainly the BBC’s property, plant, equipment
and investments

1,807

1,750

Increase in the interest in associates in respectof BBC AMERICA along with increased
long-term receivables in BBCW

Current assets

Programme and other stocks and amounts
to be received in the next 12 months

2,025

2,096

Reduction in cash due to planned pension
deficit payment is partially offset by increased
other receivables

Current liabilities

Amounts to be paid in the next 12 months(1,158)(1,186)

Decrease in accruals and deferred income at
the year end

Non-current liabilities(excluding pension liabilities)

Amounts to be paid after the next 12 months(1,112)(1,126)

Broadly consistent with prior year

1,562

1,534

(1,011)

(948)

551

586

551

586

Balance sheet classification

What is it?

Non-current assets

Net assets(excluding pension liabilities)
Net pension liabilities

The net deficit of the BBC’s pension scheme

Net assets

What has happened this year?

Increase reflecting changes in financial
assumptions

Represented by:
BBC reserves

The net resources available to the BBC
for future use

Balance sheet
The high-level property strategy through to2020 (the 2020 Vision) agreed by the BBC
Executive Board in 1998 included a financial
target that the cost of its property estate
would be no greater in real terms by 2010
than it was in 1998. The 2020 Vision was
designed to allow the BBC to continue tomodernise older buildings to meet its digital
innovation aims as well as improving its spaces
and facilities, fostering the BBC’s creative
ambitions at the same time as reducing costs,
striking the right balance between efficiency
and creativity.
Exiting the Media Centre and Garden Housebuildings within the West London Media
Village was a significant part of the property
rationalisation required to deliver thisstrategy as well as delivering a significant
element of the DQF savings. As a result£74 million was re-categorised within
non-current assets, from Land and Buildings
to Investment Properties.

bbc.co.uk

The BBC’s cash balance at the end of the yearis £335 million which is a £71 million reduction
from prior year (2014/15: £406 million)
including a £100 million planned pension
deficit payment. The reduction in cash has
been partly offset within current assets bya £67 million receivable in respect of theWest London Media Village sale.

scheme deficit which is reviewed at triennial
actuarial valuations.

The most recent actuarial valuation wascompleted in 2013 and showed a funding
shortfall of £2,054 million. The next formal
actuarial valuation of the Scheme is underway
and will present a valuation as at 1 April 2016.
The valuation will be agreed with the pension
scheme Trustees later this year in advance ofPension costs
the statutory deadline of 30 June 2017. We
At 31 March 2016, the accounting pension
deficit (as defined by IAS 19) had increased by intend on finalising the valuation by 1 April
7% to £1,011 million compared to £948 million 2017, in line with the next scheduled pension
deficit payment. The current repayment plan,a year ago. The increase during the current
year was due to a net loss from changes in the agreed between the BBC and the pension
valuation assumptions of £93 million, an annual scheme Trustees in 2013, continues to befollowed. It is considered to represent a
operating charge of £160 million and net
sensible and affordable plan to address thefinance costs of £30 million, offset by
deficit, without compromising programmes
contributions paid of £220 million.
or pension scheme members. The BBC will
This accounting valuation is only a ‘snapshot’continue to work with the pension scheme’sat a particular date in time, and is therefore
Trustees to ensure the Scheme delivers thesensitive to short-term market fluctuations.
best value to both members and licence
It also has no immediate impact on the cash
fee payers.
cost of paying down the current pension

BBC Full Financial Statements 2015/16

13

Financial overview

Summary consolidated cash flow statement
For year ended 31 March 2016
2016
£m

2015
£m

Surplus of the BBC’s income over its
operating costs

182

147

Increase reflecting the Income and Expendituresurplus this year

Net cash used in investing
activities

Cash invested in property, plant and equipment

(174)

(205)

Reduced spend on programme rights this year

Net cash used in financing
activities

Proceeds and repayments from borrowings andnet interest paid on the BBC’s borrowings

(80)

(66)

Repayment of loans

(72)

(124)

406

526

Cash flow classification

What is it?

Net cash inflow from operating
activities

Net decrease in cash andcash equivalents
Cash and cash equivalents atthe beginning of the year

The BBC’s cash balance at the beginning of theyear

Effect of foreign exchange ratechanges on cash and cash
equivalents

The impact of foreign exchange rates
on the BBC’s cash

1

4

Cash and cash equivalents at
the end of the year

The BBC’s cash at the end of the year

335

406

Cash

Tax

The BBC’s cash balance at the end of theyear of £335 million will be used to fund new
obligations, strategic initiatives and the pension
deficit repayment plan. The cash position is
forecast to fall into an overdraft position in
2017/18, whilst remaining within our DCMS
borrowing limits. The BBC will need tosuccessfully deliver efficiency saving schemesin order for the cash flow to return to along‑term positive position and fund future
investment plans.

The BBC is a committed and prudent tax
payer in all the countries in which it operates.
Its commercial operations undertake
appropriate and legitimate tax planningmeasures in accordance with the spirit andintention of all laws and regulations.

What has happened this year?

Positive movements in exchange rates
impacting the sterling value of our cash

BBC One’s 20 part drama Dickensian set within the fictional realms of Charles Dickens’ critically acclaimed novels
14

BBC Full Financial Statements 2015/16

bbc.co.uk

15Statementof Executive Board responsibilities

Statement of Executive Board responsibilities
in respect of the Annual Report and accounts
The Executive Board is responsible forkeeping proper accounting records thatare sufficient to show and explain the BBC’stransactions and disclose with reasonable
The Trustees’ responsibilities are detailed inPart One of the Annual Report and Accounts. accuracy at any time the financial position of
the Group and enable them to ensure that the
The Executive Board has accepted its
financial statements and the Executive Board
responsibility for the preparation of a strategic Remuneration Report comply with thereport, statements of compliance with
Charter. It also has a general responsibility for
applicable codes and regulations (including the taking such steps as are reasonably open to it
Executive Board Remuneration Report) andto safeguard the assets of the BBC and to
the statement of accounts which are intended prevent and detect fraud and otherby them to give a true and fair view of theirregularities.
state of affairs of the BBC and its subsidiaries
The Executive Board is responsible for the(the ‘Group’) and of the income andmaintenance and integrity of the BBC’s
expenditure for that period. The Executive
website. Legislation in the UK governing theBoard has prepared the accounts in
preparation and dissemination of financial
accordance with International Financial
Reporting Standards (IFRSs) as adopted by the statements may differ from legislation inother jurisdictions.
EU. The Executive Board must not approve
The Executive Board members who held
the statement of accounts (or ‘financial
statements’) unless it is satisfied that they give office at the date of approval of the Annuala true and fair view of the assets, liabilities and Report and Accounts, whose names andfunctions are listed in the Governancefinancial position of the Group and of thesection of Part Two of the Annual Reportsurplus or deficit for that period.
and Accounts, confirm that, to the best
In preparing the financial statements theof each of their knowledge and belief:
Executive Board has:
The Charter requires the BBC to prepare
an audited annual report and statementof accounts.

—— selected suitable accounting policies andapplied them consistently—— made judgements and estimates that arereasonable and prudent—— stated whether they have been preparedin accordance with IFRS as adopted by
the EU—— prepared the financial statements on thegoing concern basis as they believe thatthe BBC will continue in business—— the financial statements, prepared inaccordance with IFRS as adopted by theEU, give a true and fair view of the assets,
liabilities, financial position and deficit of
the Group; and—— the Annual Report and Financial
Statements includes a fair review of thedevelopment and performance of thebusiness and the position of the Group,
together with a description of theprincipal risks and uncertainties that it
faces; and—— the Annual Report, taken as a whole, isfair, balanced and understandable andprovides the information necessary forshareholders to assess the Group’s
performance, business model and strategy.

bbc.co.uk

Statement of disclosureof 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 areunaware; and each Executive Board member
has taken all the steps that they ought to havetaken as an Executive Board member to makethemselves aware of any relevant audit
information and to establish that the BBC’s
auditors are aware of that 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 the sensitivities andmitigating 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 thegoing concern basis has been adopted in the
preparation of the financial statements.
This statement was approved by the
Executive Board.

Tony Hall
Director-General
16 June 2016

BBC Full Financial Statements 2015/16

15Independent Auditor’s reportto the Trustees of the BBC only
Opinion on financial statements
In our opinion:—— BBC’s financial statements give a true andfair view of the state of the Group’s affairs
as at 31 March 2016 and of the Group’s
surplus for the year then ended; and—— the Group financial statements have been
properly prepared in accordance with
International Financial Reporting Standards
as adopted by the European Union.
What we have audited
BBC’s financial statements comprise:

Consolidated balance sheet as at 31 March 2016
Consolidated income statement for the year
then ended
Consolidated statement of comprehensive(loss)/income for the year then ended
Consolidated statement of changes in equity forthe year then ended
Consolidated cash flow statement for the year
then ended
Related notes A to H to the financial statements

The financial reporting framework that has
been applied in their preparation is applicablelaw and International Financial ReportingStandards (IFRSs) as adopted by theEuropean Union.

Respective responsibilities of
Executive Board and auditor
As explained more fully in the Trustees’ andExecutive Board responsibilities statements
set out on page 15, the Executive Board is
responsible for the preparation of the Groupfinancial statements and for being satisfied
that they give a true and fair view. Our
responsibility is to audit and express an
opinion on the Group financial statementsin accordance with the Royal Charter and
Schedule 8 to the Large and Medium sizedCompanies and Groups (Accounts andReports) regulations 2008 and International
Standards on Auditing (UK and Ireland).
Those standards require us to comply
with the Auditing Practices Board’s EthicalStandards for Auditors.

This report is made solely to the Trustees onterms that have been agreed. Our audit work
has been undertaken so that we might state to
the Trustees those matters we are required
to state to them in an auditor’s report and, inrespect of the separate opinions in relation to
the Remuneration Report and reporting on
Corporate Governance, those matters that
we have agreed to state to them in ourreport, and for no other purpose. To thefullest extent permitted by law, we do not
accept or assume responsibility to anyone
other than the BBC and the Trustees as abody, for our audit work, for this report,
or for the opinions we have formed.

Overview
Risks of material misstatement—— completeness and occurrence of licence fee revenue around year end—— completeness and occurrence of commercial and other income streams around year end—— classification of costs for service licences and content spend—— valuation of provisions and accruals—— inappropriate capitalisation or unidentified impairment of capital projects—— valuation of the property portfolio—— judgemental assumptions impacting the pension deficit

Audit scope—— we performed an audit of the complete financial information of five components—— the five full-scope reporting components where we performed audit procedures
accounted for 96% of the Group’s total assets, 100% of the Group’s income,
100% of the Group’s operating costs and 81% of the Group’s surplus before taxation

Materiality

Our assessment of riskof material misstatement
We identified the risks of material
misstatement described overleaf as they
had the greatest effect on our overall audit
strategy, the allocation of resources in theaudit and direction of the efforts of the audit
team. These risks remain consistent with theprior year; however, articulation of these risks
has been clarified in the current year to define
more precisely those which we consider thegreatest risks of material misstatement.

16

BBC Full Financial Statements 2015/16

—— overall Group materiality of £10 million, which represents 0.2% of operating costs
In addressing these risks, we have performed
the procedures below which were designed in
the context of the financial statements as awhole and, consequently, we do not express
any opinion on these individual areas.

bbc.co.uk

16-26
Independent Auditor’s reportCompletenessand occurrenceof licence feerevenue aroundyear end – total
revenue recognised£3,742.8 million(2015: £3,735.4 million)
Refer to notes A1 and A2(financial disclosures) andnote H (accounting
policy). Communicatedin Audit Committee
report section 3 andAppendix A.

Risks

Our response to these risks

There is a rebuttable presumptionthat revenue recognition is
identified as a fraud risk by theInternational Standards of Auditing.

We have met with key members ofmanagement and the outsourced service
provider who collect the licence fee on
behalf of the BBC, to understand andevaluate any changes in the licence fee
process. We have walked through thelicence fee process and identified key
controls in place.

The value of licence fee revenue issignificant. The forecast revenue
from the licence fee forms thebasis of the BBC budget andallocated spend. There could be
an incentive to disclose a revenue
figure to meet the public’s ormanagement’s expectation. This
could exist at the BBC or at third
parties involved in this revenue
recognition process.
The revenue recognition process
for licence revenue is not complex
as the recognition occurs on
issuance of the licence and theamount is a fixed price. We
consider the transactions over theyear end period to have a higher
risk owing to timing differences andfocus our testing over this area.
This risk has remained consistent
with the prior year.

What we concluded to
the Audit Committee
Based upon the audit
procedures performed,
we consider the licencefee revenue to beappropriately stated.

We have inspected any changes tocontractual agreements between the
BBC and third parties in relation to thelicence fee.
We have researched external sources
regarding changes in the licence fee anddiscussed these with management. We
assessed any impact on the financial
statements.
We have completed analytical review
procedures by calculating our expectedlicence fee revenue figure for the year andcomparing this to the licence fee revenue
recognised, utilising external evidence basedon the number of households and expectedevasion rates.
We have inspected the year end
reconciliation of cash to licence fee revenue.
This includes the licence fee receivable andpayable accounts. We have confirmed thevaluation, existence and completeness ofthese accounts by testing a sample oftransactions back to cash receipts andlicences issued.
We have inspected cut-off documentation
and underlying evidence. We inspected
evidence showing cash payments andlicences issued after year end.
We have examined and obtained support
for material journal entries focusing on
March and April postings.
We performed full scope audit procedures
over this risk area in one location, which
covered 100% of the risk amount.

bbc.co.uk

BBC Full Financial Statements 2015/16

17

Independent Auditor’s report to the Trustees of the BBC only

Completenessand occurrenceof commercial
and other income
streams aroundyear end – total
revenue recognised£1,084.2 million(2015: £1,069.7 million)
Refer to notes A1 and A2(financial disclosures) andnote H (accounting
policy). Communicatedin Audit Committee
report section 3 andAppendix A.

Risks

Our response to these risks

The accounting for revenue will
differ depending on the type ofsale and terms of the underlying
agreement. A significant
proportion of the external
revenue is generated by BBC
Worldwide through channels,
distribution and consumer
products. Our area of emphasis
is on the timing of revenue
recognition for these revenue
streams as there are a number ofdifferent types of revenue and asignificant proportion of revenue
is recognised in the final quarterof the year, increasing the riskof misstatement due to revenue
being recognised in thewrong period.

We have understood controls relating to therevenue process by revenue type and tested
controls over a number of revenue streams.
Where we are not able to place relianceover the controls in place we performed atest of transactions to source documentationand cash receipts to validate revenue
transactions recorded throughout
the period.
We have inspected any unusual sales
agreements, including non-standard terms,
discounts or rebates and the sales-relatedbalance sheet reserves for such items.

What we concluded to
the Audit Committee
We identified a
misstatement relating to
the royalty income which
management adjusted.
Based on our procedures
we are satisfied that thecompleteness andoccurrence of commercial
and other income streams
are appropriate.

We performed cut-off tests around year
end for material items to assess whether
revenue had been recorded in the correct
accounting period.
We have inspected a sample of post year
end credit notes and assessed theimpact on pre year end revenue and/or
sales-related reserves.
As part of our journal entry testing, we
obtained evidence for a sample of manual
postings to revenue made around thecut-off period to ensure that all entries
were appropriate.
We performed disaggregated analyticalreview procedures across all revenue
streams compared to expectations to
identify unusual and unexpected variances.
To the extent that substantive analyticalprocedures and key item testing was not
sufficient, we performed representative
sampling on revenue items throughout theyear. This was assessed for each revenue
stream, and performed by testing theaccuracy of revenue transactions recorded
throughout the period by reviewing
underlying contracts, invoices andcash collection.
Throughout the testing above, we
considered whether revenue had beenrecognised in accordance with the terms andconditions of the contract and in compliancewith the BBC’s revenue recognition policy,
particularly cut-off at year end.
We performed full scope audit procedures
over this risk area in 5 locations, which
covered 100% of the risk amount.

18

BBC Full Financial Statements 2015/16

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16-26
Independent Auditor’s report

Classification of
costs for service
licences andcontent spend– total expenditure£3,493.1 million(2015: £3,619.3 million)
Refer to notes A1 and A2(financial disclosures) andnote H (accounting
policy). Communicatedin Audit Committee
report section 3 andAppendix A.

Risks

Our response to these risks

What we concluded to
the Audit Committee

In accordance with the Charter,
service licences are used by the
BBC Trust to regulate the BBC’s
licence fee funded services andensure that each service provides
public value. The Trust’s annual
assessment of performance against
service licences compares actual
costs for content against an agreed
and authorised baseline budget.
Actual costs may vary by up to 10%
against budget, but if this tolerance
threshold is breached, the matteris referred to the Trust.

We obtained the year end service licencestatement workings and assessed if theallocation between ‘content and distribution
support’ and ‘general support’ are consistent
between service licences and with theprior year.

We identified
misstatements relating
to the service licence
disclosure. Upon bringing
to management’s attention
these were adjusted.

We tested significant spend allocations
between service licences, obtaining support
as to the appropriateness of the basis ofallocation used.

Based on our procedures
performed, we consider
the classification of costs
for service licences andcontent spend to bereasonably stated.

Disclosure of service licences istherefore subject to high levelsof scrutiny from members of the
public who are interested inunderstanding how the licence fee
is spent on individual channels andservices and is subject to risk ofmanagement override.
Areas of focus include anassessment of the appropriatenessand consistency of the allocation of
costs between service licences andthe apportionment of costs
between ‘content and distribution
support’ and ‘general support’ andrisk of management override.

bbc.co.uk

We obtained and recalculated thecentral contribution rate calculations andunderstood all estimates and assumptions
applied in the computation of eachpercentage.
We understood and considered any
judgemental allocations of costs across theservice licence reporting. We assessed the
independence and competence of any
individuals making the judgements,
considering the risk of management
override of controls.
We read the disclosures in the Annual
Report and Accounts, and agreed these
disclosures to the underlying audited
financial information and considered theiraccuracy.
We performed full scope audit procedures
over this risk area in one location, which
covered 100% of the risk amount.

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Independent Auditor’s report to the Trustees of the BBC only

Valuation ofprovisions andaccruals – Provisions£107.0 million (2015:£117.8 million) Accruals£126.3 million(2015: £153.1 million).
Refer to notes F7 & F8
(financial disclosures)and note H (accounting
policy). Communicatedin Audit Committee
report section 3 andAppendix A.

Risks

Our response to these risks

Certain provisions and accruals
require complex estimates
involving high levels of judgement
and uncertainty, with manualintervention increasing the risk
further. The judgements andestimates involved also meanthat the valuation of provisions
in particular give rise to a riskof management override.

We tested material provisions and accruals
for business purpose and appropriateness.

Some provisions, for example,
for legal costs relating to ongoinginvestigations into past talent, arematerial by nature (rather thanamount) and subject to high levelsof scrutiny by the public. The
disclosure of the amounts of theseprovisions are therefore mattersof public interest.

We tested journal entries made toprovisions and accruals to identify
unusual postings.

For a sample of provisions and accruals
we obtained supporting evidence andrecalculated amounts where appropriate.
We calculated the sensitivity of certain
provisions to changes in assumptions usedsuch as discount rates and inflation todetermine if this was material.

What we concluded to
the Audit Committee
We identified audit
adjustments in this area
which were not material
to the accounts.
We are satisfied thatprovisions have been
established in accordancewith accounting standards
and are appropriately
disclosed. We also
consider accruals to bereasonably stated.

We assessed management’s judgement
and estimates applied in the calculation ofprovisions in the financial statements bycomparing actual costs to provision amounts
made at the end of the prior year where
provisions have materialised to assess theaccuracy of management’s past judgements.
We reviewed the disclosure of provisions
in the financial statements to determine
whether accurate and complete.
We performed full scope audit procedures
over this risk area in five locations, which
covered 100% of the risk amount.

20

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16-26
Independent Auditor’s report

Valuation of theproperty portfolio– total value capitalised£692.0 million(2015: £796.3 million)
Refer to notes D1, D2, D3,
D4, D5, D6 and D7(financial disclosures)and note H (accounting
policies). Communicatedin Audit Committee
report section 3 andAppendix A.

Risks

Our response to these risks

The BBC occupies and owns anumber of properties across the
UK. Included within the portfolio
are properties, which are carriedat historic cost, investment
properties and properties undereither finance or operating leases.
A property might also be classified
as held for sale if it is available for
immediate sale and a sale is highly
probable. Certain propertytransactions, such as the sale andleaseback of Broadcasting House(‘the Daunus asset’), theconstruction works associatedwith the sale and leaseback of
Television Centre and accounting
for Media Village include complex
accounting treatment.

We enquired with management, including
Board members and fixed asset accountants,
with regards to changes in the BBC’s
property portfolio. We understood thefinancial impact of any changes andinvestigated whether there were any
expected changes in the future use of theproperties. We reviewed Executive Board
minutes. We checked that our
understanding was consistent with thefinancial statements.

The BBC’s property portfolio
forms a key part of the BBC’s costsavings initiatives; in relation toboth the location of properties,
and the method of financing. The
BBC has progressed with plans tobecome more prominent outsideof London in recent years. The
BBC’s strategy has led to a numberof changes in the property
portfolio, with further relocationand changes to leases expected in
the coming years.
There are a number of ongoingproperty transactions. Certain
property transactions involve
complex accounting and theapplication of judgements andtherefore are deemed to be asignificant risk.
Note that properties are recorded
at cost, or the lower of fair value
and the present value of minimum
lease payments where acquired
through a finance lease, and notmarket value. However, should theaccounting treatment not becorrectly determined, the resultant
values recorded on the balance
sheet could be incorrect. The
property transactions describedabove were areas of focus forour audit.

bbc.co.uk

We performed site visits to material BBC
properties. We understood from enquiries
with individuals at each site, the use of theproperty and any expected changes. We
assessed whether the property is used
as intended.
We read meeting minutes and press
releases. We remained aware and alert
for issues in relation to the BBC property
portfolio. We assessed the impact on thefinancial statements.

What we concluded to
the Audit Committee
Significant transactions
during the year included
the lease of Media Village
to Stanhope, and the saleof Gateway for £87 million.
We read signed contracts
and verified that the leaseclassification and accounting
was appropriate.
We identified audit
differences in relation to
the discounting of future
receipts and the bookvalue of a property, whichwere not material to theaccounts, and we consider
the property portfolio
amounts to bereasonably stated.

We read management’s technical accounting
papers relating to property transactions.
We understood any judgements or areasof subjectivity involved. We assessed andconcluded on the accounting treatment for
the valuation of properties.
We reviewed material new or amendedlease contracts. We checked and concluded
on whether the lease should be accounted
for as a finance lease or an operating lease.
We agreed key terms to lease calculations
and recalculated the lease amounts in thefinancial statements. We investigatedany differences.
We understood any variances in thelease contracts (i.e. factors which drivelease increases or decreases). We
checked that these have been accounted
for appropriately.
We understood management’s position
with regard to investment properties andheld for sale assets at year end. We tested
the completeness and accuracy of theseaccounts and considered if the disclosures
were appropriate.
We performed full scope audit procedures
over this risk area in five locations, which
covered 100% of the risk amount.

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21

Independent Auditor’s report to the Trustees of the BBC only

Inappropriate
capitalisationor potential
impairment of
capital projects– total amount of assets
under construction£98.2 million (2015:£102.8 million)
Refer to note D1(financial disclosures)and note H (accounting
policy). Communicatedin Audit Committee
report section 3 andAppendix A.

Risks

Our response to these risks

The BBC undertakes multiple
capital projects at any one time
which vary in size, complexityand duration. If a material capitalproject cannot be completed, or
will not generate future benefit
to the BBC, this could result in an
impairment, and if significant bysize or nature, this could result in
reputational risk for the BBC.

We obtained a listing of open projects. We
reconciled this listing through to the fixed
asset register and financial statements. We
assessed completeness through enquiry
with project managers and review of
meeting minutes.

There are a high number of open
capital projects; typically over 300.
These can be complex projects
and take more than one year tocomplete. There is a risk of assets
being inappropriately capitalised,or indicators of impairment not
being identified, leading to an
overstatement of tangible andintangible assets.

What we concluded to
the Audit Committee
Based on our procedures
performed, we consider
the capital projects to bereasonably stated.

We gained an understanding of a sample ofopen projects; through enquiring of project
managers, finance and operations teams;
inspecting the business approval form andreading Board and steering meeting minutes.
We examined the nature of the costs
capitalised and considered if they met thecapitalisation criteria. We selected a sample
of items and tested these to third-party
evidence.
We performed physical verification for asample of projects to confirm the existenceof the asset and to identify any visible
indicators of impairment.
We assessed any uncertainty in theperformance of projects based upon the
aging of the project, costs incurred to datecompared to budget and our knowledgeof the business to determine whether
a provision or impairment should
be considered.
We compared budgeted costs of a sample
of projects against actual spend to date.
We examined and obtained support formaterial manual journal entries.
We considered the appropriateness of theaccounting and disclosures.
We performed full scope audit procedures
over this risk area in five locations, which
covered 100% of the risk amount.

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Independent Auditor’s report

Judgemental
assumptions
impacting pension
deficit – pension
deficit £1,010.7 million(2015: £948.2 million)
Refer to notes C7, C8, G3(financial disclosures) andnote H (accounting
policies). Communicatedin Audit Committee
report section 3 andAppendix A.

Risks

Our response to these risks

The BBC has a significant pension
deficit. The assumptions used toarrive at the value of the pension
deficit are highly judgemental, andthe degree of public interest in
the deficit means that it isimportant there is sufficient andcomprehensible disclosure ofpension balances to enable
understanding of the impact ofthese balances on both pensioners
and the licence fee payer.

We confirmed our understanding of theretirement benefit schemes and processes
undertaken by management to accountfor pensions.
We understood significant assumptions
used. We tested the appropriateness ofthese assumptions using our pension
specialists and considered consistency withprior year, current market information andknowledge of the BBC pension scheme.

What we concluded to
the Audit Committee
Based on procedures
performed, we consider
that the assumptions arereasonable and thedisclosure of pension
figures is appropriate.

We tested the completeness and accuracyof the membership data used by the actuary.
We performed this by testing a sample ofmembers and verifying to payroll records.
We tested the valuation of the pension
scheme assets by obtaining third-party
confirmations of the amounts andreperformance of the valuation ofa sample of assets.
We tested the cash contribution andobtained evidence to support the amounts
including bank statements and authorisationof payment runs.
We tested key transactions and journal
entries during the year. We assessed theappropriateness of accounting treatment
and applicable disclosures.
We performed full scope audit procedures
over this risk area in one location, which
covered 100% of the risk amount.

Scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluationof materiality and our allocation of
performance materiality determine our audit
scope for each entity within the Group. Taken
together, this enables us to form an opinion on
the consolidated financial statements. We take
into account size, risk profile, the organisationof the Group and effectiveness of group-wide
controls, changes in the business environmentand other factors such as recent Internal Audit
results when assessing the level of work to be
performed at each entity.
In assessing the risk of material misstatement to
the Group financial statements, and to ensure
we had adequate quantitative coverage ofsignificant accounts in the financial statements,
we selected five components, which represent
most of the activity of the Group.

bbc.co.uk

We performed an audit of the complete
financial information of all five components.
The reporting components where we
performed audit procedures accounted for
100% (2015: 97%) of the Group’s income,
100% (2015: 100%) of the Group’s operating
costs, 81% (2015: 53%) of the Group’s surplus
before tax and 96% (2015: 82%) of theGroup’s total assets.
We have performed analytical procedureson the aggregated results of the othercomponents in order to identify whether there
are significant risks of material misstatement
for the Group financial statements.
Changes from the prior year
In the prior year, two components were in
specific scope for Group reporting, with audit
procedures performed on specific accounts
within those components. The nature of work
performed in the prior year was similar to afull scope audit as most accounts had beentested. We have selected these components
to be in full scope in the current year forGroup reporting in order to increase our
audit coverage.
Involvement with component teams
In establishing our overall approach to theGroup audit, we determined the type of workthat needed to be undertaken at each of thecomponents by us, as the primary audit
engagement team. Of the five full scope
components, audit procedures were
performed on two of these directly by the
primary audit engagement team. For two
components an additional scoping exercise wasundertaken to determine the statutory entities
that are in scope in order for them to issue afull scope opinion to the primary team. In thecase of the final component, BBC Worldwide,
additional instructions are issued by the
primary audit engagement team to component
auditors from other EY global network firms
who operate under our instruction.
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Independent Auditor’s report to the Trustees of the BBC only

The majority of the audit is conducted by the
primary audit engagement team in the UK
given the nature of the Group’s activities. The
Group audit team also continued to follow a
programme of planned visits. These visits
involved discussing the audit approach withthe component team and any issues arisingfrom their work, meeting with local
management, attending planning and closing
meetings, and reviewing key audit working
papers on risk areas. The primary teaminteracted regularly with the component
teams where appropriate during various
stages of the audit, reviewed key working
papers and were responsible for the scopeand direction of the audit process. This,
together with the additional procedures
performed at Group level, gave us
appropriate evidence for our opinion
on the Group financial statements.

Our application of materiality
We apply the concept of materiality inplanning and performing the audit, inevaluating the effect of identified
misstatements on the audit and informing our audit opinion.
Materiality
The magnitude of an omission or misstatement
that, individually or in the aggregate, could
reasonably be expected to influence the economic
decisions of the users of the financial statements.
Materiality provides a basis for determining thenature and extent of our audit procedures.
We determined materiality for the Group tobe £10 million (2015: £10 million). We havebased materiality on 0.2% of operating costs,
which reflects our consideration of the
expectations of the users of the financial
statement and as agreed with the Executive
Audit Committee. We believe that operating
costs is the most relevant performancemeasure to the stakeholders of the Groupgiven the level of focus stakeholders place on
how efficiently the Group spends the income
raised through the licence fee. Profit-related
measures would not be appropriate as theGroup is a public sector broadcaster. For
illustration, materiality for the Group
represents 0.2% of the Group’s operating
costs and 0.3% of the Group’s total assets.
This provided a basis for identifying andassessing the risk of material misstatement anddetermining the nature, timing and extent offurther audit procedures.

24

BBC Full Financial Statements 2015/16

are appropriate to the Group’s circumstancesand have been consistently applied andadequately disclosed; the reasonableness ofsignificant accounting estimates made by the
Executive Board; and the overall presentationof the financial statements. In addition, we
On the basis of our risk assessments, together read all the financial and non-financial
information in the annual accounts to identify
with our assessment of the Group’s overallmaterial inconsistencies with the audited
control environment and other qualitative
financial statements and to identify any
considerations, our judgement was that
overall performance materiality for the Group information that is apparently materiallyshould be 50% of planning materiality, namely incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the£5 million (2015: £5 million). Our objective incourse of performing the audit. If we become
adopting this approach was to reduce to anaware of any apparent material misstatements
appropriately low level the probability
or inconsistencies we consider the implications
that the aggregate of total undetected andfor our report.
uncorrected misstatements for theaccounts as a whole did not exceed ourOpinion on other mattersplanning materiality.
prescribed by the terms
Performance materiality
The application of materiality at the individual
account or balance level. It is set at an amount to
reduce to an appropriately low level the
probability that the aggregate of uncorrected andundetected misstatements exceed materiality.

Audit work at component locations for the
purpose of obtaining audit coverage oversignificant financial statement accounts isundertaken based on a percentage of total
performance materiality. The performancemateriality set for each component is basedon the relative scale and risk of thecomponent to the Group as a whole and ourassessment of the risk of misstatement at thatcomponent. In the current year, the range ofperformance materiality allocated tocomponents was £1.0 million to £3.75 million(2015: £1.0 million to £3.75 million).

of our engagement

Reporting threshold
An amount below which identified misstatements
are considered as being clearly trivial.

In our opinion:

In addition to our audit of the Group financial
statements, the Trustees have engaged us toaudit the information in the Trustees andExecutive Board Remuneration Reports thatare described as having been audited, which
the Executive Board has decided to prepare
as if the BBC were required to comply withthe requirements of Schedule 8 to The Large
and Medium-sized Companies and Groups(Accounts and Reports) Regulations 2008
(SI 2008 No. 410) made under the Companies
Act 2006.

—— the information given in the Overview
Section of the Annual Report andAccounts, the Chairman’s Foreword andWe agreed with the Executive Audit
the Trustees’ performance review in Part
Committee that we would report to them all
One of the Annual Report and Accounts,
uncorrected audit differences in excess of £0.5
the Director-General’s Introduction, themillion (2015: £0.5 million), which is set at 5% of
Executive Board’s performance review
planning materiality, as well as differences below
and financial overview and highlights, thethat threshold that, in our view warranted
Corporate Governance Statement andreporting on qualitative grounds.
the unaudited parts of the Remuneration
We evaluate any uncorrected misstatements
Reports in Part Two of the Annual Reportagainst both the quantitative measures ofand Accounts for the financial year formateriality discussed above and in light ofwhich the Group financial statements areother relevant qualitative considerations in
prepared are consistent with the Groupforming our opinion.
financial statements; andScope of the audit of the financial
statements—— the parts of the Remuneration Reports
which we were engaged to audit have
An audit involves obtaining evidence about the
been properly prepared in accordance
amounts and disclosures in the financial
with Schedule 8 to The Large andstatements sufficient to give reasonable
Medium-sized Companies and Groups
assurance that the financial statements are(Accounts and Reports) Regulations 2008,
free from material misstatement, whether
as if those requirements were to apply tocaused by fraud or error. This includes an
the Group.
assessment of: whether the accounting policies
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16-26
Independent Auditor’s report

Matters on which we are required to report by exception
ISAs (UK and Ireland)
reporting

We are required to report to you if, in our opinion, financial and non-financial
information in the annual report is:

We have no exceptions toreport.

—— materially inconsistent with the information in the audited financial
statements; or—— apparently materially incorrect based on, or materially inconsistent with,
our knowledge of the Group acquired in the course of performing our
audit; or—— otherwise misleading.
In particular, we are required to consider whether we have identified any
inconsistencies between our knowledge acquired during the audit and the
Executive Board’s statement that they consider the annual report is fair,balanced and understandable and whether the annual report appropriately
discloses those matters that we communicated to the Audit Committee
which we consider should have been disclosed.
Terms of ourengagement

We are required to report to you if, in our opinion:—— adequate accounting records have not been kept by the parent company,or returns adequate for our audit have not been received from branches
not visited by us; orWe have no exceptions toreport.

—— the parent company financial statements and the part of theRemuneration Report to be audited are not in agreement with theaccounting records and returns; or—— certain disclosures of Executive Boards’ remuneration specified by law
are not made; or—— we have not received all the information and explanations we require forour audit.
In addition to our audit of the financial statements the Trustees have engaged
us to review the Corporate Governance Statement as if the BBC was
required to comply with the Listing Rules of the Financial Conduct Authority
in relation to these matters. Under the terms of our engagement we are
required to review:—— the Executive Board’s statement, set out on page 15, in relation to going
concern, and long-term viability, set out on page 15; and—— the part of the Corporate Governance Statement on pages 136 to 137 ofPart Two of the Annual Report relating to the BBC’s compliance with theprovisions of the UK Corporate Governance Code specified for our
review.

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25

Independent Auditor’s report to the Trustees of the BBC onlyStatement on the Executive Board assessment of the principal risks that would threaten the solvency
or liquidity of the entity
ISAs (UK and Ireland)
reporting

We are required to give a statement as to whether we have anything material
to add or to draw attention to in relation to:—— the Executive Board’s confirmation in the annual report that they havecarried out a robust assessment of the principal risks facing the entity,
including those that would threaten its business model, future
performance, solvency or liquidity;

We have nothingmaterial to add or to draw
attention to.

—— the disclosures in the annual report that describe those risks and explain
how they are being managed or mitigated;—— the Executive Board’s statement in the financial statements about
whether they considered it appropriate to adopt the going concern basisof accounting in preparing them, and their identification of any material
uncertainties to the entity’s ability to continue to do so over a period of atleast 12 months from the date of approval of the financial statements; and—— the Executive Board’s explanation in the annual report as to how they
have assessed the prospects of the entity, over what period they havedone so and why they consider that period to be appropriate, and theirstatement as to whether they have a reasonable expectation that theentity will be able to continue in operation and meet its liabilities as theyfall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications orassumptions.

Richard Wilson(Senior statutory auditor)
for and on behalf of Ernst & Young LLP,
Statutory Auditor
London16 June 2016

Notes
1 The maintenance and integrity of the BBC website is the
responsibility of the Executive Board; the work carried out by theauditors does not involve consideration of these matters and,accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they
were initially presented on the website.
2 Legislation in the United Kingdom governing the preparation anddissemination of financial statements may differ from legislation inother jurisdictions.

26

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27-92
The BBC’s consolidated financial statements

The BBC’s consolidated
financial statements
These financial statements compriseboth the primary statements andadditional supporting disclosure notes.
The primary statements are:Consolidated income statement
The income the BBC receives and expenditure incurred by theGroup’s operations during the financial year.
Consolidated statement of comprehensive(loss)/income
Items of income and expense, including reclassification adjustments,that are not directly recognised in the income statement andhence are charged or credited directly against or to reserves.
Consolidated balance sheet
The statement of the assets and liabilities of the BBC at a specificpoint in time, the financial year end.
Consolidated statement of changes in equity
Components that make up the capital and reserves of the Groupand the changes to each component during the financial year.
Consolidated cash flow statement
Cash generated by the BBC from its operations and how thosecash flows have been used.

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27

Group financial statements for the year ended 31 March 2016

Consolidated income statement
Note

2016
£m

2015
£m

Licence fee income

A1

3,742.8

3,735.4

Other income

A1

1,084.2

1,069.7

Total income

A1

4,827.0

4,805.1(4,775.7)(4,903.2)

Operating costs excluding restructuring costs
Restructuring costs

C3(21.4)(11.1)

Total operating costs

A1(4,797.1)(4,914.3)

29.9(109.2)Gain on sale and termination of operations

E3

–

115.9

Gain on disposal of non-current assets

D8

96.7

7.9

Share of results of associates and joint ventures

E4

39.7

33.5

Financing income

F9

12.7

19.8

Financing costs

F9(119.5)(163.1)

Net financing costs

F9(106.8)(143.3)

59.5(95.2)

Group operating surplus/(deficit)

Surplus/(deficit) before taxation
Taxation(0.2)(30.0)

59.3(125.2)

BBC

59.3(125.2)

Surplus/(deficit) for the year

59.3

(125.2)

Surplus/(deficit) for the year

G2.1

Attributable to:28

BBC Full Financial Statements 2015/16

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00-00
27-92The BBC’s consolidated financial statements

Consolidated statementof comprehensive (loss)/income
Note

Surplus/(deficit) for the year

2016
£m

2015
£m

59.3

(125.2)(92.7)

489.9(92.7)

489.9

Other comprehensive income:Remeasurement on defined benefit pension schemes
Total items that will not be reclassified to the income statement in the future
Exchange differences on translation of foreign operations

C7.2

7.2

19.6

(12.5)(10.9)

Recycling of translation reserves on disposal–

6.1

Revaluation of available for sale financial assets

2.9–

Deferred tax on financial instruments

2.5

2.5

Losses on cash flow hedges

Total items that may be reclassified to the income statement in the future

0.1

17.3

Other comprehensive (loss)/income net of tax(92.6)

507.2

Total comprehensive (loss)/income for the year

(33.3)

382.0

BBC(33.3)

382.0

Total comprehensive (loss)/income for the year

(33.3)

382.0

Attributable to:bbc.co.uk

BBC Full Financial Statements 2015/16

29

Group financial statements for the year ended 31 March 2016

Consolidated balance sheet
Note

2016
£m

2015
£m

Non-current assets
Intangible assets (including goodwill)

E1

291.3

275.7

Property, plant and equipment

D1

1,137.4

1,258.0

Investment properties

D2

85.2

14.5

Interests in associates and joint ventures

E4

171.8

148.9

Other receivables

F6.1

92.6

28.3

Assets available for sale

D3

7.5

4.4

Derivative financial instruments

G4.2

10.1

8.3

Deferred tax assets

G2.5

10.9

12.3

1,806.8

1,750.4

Current assets
Programme-related assets and other inventories

B5

684.7

707.7

Trade and other receivables

F6.2

975.5

947.2

Assets classified as held for sale

G1

–

3.0

Derivative financial instruments

G4.2

3.9

11.4

Current tax assets

G2.4

26.1

20.5

F1

334.8

405.8

2,025.0

2,095.6

Cash and cash equivalents
Current liabilities
Trade and other payables

F7.1(1,006.4)(1,054.4)

Borrowings

F3.1(61.6)(43.2)

Provisions

F8(64.8)(66.2)

G4.2(19.3)(17.0)

Derivatives financial instruments
Current tax liabilities

(6.3)

(4.7)

(1,158.4)(1,185.5)

Non-current liabilities
Other payables

F7.2(14.5)(13.8)

Borrowings

F3.2(1,020.5)(1,022.5)

Provisions

F8(42.2)(51.6)

Derivative financial instruments

G4.2(12.8)(18.7)

Deferred tax liabilities

G2.5(21.5)(19.7)

Pension liabilities

C7.1(1,010.7)(948.2)(2,122.2)(2,074.5)

551.2

586.0

Operating reserve

545.3

578.7

Hedging reserve(13.0)(3.0)

Translation reserve

17.5

10.3

Net assets
Attributable to the BBC:

Other reserve

1.3

–

551.1

586.0

Non-controlling interests

0.1–

Total capital and reserves

551.2

586.0

The financial statements were approved by the Executive Board on 16 June 2016 and signed on their behalf by:

Tony Hall
Director-General30

BBC Full Financial Statements 2015/16

Anne Bulford
Managing Director Finance and Operations
bbc.co.uk

00-00
27-92The BBC’s consolidated financial statements

Consolidated statement of changes in equity

Total
£m

Noncontrollinginterests
£m

–

204.0

–

204.0

–

(125.2)–(125.2)

Operatingreserve£m

Hedging
reserve£m

Translation
reserve£m

Otherreserve£m

At 1 April 2014

214.0

5.4

(15.4)

Deficit for the year

(125.2)

–

–

Note

Total
£m

Exchange differences ontranslation of foreign
operations

–

–

19.6

–

19.6

–

19.6

Cash flow hedges–(10.9)––(10.9)–(10.9)

Deferred tax on financial
instruments

–

2.5

–

–

2.5

–

2.5

Recycling of translation
reserves on disposal

–

–

6.1

–

6.1

–

6.1

Remeasurement on defined
benefit pension scheme

489.9

–

–

–

489.9

–

489.9

Total comprehensive income/(loss) for the year

C7.2

364.7

(8.4)

25.7

–

382.0

–

382.0

At 31 March 2015

578.7

(3.0)

10.3

–

586.0

–

586.0

Surplus for the year

59.3

–

–

–

59.3

–

59.3

Exchange differences ontranslation of foreign
operations

–

–

7.2

–

7.2

–

7.2

Cash flow hedges–(12.5)––(12.5)–(12.5)

Deferred tax on financial
instruments

–

2.5

–

–

2.5

–

2.5

Revaluation of available forsale financial assets

–

–

–

2.9

2.9

–

2.9

–

(92.7)–(92.7)(33.3)

Remeasurement on defined
benefit pension scheme(92.7)––

Total comprehensive income/(loss) for the year

(33.4)(10.0)

7.2

2.9(33.3)–

Acquisition of subsidiaries*

–

–

–

(1.6)

(1.6)

0.1

(1.5)

545.3

(13.0)

17.5

1.3

551.1

0.1

551.2

At 31 March 2016

C7.2

* Relates to the non-controlling interest put option held on Rapid Blue (Pty) Ltd.

bbc.co.uk

BBC Full Financial Statements 2015/16

31

Group financial statements for the year ended 31 March 2016

Consolidated cash flow statement
Note

2016
£m

2015
£m

F5

179.9

178.0

Operating activities
Cash generated from operations
Tax received/(paid)

2.5(31.0)

182.4

147.0

6.3

6.3

Dividends received from associates and joint ventures

26.6

32.0

Proceeds from sale of operations

31.6

64.5

Proceeds from disposal of property, plant and equipment

24.2

0.1

Acquisition of investments

(3.1)

–

Acquisition of interests in associates and joint ventures

(2.9)

(3.6)

Net cash from operations
Investing activities
Interest received

Purchases of other intangible assets

F9(137.8)(182.7)Purchases or property, plant and equipment

E1(118.6)(121.8)Net cash used in investing activities(173.7)(205.2)

(5.1)

(6.6)

Proceeds from increase in borrowings

53.6

35.0

Repayments of borrowings(35.0)(0.4)

Payment of obligations under finance leases(93.7)(93.7)Net cash used in financing activities(80.2)(65.7)Net decrease in cash and cash equivalents(71.5)(123.9)

405.8

526.1

Financing activities
Interest paid

Cash and cash equivalents at beginning of the year

F9

F1

Effect on foreign exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year32

BBC Full Financial Statements 2015/16

F1

0.5

3.6

334.8

405.8

bbc.co.uk

00-00
27-92The BBC’s consolidated financial statements

Key themes for the BBC
Page

A. Where the BBC’s funding comes from—— Income and operating results

34—— Contribution of commercial operations—— Licence fee income

B. How the BBC spends the funds

36—— Total operating costs—— Analysis of total operating costs by commercial activities—— Auditor’s remuneration—— Programme-related assets and other inventories—— PSB Group expenditure—— PSB ring-fenced expenditure

C. What the BBC spends on its people—— Persons employed—— Key management personnel compensation—— Employee remuneration—— Related party transactions with key management personnel—— Restructuring costs—— Group pension plans

42—— Remuneration of BBC Trust members
and the BBC Executive Board

D. The property, technology and equipment used by the BBC to make its programmes—— Property, plant and equipment—— Financing costs of leasing arrangements—— Investment properties—— Operating leases—— Assets available for sale—— Property provisions—— Obligations under finance leases—— Gain on disposal of non-current assets

E. Investments in the BBC’s commercial activities—— Intangible assets—— Gain on sale and termination of operations—— Goodwill—— Interests in associates and joint ventures

F. Managing funding (including future costs)—— Analysis of net funds—— Trade and other payables—— Borrowings and borrowing facilities—— Provisions and contingent liabilities—— Cash generated from operations—— Net financing costs—— Trade and other receivables—— Long-term commitments not reflected in the balance sheet

bbc.co.uk

49

53

59

BBC Full Financial Statements 2015/16

33

Group financial statements for the year ended 31 March 2016

Notes to the accounts
A. Where the BBC’s funding comes fromThe Group generates its income from a number of key sources, each source funding different parts of the BBC’s activity. The notes in thissection provide information on the performance in the year for each segment of the BBC Group.
The distinction between the various income sources is important as the BBC must not cross-subsidise its commercial activities through its PSB
Group or grant funded activities; however, the performance of the Group’s commercial activities generates profits that are distributed back to
the BBC and contribute towards the funding of PSB Group activities.
The BBC Group’s operating segments are reported in a manner consistent with the internal reports provided to the BBC Executive Board. The
BBC Executive Board is responsible for making strategic decisions, allocating resources and assessing performance of the operating segments.
Segmental information provided to the BBC Executive Board is aligned to the BBC Group’s income sources. The reportable segments are:—— 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 Worldwide – Generates revenue from exploiting the various assets of the BBC, for example licencing formats, selling internationalrights, merchandising and production facilities;—— Other commercial – These have been aggregated for reporting purposes as they meet the conditions set out in IFRS 8, Operating Segments.
The prices charged for services provided by one segment of the BBC Group to another are determined on an arm’s length basis in accordancewith the BBC’s Fair Trading policy.
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
A1 Income and operating results

2016

Licence fee income

Note

PSB
Group
£m

A2

BBC
Worldwide£m

Othercommercials
£m

Group
adjustments
£m

Group
£m

3,742.8–––

3,742.8

Other revenue

59.7

809.5

111.6

–

980.8

Intra–group trading

65.1

–

20.5

(85.6)–

Grant income

4.0

0.1

–

–

4.1

Royalties

31.4

45.2

–

–

76.6

Rental income

22.1

0.6

–

–

22.7

Other income

182.3

855.4

132.1

(85.6)

1,084.2

3,925.1

855.4

132.1

(85.6)

4,827.0(15.1)

(5.2)

(1.1)

–

(21.4)(154.3)(134.5)(1.8)–(290.6)

Total income
Restructuring costs

C3

Depreciation and amortisation
Pension deficit reduction contributions
Other operating costs
Total operating costs

B3, B4

Group operating (deficit)/surplus(95.8)

(3.3)

(0.9)

100.0

–

(3,745.5)(653.3)(139.0)52.7(4,485.1)(4,010.7)(796.3)(142.8)152.7(4,797.1)(85.6)

59.1(10.7)

67.1

29.9
96.7

Gain on disposal of non-current assets

D8

95.2

1.5

–

–

Share of results of associates and joint ventures

E4

(2.1)

41.8

–

–

39.7

7.5

102.4

(10.7)

67.1

166.3

Operating segment result
Financing income

F9

12.7

Financing costs

F9(119.5)

Net financing costs

F9(106.8)

Surplus before taxation
Taxation
Surplus for the year

59.5
G2.1

(0.2)
59.3

Additional information on total operating costs can be found in note B3 for the PSB Group and note B4 for the commercially funded activities.
Total operating costs for the Group are also analysed further in note B1.

34

BBC Full Financial Statements 2015/16

bbc.co.uk

00-00
27-92The BBC’s consolidated financial statements

2015

Licence fee income

Note

PSB
Group
£m

A2

BBC
Worldwide£m

Othercommercials
£m

Group
adjustments
£m

Group
£m

3,735.4–––

3,735.4

Other revenue

77.0

806.9

112.3

–

996.2

Intra-group trading

85.7

–

55.1

(140.8)–Grant income

3.1

0.1

–

–

3.2

Royalties

14.8

44.1

0.1

–

59.0

Rental income

11.1

0.2

–

–

11.3

Other income

191.7

851.3

167.5

(140.8)1,069.7

3,927.1

851.3

167.5

(140.8)4,805.1

(8.4)

(2.6)

(0.1)

–

(11.1)(160.7)(125.4)(4.0)–(290.1)

Total income
Restructuring costs

C3

Depreciation and amortisation
Pension deficit reduction contributions(188.4)

(8.1)

(3.5)

200.0

–

Other operating costs(3,864.4)(641.6)(197.1)

90.0(4,613.1)(4,221.9)(777.7)(204.7)290.0(4,914.3)(294.8)73.6(37.2)

149.2(109.2)

–

115.9

–

–

115.9

Total operating costs

B3, B4

Group operating (deficit)/surplus
Gain on sale and termination of operations

E3

Gain on disposal of non-current assets

D8

7.9

–

–

–

7.9

Share of results of associates and joint ventures

E4

(2.3)

35.8

–

–

33.5

(289.2)225.3(37.2)

149.2

48.1

Operating segment result
Financing income

F9

19.8

Financing costs

F9(163.1)

Net financing costs

F9(143.3)(95.2)

Deficit before taxation
Taxation

G2.1(30.0)(125.2)

Deficit for the year

A2 Licence fee income

Licence fee
2015£

Licencesin force
2015
Number’000

Total
income2015£m

3,103.1

145.5021,4203,103.7

7

0.3

49.00

7

0.4

186

1.3

7.50

170

1.2

4,363

621.7

–

4,362

613.4

25,997

3,726.4

25,9593,718.7

Licence fee
2016£

Licencesin force
2016
Number’000

Total
income2016£mColour145.5021,441

Monochrome

49.00

Concessionary

7.50–

Over 75s
Quarterly payment scheme premium
Digital switchover help scheme overspend
Total licence fee income

16.3

16.4
–

0.4

3,742.8

3,735.4

During the year 3.3 million (2015: 3.3 million) colour licences were issued under the quarterly payment scheme at a premium of £5 each (2015: £5).
Households in which one or more persons over the age of 75 reside, as their primary residence, are entitled to a free licence. The BBC was
reimbursed for these free licences by the relevant Government department during the year.
A3 Contribution of commercial operations
In the year ended 31 March 2016, a dividend of £93.0 million (2015: £15.3 million) was declared by BBC Worldwide to PSB Group throughthe commercial holding companies. The dividends paid by BBC Worldwide are not identifiable in the consolidated primary statements as theamounts paid by BBC Worldwide and received by PSB Group are eliminated during the consolidation process.

bbc.co.uk

BBC Full Financial Statements 2015/16

35

Group financial statements for the year ended 31 March 2016

Notes to the accounts
B. How the BBC spends the funds
This section analyses the total operating costs incurred by the BBC Group. It also analyses the PSB Group’s expenditure by service licence as
required to be reported to the BBC Trust.
Service licences
In accordance with the Charter, service licences are used by the BBC Trust to regulate the BBC’s licence fee-funded services and ensure thateach service provides public value and contributes to delivering the BBC’s public purposes.
The Trust’s annual assessment of performance against service licences compares actual costs for content against an agreed and authorisedbaseline budget. Actual costs may vary by up to 10% of the baseline budget to permit management flexibility in its commissioning decisions.
When a service licence budget is breached by more than the threshold, the matter is referred to the BBC Trust.
No service was outside of its 10% threshold for the 2015/16 financial year.
Service licences show the cost to the licence fee payer of providing the relevant service and therefore exclude any costs funded by a co‑producer.
The table presented in note B3 sets out the PSB Group content expenditure by service.
Where a programme is broadcast on more than one channel, the full cost of the programme is recognised as a cost of the channel where theprogramme is first broadcast. Where a programme is commissioned by two channels, however, the cost of the programme is recognised asa cost of the primary channel irrespective of the channel holding the first transmission.
For BBC Online and BBC Red Button, the licence reflects only the incremental costs of getting content to audiences unless the content is
specifically commissioned for one of these two services.
This means the costs reported against individual service licences are not necessarily equivalent to the costs which would be incurred by sucha service on a stand-alone basis.
Development costs (see note B3.1) fund the near-term development of new platforms and services, particularly for BBC Online and Red Button.
This is primarily focused on new features for existing services and also include related support and overhead costs. It is distinct from researchcosts (see note B3.2) which is focused on much longer-term research of new technology and standards that benefit the whole industry.
World Service operating licence
From 1 April 2014 BBC World Service, having previously been funded by the Foreign & Commonwealth Office, became directly funded by thelicence fee. The BBC Trust regulates spend on BBC World Service in a similar manner to the BBC’s UK Public Services using an operating licence.
The BBC committed to spend at least £245 million on BBC World Service activity (including capital expenditure) in 2015/16. The operating
licence also sets a content and distribution budget of £217 million against which variations of more than 10% must be approved by the BBC Trust.
Digital switchover
The Group was granted specific funds to cover the costs of the digital switchover. These funds were ring-fenced from the licence fee, with
underspend against the budgeted cost being repayable to the Department of Culture, Media and Sport (DCMS).
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.

36

BBC Full Financial Statements 2015/16

bbc.co.uk

00-00
27-92The BBC’s consolidated financial statements

B1 Total operating costs
Total operating costs have been arrived at after charging the following items:
Note

2016
£m

2015
£m

– owned assets

D1

113.6

122.0

– leased assets

D1, D2

36.8

37.6

E1

140.2

130.5

–

2.0

11.2

7.0

– land and buildings

59.6

66.6

– plant and machinery

27.9

33.0

– other

50.7

61.4

Net loss on disposal of tangible fixed assets*

9.2

6.1

17.9

19.3

87.7

83.6

2.1

1.9

Fair trading auditor’s remuneration (Deloitte LLP)

0.2

0.2

Net exchange differences on settled transactions

1.7

0.3

Intangible fixed assets, property, plant and equipment and other investments
Depreciation

Amortisation of intangible fixed assets
Impairment of investments in joint ventures and associates
Inventories
Write-downs of programme-related assets recognised as an expense
Other operating costs
Payments under operating leases

Research costs

B3.2

Online and TV development
Audit and non-audit fees paid to Ernst & Young LLP

B2

Impairment of trade debtors

F6.2

4.8

3.4

Staff costs

C2

1,297.2

1,293.1* The loss on disposal of tangible fixed assets represent adjustments to depreciation on disposals made in the ordinary course of business.

B2 Auditor’s remuneration
Ernst & Young LLP served as independent external auditors for the year ended 31 March 2016 and 31 March 2015. The external auditors are
subject to reappointment at the Annual General Meeting.
The following table presents the aggregate fees for professional services and other services rendered by the external auditors to the BBC:
2016
£m

2015
£m

For the audit of the BBC’s annual accounts

0.7

0.6

For the audit of subsidiaries of the BBC

0.9

0.8

Audit-related assurance services

0.2

0.2

Total audit and audit-related assurance services

1.8

1.6

Taxation compliance services

0.2

0.1

All other services

0.1

0.2

Total non-audit services

0.3

0.3

2.1

1.9

Note

Total fees paid

B1

bbc.co.uk

BBC Full Financial Statements 2015/16

37

Group financial statements for the year ended 31 March 2016

Notes to the accounts
B. How the BBC spends the funds continued
B3 PSB Group expenditure
B3.1 PSB Group expenditure by service

2016 Service

BBC One
BBC Two
BBC Three
BBC Four
CBBC
CBeebies
BBC ALBA
BBC News channel*
BBC Parliament
Television
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio 5 LiveBBC Radio 5 Live Sports Extra
BBC 1Xtra
BBC 6MusicBBC 4 Extra
BBC Asian Network
BBC Local RadioBBC Radio Scotland
BBC Radio nan Gàidheal
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foyle
Radio
BBC Online and Red Button**
Spend regulated by service licence
Orchestras and performing groups
S4C (service spend)
Development spend
BBC World Service operating licence***
Other service spend
Total service spend
Licence fee collection costs
S4C (direct funding)
Monitoring
PSB Group pension deficit reduction payment
Costs incurred to generate intra-group income
Costs incurred to generate third-party income
Restructuring costs
Total PSB Group content expenditure
Local TV****
Broadband rollout****Total PSB Group expenditure
Lease reclassification*****PSB Group expenditure38

BBC Full Financial Statements 2015/16

Note

A1

Content£m

Distribution£mContent anddistribution
support£m

1,052.5
399.0
52.9
44.2
70.6
29.1
5.5
46.6
1.9
1,702.3
36.2
44.6
37.7
88.6
45.5
2.5
4.6
7.9
3.1
6.6
119.8
22.9
3.9
15.1
14.2
17.7
470.9
153.3
2,326.5
23.2
28.0
72.0
224.3
347.5
2,674.0

35.8
20.2
7.7
4.1
7.7
4.1
0.9
7.0
6.3
93.8
6.0
6.0
6.0
6.4
4.4
1.6
1.7
1.7
1.7
2.1
14.8
2.9
1.3
1.6
1.5
1.8
61.5
37.9
193.2
–
–
–
–
–
193.2

154.1
60.2
13.5
7.7
12.4
6.6
0.9
6.5
1.4
263.3
5.2
4.8
6.3
13.2
7.0
1.3
3.0
2.4
1.4
1.8
15.0
4.3
0.7
3.0
2.9
3.5
75.8
33.6
372.7
3.0
4.3
9.2
21.9
38.4
411.1

Generalsupport
£m

88.0
34.1
4.4
3.8
6.1
2.5
0.5
2.2
0.2
141.8
1.3
2.1
3.1
6.6
3.6
0.2
0.3
0.6
0.2
0.5
9.3
1.9
0.3
1.2
1.2
1.5
33.9
13.2
188.9
2.1
2.4
6.4
15.0
25.9
214.8

Total
£m

1,330.4
513.5
78.5
59.8
96.8
42.3
7.8
62.3
9.8
2,201.2
48.7
57.5
53.1
114.8
60.5
5.6
9.6
12.6
6.4
11.0
158.9
32.0
6.2
20.9
19.8
24.5
642.1
238.0
3,081.3
28.3
34.7
87.6
261.2
411.8
3,493.1
114.6
75.3
5.8
95.8
64.5
71.3
15.1
3,935.5
3.5
150.0
4,089.0(78.3)
4,010.7

bbc.co.uk

00-00
27-92The BBC’s consolidated financial statements

2015 Service

BBC One
BBC Two
BBC Three
BBC Four
CBBC
CBeebies
BBC ALBA
BBC News channel*
BBC Parliament
Television
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio 5 LiveBBC Radio 5 Live Sports Extra
BBC 1Xtra
BBC 6MusicBBC 4 Extra
BBC Asian Network
BBC Local RadioBBC Radio Scotland
BBC Radio nan Gàidheal
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foyle
Radio
BBC Online and Red Button**
Spend regulated by service licence
Orchestras and performing groups
S4C (service spend)
Development spend
BBC World Service operating licence***
Other service spend
Total service spend
Licence fee collection costs
S4C (direct funding)
Monitoring
PSB Group pension deficit reduction payment
Costs incurred to generate intra-group income
Costs incurred to generate third-party income
Restructuring costs
Total PSB Group content expenditure
Digital switchover (DSHS Limited)
Local TV****
Broadband rollout****Total PSB Group expenditure
Lease reclassification*****PSB Group expenditure

bbc.co.uk

Note

A1

Content£m

Distribution£m

Restated^
content anddistribution
support£m

1,110.0
404.8
82.0
46.0
72.2
27.7
6.0
46.2
1.7
1,796.6
40.5
46.2
38.4
87.8
49.1
2.5
6.2
8.0
3.9
6.2
115.6
21.7
3.7
14.1
12.8
17.3
474.0
124.6
2,395.2
26.3
24.5
66.9
215.3
333.0
2,728.2

46.2
24.2
8.3
4.4
8.3
4.4
1.4
7.6
7.0
111.8
6.2
6.1
6.1
6.6
4.7
1.5
1.7
1.6
1.6
2.0
13.0
3.1
1.3
1.6
1.5
1.6
60.2
38.1
210.1
–
–
–
–
–
210.1

164.4
62.4
15.6
7.9
12.2
6.2
1.0
6.7
1.2
277.6
5.6
5.4
6.9
13.4
7.6
1.4
2.6
2.2
1.6
1.9
14.4
4.3
0.6
2.8
2.7
3.4
76.8
25.1
379.5
3.4
4.0
8.7
20.9
37.0
416.5

Restated^
generalsupport
£m

111.9
41.7
8.3
4.8
7.6
2.8
0.6
2.5
0.2
180.4
2.0
2.7
3.7
7.9
4.7
0.3
0.6
0.7
0.4
0.6
10.8
2.2
0.4
1.4
1.3
1.7
41.4
13.1
234.9
2.8
2.5
7.1
17.2
29.6
264.5

Restated^
total£m

1,432.5
533.1
114.2
63.1
100.3
41.1
9.0
63.0
10.1
2,366.4
54.3
60.4
55.1
115.7
66.1
5.7
11.1
12.5
7.5
10.7
153.8
31.3
6.0
19.9
18.3
24.0
652.4
200.9
3,219.7
32.5
31.0
82.7
253.4
399.6
3,619.3
101.4
76.0
16.9
188.4
70.1
66.7
8.4
4,147.2
0.4
2.9
150.0
4,300.5(78.6)
4,221.9

BBC Full Financial Statements 2015/16

39

Group financial statements for the year ended 31 March 2016

Notes to the accounts
B. How the BBC spends the funds continued
B3.1 PSB Group expenditure by service continued^*

The BBC have reviewed its analysis of PSB Group expenditure support costs during the year and consequently restated to make the prior year classification consistent with the current year.
Included within BBC News channel are production costs of £24.7 million, Newsgathering costs of £21.3 million and other costs of £0.6 million (2015: production costs of £23.5 million, Newsgathering costsof £22.1 million and other costs of £0.6 million).
**
BBC Online and Red Button spend is monitored by annexe (relating to editorial areas of the service). Non-annexe spend covers costs relating to central editorial activities such as the BBC Homepage,technologies which operate across the service and overheads. The spend for each annexe was: News, Travel & Weather £50.9 million (2015: £43.5 million), Sport, £16.7 million (2015: £17.2 million), Childrens£9.4 million (2015: £9.0 million), BBC Three £10.4 million (2015: nil), Knowledge & Learning £18.6 million (2015: £15.5 million), TV & iPlayer £16.3 million (2015: £13.7 million) and Radio & Music £13.5 million(2015: £14.1 million), giving a total annexe spend of £135.8 million (2015: £113.0 million). Non-annexe spend was £17.5 million (2015: £11.6 million).
*** The BBC World Service operating licence includes distribution spend of £36.6 million. Total Grant-in-aid funding equivalent spend on BBC World Service was £240.2 million.
**** Under the terms of the latest licence fee agreement, the BBC has committed to contribute funding toward broadband rollout across the UK and funding for the development of Local TV channels.
***** In order to reflect the full cost of the PSB Group expenditure by service, finance lease interest is included, although it is not included in the Group operating expenditure.

B3.2 PSB Group support costs
Infrastructure and support costs, as reported in previous years, have been analysed further into content and distribution related support andgeneral support costs. PSB Group support costs include the following:

2016
£m

Restated^
content anddistribution
support£m

Restated^
generalsupport£m

Restated^
2015
£m

43.3

111.6

69.5

92.1

161.6

31.5

45.5

16.5

26.6

43.1

–

9.5

9.5

–

6.6

6.6

Finance and operations

10.7

49.1

59.8

19.7

65.4

85.1

Marketing, audiences and communication

86.8

–

86.8

79.6

–

79.6

Total central costs

179.8

133.4

313.2

185.3

190.7

376.0

Technology

106.6

59.8

166.4

115.6

55.2

170.8

Libraries, learning support and community events

28.5

–

28.5

33.0

–

33.0

Production and digital support

25.0

–

25.0

28.3

–

28.3

Research department

17.9

–

17.9

17.0

–

17.0

Contribution to JVs and spend in other PSB entities

28.3

–

28.3

26.1

–

26.1

–

9.9

9.9

–

10.2

10.2

Other

25.0

11.7

36.7

11.2

8.4

19.6

Total support costs

411.1

214.8

625.9

416.5

264.5

681.0

Content anddistribution
support£m

Generalsupport£m

Property

68.3

HR and training

14.0

Policy and strategy

BBC Trust Unit (excluding restructuring)^The BBC have reviewed its analysis of PSB Group expenditure support costs during the year and consequently restated to make the prior year classification consistent with the current year.

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B4 Analysis of total operating costs by commercial activities
BBCWorldwide
2016
£m

BBC
Worldwide
2015
£m

Other
commercials
2016
£m

Other
commercials
2015
£m

Total
commercials
2016
£m

Total
commercials
2015£mCost of sales

572.7

528.0

114.2

110.7

686.9

638.7

Distribution costs

70.8

83.5

–

–

70.8

83.5

Administration expenses

152.8

166.2

28.6

94.0

181.4

260.2

Total operating costs

796.3

777.7

142.8

204.7

939.1

982.4

B5 Programme-related assets and other inventories
The main output of the BBC Group is the production of programmes for broadcast and the sale of rights for others to broadcast. This note
discloses the amounts for those programmes that are in production, completed programmes that are ready for broadcast but not yet aired, andrights secured to broadcast programmes produced independently of the BBC Group. Other inventory for our commercial activities are also
contained in this note.
Originated programmes are stated at the lower of cost and net realisable value, and the full value is written off on first transmission. The costs ofacquired programmes and films are also written off on first transmission except to the extent that the numbers of further showings arecontractually agreed, when it is written off according to its expected transmission profile.
2016
£m

2015
£m

Programme-related assets– Rights to broadcast acquired programmes and films

92.9

93.2

– Prepayments to acquire future programme-related rights

349.1

334.4

– Completed originated programmes1

61.3

69.5

– Programmes in production

169.7

193.7

Total programme-related assets

673.0

690.8

Other inventories

11.7

16.9

Total programme-related assets and other inventories

684.7

707.7

1 See Glossary for further details

bbc.co.uk

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41

Group financial statements for the year ended 31 March 2016

Notes to the accounts
C. What the BBC spends on its people
The BBC Group employs a significant number of people. It also provides pension benefits to both current and past employees. This section isbroken into two main parts; the first details employee numbers (excluding freelancers and agency staff), costs and transactions with BBC Trust
members and the BBC Executive Board. The second presents the key information relating to the BBC Group’s pension plans.
The analysis provided in the pension notes is based on the IAS 19 estimate of the scheme’s assets and liabilities as at 31 March 2016. The mostrecent actuarial valuation of the pension scheme completed in 2013 by Willis Towers Watson showed a funding shortfall of £2,054 million.
The deficit of the BBC Pension Scheme can change significantly. In this section we provide information to explain the following:—— why the pension liabilities on the balance sheet have changed from one year to another;—— what makes up the charge in the income statement in the year;—— the amount of the scheme assets and liabilities totalling the net defined benefit pension liability on the balance sheet;—— how sensitive the liabilities are to changes in key assumptions; and—— the steps being undertaken by the BBC to fund the defined benefit pension liability.
The movement in the IAS 19 Employee Benefits estimate of the defined benefit scheme liability during the year, specifically the BBC Pension
Scheme, is the item which singularly has the greatest impact on the balance sheet position of the Group. The pension note in this section explainsin further detail the reasons behind the movements in the defined benefit pension liability in the year and its degree of sensitivity to changes in
the underlying assumptions used.
Further information on the analysis of the BBC Pension Scheme assets and the assumptions underlying the liabilities are set out in note G3.
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
C1 Persons employed
The average number of persons employed in the year was:Average for the year
2016
Number

2015
NumberPSB Group

18,92018,974

BBC Worldwide

1,759

1,824

Other commercial businesses
Group total

237

247

20,916

21,045

Within the averages above 2,616 (2015: 2,823) part-time employees have been included at their full-time equivalent of 1,576 (2015: 1,683).
In addition to the above, the Group employed an average full-time equivalent of 821 (2015: 804) persons on a casual basis and the BBC
Orchestras and BBC Singers, employed on programme contracts, totalled 349 (2015: 359) full-time equivalents.

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C2 Employee remuneration
2016
£m

2015
£m

Salaries and wages

990.0

976.5

Social security costs

101.5

98.9

Note

Pension costs– Main scheme (defined benefit)

C7.3

154.5

182.1

– Other schemes

C7.3

29.8

24.5

Restructuring costs

C3

21.4

11.1

1,297.2

1,293.1

Comprising:
PSB Group

1,198.8

1,161.4

BBC Worldwide

145.1

151.5

Other commercial businesses

18.5

21.8

Group adjustments*
Group total(65.2)(41.6)

1,297.2

1,293.1* Relates to Group adjustments for the BBC Pension Scheme, reflecting the difference between the operating charge and contributions paid.

The actual employer cash contributions to the defined benefit pension scheme are borne by each business.
Employee pension contributions made via salary sacrifice are included within pension costs, with a corresponding reduction in salaries and wages.

bbc.co.uk

BBC Full Financial Statements 2015/16

43Group financial statements for the year ended 31 March 2016

Notes to the accounts
C. What the BBC spends on its people continued
C3 Restructuring costs
2016
£m

2015
£m

PSB Group

15.1

8.4

BBC Worldwide

5.2

2.6

Other commercial businesses

1.1

0.1

21.4

11.1

The table above reflects the BBC’s cost of redundancy during the year. For further information on total restructuring costs, please see note F8.
The PSB Group restructuring costs include anticipated redundancies through the Delivering Quality First and Simplification Programme andcosts resulting from the commitment to relocate and increase investment out of London.
BBC Worldwide includes redundancy costs arising as a result of changes within the Group’s organisation structure.
C4 Remuneration of the BBC Trust members and the BBC Executive Board
The total emoluments of the members of the BBC Executive Board and the BBC Trust are disclosed in the BBC Executive Board Remuneration
Report in Part Two of the Annual Report and Accounts. The details of emoluments of the members of the BBC Trust are disclosed in Part Oneof the Annual Report and Accounts.
C5 Key management personnel compensation
Key management personnel are those people who have authority and responsibility for planning, directing and controlling the activities of theBBC. This includes all members of the BBC Executive Board, including the non-executive directors (see the BBC Executive Remuneration
Report) along with the Trustees and the Director of the Trust Unit (see the Trustees’ Remuneration Report).
Information about the BBC’s structure, senior staff salaries and expenses are published on the BBC’s website.
Key management personnel compensation is as follows:
2016
£m

2015
£m

Short-term employee benefits

4.2

4.0

Post-employment benefits

0.3

0.3

4.5

4.3

C6 Related party1 transactions with key management personnel
Executive directors:
Danny Cohen has a close family member who contributes on an ad hoc basis to BBC programmes and all transactions are at an arm’s length basis.
He left the BBC within the financial year.
Peter Salmon has a close family member who has an artist contract with the BBC. All transactions are at an arm’s length basis. He left the BBC
within the financial year.
Nicholas Hytner is a statutory director of Van Productions Limited, a production company which produced a film for the BBC during the prioryear. The decision to commission this film was taken before Nicholas Hytner joined the BBC Board. During the prior year, the BBC paid £1.25
million to Van Productions Limited for the public service rights of this film and a further £0.75 million as part of a funding agreement. The termsof this transaction was agreed at arm’s length. No further monies were paid to Van Productions Limited during 2015/16. He left the BBC within
the financial year.
Non-executive directors:
Alice Perkins has a close family member who contributed to a BBC programme during the year. The transaction was at an arm’s length basis.
Trustees:
Diane Coyle has a close family member employed by the BBC on standard terms and conditions.
Elan Clos Stephens has a close family member employed by the BBC on standard terms and conditions.

1 See Glossary for further details

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C7 Group pension plans
The following section includes the key notes relating to BBC Group pension plans and more specifically the BBC Pension Scheme1. Further
supplementary notes on the assumptions underpinning the value of the BBC Pension Scheme asset and liability are disclosed in note G3.
As the BBC Group has two defined benefit pension schemes, the BBC Pension Scheme and the Unfunded Scheme, the information in thissection first analyses the liability and income statement charge between the two schemes. Separate analysis then follows in respect of the
BBC Pension Scheme to highlight the points outlined below (note C8).
The defined benefit pension schemes give rise to liabilities which are included on the BBC Group balance sheet as the BBC bears the risk on
investment returns, life expectancy (mortality) and inflation related to meeting future pension payments. The net liability consists of two
component parts:—— scheme liabilities: these are the present value of the future pension payments the BBC is required to pay in respect of employee service
performed up to the balance sheet date.
—— scheme assets: these are the assets held by the pension fund, into which the BBC pays annual contributions. The assets are used to fundthe payments to retired members and to generate returns to fund future pension payments.
The BBC Group’s defined contribution plans do not give rise to balance sheet pension assets/liabilities as there is no ongoing liability for theemployer from these plans once the contributions due for the year have been settled. The expenditure on the defined contribution scheme
shown in these accounts represents the BBC’s contributions payable in this financial year.
C7.1 Pension liabilities included in the balance sheet
The pension liabilities included in the BBC Group balance sheet comprise both the BBC Pension Scheme and the Unfunded Scheme and are
analysed below:
Pension liabilities

BBC Pension Scheme
Unfunded Scheme
Total

2016
£m

2015
£m

(1,003.4)(940.7)

(7.3)

(7.5)

(1,010.7)(948.2)

C7.2 Group pension plans

Deficit in scheme at the start of the year

BBC Pension
Scheme2016£mUnfunded
Scheme
2016
£m

Total
2016
£m

BBC Pension
Scheme2015£mUnfunded
Scheme
2015
£m

Total
2015
£m

(940.7)(7.5)(948.2)(1,508.5)(7.2)(1,515.7)

Movement in the year:
Current service cost1(185.4)–(185.4)(181.0)–(181.0)Contributions (from employer)*

219.8

0.4

220.2

327.4

0.4

327.8
(1.1)

Past service costs **

30.9

–

30.9

(1.1)

–

Administration costs incurred

(7.7)

–

(7.7)

(8.4)

–

(8.4)

Net finance cost1(29.9)(0.2)(30.1)(59.5)(0.2)(59.7)

Settlement gains

2.3

–

2.3

–

–

–

1

Remeasurement recognised in the consolidated statement ofcomprehensive income
1

Deficit in scheme at the end of the year

(92.7)–(92.7)

490.4

(0.5)

489.9

(1,003.4)(7.3)(1,010.7)(940.7)(7.5)(948.2)* The contribution shown for the Unfunded Scheme represents the pensions paid to members during the year.
** This comprises a past service cost of £0.8 million for augmentations over the year and a past service credit of £31.7 million due to the Pension Increase Exchange1.

The assumptions for pension scheme liabilities of the Unfunded Scheme are the same as the main scheme. As the scheme is unfunded there areno assets.

1 See Glossary for further details

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BBC Full Financial Statements 2015/16

45Group financial statements for the year ended 31 March 2016

Notes to the accounts
C. What the BBC spends on its people continued
C7.3 Pension charges in consolidated income statement
BBC Pension

Note

BBC Pension
Scheme£m

Unfunded
Scheme£m

Definedcontribution
scheme£m

All schemes£mCurrent service cost

C2

(185.4)–(29.8)(215.2)

Past service costs

C2

30.9

–

–

30.9

Settlement gains

2.3

–

–

2.3

Administration costs

(7.7)

–

–

(7.7)

(159.9)–(29.8)(189.7)(29.9)(0.2)–(30.1)(189.8)(0.2)(29.8)(219.8)2016

Total operating charge
Net finance cost

F9

Net cost in consolidated income statement
2015
Current service cost

C2

(181.0)–(24.5)(205.5)

Past service costs

C2

(1.1)

(1.1)

–

–

Administration costs

(8.4)

–

–

(8.4)

Total operating charge(190.5)–(24.5)(215.0)(59.5)(0.2)–(59.7)(250.0)(0.2)(24.5)(274.7)

Net finance cost

F9

Net cost in consolidated income statement

C8 BBC Pension Scheme
The BBC Pension Scheme, a defined benefit scheme, is now closed to new entrants. This plan provides pensionable salary-related benefits ona defined benefit basis.
The pension scheme is administered by a separate fund that is legally separated from the BBC Group. The Trustees of the pension fund are
required by law to act in the interest of the fund and of all relevant stakeholders of the scheme. The pension scheme Trustees manage the planin the short, medium and long term. They make funding decisions based on valuations which take a longer-term view of the assets required tofund the scheme’s liabilities.
The pension scheme exposes the BBC to the following actuarial risks:
Risk

Description

Investment risk

Actual returns may differ from expected returns. If the return on plan assets is below the discount rate, it will create a plan deficit.
Investments are diversified across and within asset classes, to avoid overexposure to any one asset class or market.

Currency risk

Movements in exchange rates can impact the sterling value of overseas assets held. The scheme ensures that overseas investments
are diversified across currencies and buys forward rate contracts in order to partially hedge against US dollar and euro exposures.

Counterparty risk

The risk that a counterparty defaults while owing money to the scheme. Collateral is posted by the counterparty for long-termtransactions when the valuation of the transaction is favourable to the scheme.

Interest risk

A fall in interest rates would cause the present value of liabilities to rise. To mitigate this risk, the scheme’s Trustees invest in bonds,
derivatives and other investments with predictable long-term cash flows that will tend to rise in price if interest rates fall.

Longevity risk

Longer life expectancy would increase the scheme’s liabilities. The scheme’s Trustees regularly assess the possibility and value ofhedging the scheme’s longevity risk.

Inflation risk

An increase in expected inflation will cause the present value of liabilities to rise if it is not accompanied by a rise in interest rates.
To mitigate this risk, the scheme’s Trustees invest in index-linked bonds, derivatives and other assets whose value is likely toincrease if inflation rises.

Liquidity risk

The risk of the scheme not having sufficient liquid assets to allow it to meet its liabilities and other obligations as they fall due.
The amount of cash held to pay benefits is assessed well in advance to minimise unforeseen sales and transaction costs and thelarge majority of the scheme’s assets are invested in highly liquid assets.

Custody risk

The collapse of the scheme’s custodian could result in a significant proportion of the scheme’s assets being frozen or put at risk ofloss. The scheme undertakes rigorous due diligence of the custodian relationship and conducts regular service level reviews.

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C8.1 Scheme financial position
Valuations of the scheme are performed by Willis Towers Watson, consulting actuaries. Formal valuations are undertaken at least every three years.
2015
£m

2016
£m

IAS 19 valuation1

Note

Scheme assets

G3.2

12,821.4

12,766.3

Scheme liabilities

G3.1(13,824.8)(13,707.0)(1,003.4)(940.7)93%

93%

Deficit
Percentage by which scheme assets cover liabilities

Key movements in the year are shown in note C7.2.
A deferred tax asset or liability in relation to the scheme does not arise for the BBC Group because most of the BBC Group’s public service
activity is not subject to taxation.
The sensitivities of the Scheme’s liabilities to changes in the principal assumptions are set out below:

Assumption
used

Movement

Impacton scheme
liabilities%(Increase)/decreaseon scheme
liabilities
£m

(302)

2016
Discount rate

3.4% decrease 0.1%

2.2%

Discount rate

3.4%

increase 0.1%

1.6%

227

Retail price inflation rate

2.9% decrease 0.1%

1.7%

237

2.9%

(244)

increase 0.1%

1.8%

Mortality rate

Retail price inflation rate

See note G3.5 decrease 0.1%

3.4%

476

Mortality rate

See note G3.5

increase 0.1%

3.6%

(493)

3.4% decrease 0.1%

2.2%

(308)

2015
Discount rate
Discount rate

3.4%

increase 0.1%

1.7%

230

Retail price inflation rate

2.9% decrease 0.1%

1.8%

245

2.9%

(251)

increase 0.1%

1.8%

Mortality rate

Retail price inflation rate

See note G3.5 decrease 0.1%

3.5%

477

Mortality rate

See note G3.5

3.6%

(494)

increase 0.1%

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that thechange in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
In presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit
method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in thestatement of financial position.

1 See Glossary for further details

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47

Group financial statements for the year ended 31 March 2016

Notes to the accounts
C. What the BBC spends on its people continued
C8.2 Funding the scheme
The 2013 actuarial valuation by Willis Towers Watson of the pension scheme showed a funding shortfall of £2,054 million. Consequently,
a recovery plan was agreed between the BBC and the pension scheme Trustees which details the contribution amounts to be paid by the BBC
over a 12-year period commencing in 2014. Future contributions are to be paid to the pension scheme on or before the due dates shown below.
Due date

Amount£m

Due date

Amount£m

Amount£m

Due date

1 April 2016

100

1 April 2020

240

1 April 2024

150

1 April 2017220

1 April 2021

130

1 April 2025

100

30 June 2017120

1 April 2022

100

1 April 2026

250

1 April 201995

1 April 2023

250

The next formal actuarial valuation being performed as at 1 April 2016.
Projection
2017
%

2016
%

2015
%

Employer

16.7

16.7

16.7

Employee (Old and New Benefits)

7.5

7.5

7.5

Employee (Career Average Benefits 2006)

4.0

4.0

4.0

Employee (Career Average Benefits 2011)

6.0

6.0

6.0

Contribution rates

On the basis of the pension assumptions made above, contributions totalling £132.2 million are expected to be paid in 2015/16.
C8.3 Scheme cash flows (day-to-day liquidity)
Below are the cash flows related to the BBC Pension Scheme (not included in the Group results). The contributions paid have decreased dueto the £100 million reduction in additional contributions made during the year. As the scheme is now closed to new entrants, the level ofcontribution from employees will decrease (as members retire, there are no new entrants to replace the reduction in employee contributions).
2016£mRestated^
2015£mContributions including additional voluntary (employer and employee)

222.9

330.8

Investment income

222.9

211.5

Cash inflows

445.8

542.3

Payments of pensions and transfers out(446.5)(390.3)

Expenses(28.1)(28.7)Net cash (outflow)/inflow(28.8)

123.3^ Comparatives have been restated to align disclosures to the BBC Pension Scheme financial statements.

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D. The property, technology and equipment used by the BBC to make its programmes
The BBC Group uses a significant number of assets in its operations. This section sets out those assets the BBC Group intends to continue touse, those which it is in the course of disposing of and any disposals which have been completed in the year.
Certain assets which are shown on the balance sheet are not legally owned by the BBC Group, but instead are leased under finance leases.
Under such arrangements, the BBC Group obtains substantially all the risks and benefits of ownership and therefore records such assets as
if they were legally owned. This section also deals with the financing costs and obligations associated with such assets.
The BBC Group has certain obligations to restore leased properties to their original condition at the end of the lease term. The BBC Groupmakes provisions for the cost of such restoration works. The amounts provided are included within this section of the notes.
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
D1 Property, plant and equipment
Land andbuildings£mPlant andmachinery£m

Furnitureand fittings£m

Assets underconstruction
£m

Total
£m

1,144.3

1,024.6

149.7

105.2

2,423.8

Additions

12.2

17.8

1.4

101.4

132.8

Transfer to investment properties(22.4)–––(22.4)

Transfer from intangible assets

–

–

–

1.2

1.2

Category transfers

–

6.4

(6.4)

–

–

Brought into service

9.1

92.0

3.9

(105.0)–

Disposals(3.1)(114.8)(23.8)(0.2)(141.9)Exchange movements

0.2

0.4

(0.8)

0.2

–

1,140.3

1,026.4

124.0

102.8

2,393.5

0.7

16.3

3.2

106.9

127.1

(112.9)–––(112.9)(18.2)Cost
At 1 April 2014

At 31 March 2015
Additions
Transfer to investment properties

–

–

(1.2)

(17.0)

Brought into service

Transfer to intangible assets

13.0

67.8

13.7

(94.5)–

Disposals(10.9)(61.8)(17.1)–(89.8)

Exchange movements

0.2

0.4

0.3

–

0.9

1,030.4

1,049.1

122.9

98.2

2,300.6

At 1 April 2014

305.4

710.8

102.0

–

1,118.2

Charge for the year

48.3

102.0

9.3

–

159.6

Disposals(2.7)(110.8)(22.2)–(135.7)

Transfer to investment properties

(7.9)

–

–

–

(7.9)

Impairment

0.9

0.6

–

–

1.5

Exchange adjustments

–

0.2

(0.4)

–

(0.2)

At 31 March 2015

344.0

702.8

88.7

–

1,135.5

Charge for the year

43.4

92.7

11.2

–

147.3

Disposals(10.2)(57.4)(13.0)–(80.6)

Transfer to investment properties

At 31 March 2016
Depreciation(39.1)–––(39.1)

Transfer to intangible assets

–

–

(0.7)

–

(0.7)

Impairment

–

0.1

–

–

0.1

Exchange adjustments

0.3

0.2

0.2

–

0.7

338.4

738.4

86.4

–

1,163.2

At 31 March 2016

692.0

310.7

36.5

98.2

1,137.4

At 31 March 2015

796.3

323.6

35.3

102.8

1,258.0

At 31 March 2016
Net book value

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Group financial statements for the year ended 31 March 2016

Notes to the accounts
D. The property, technology and equipment used by the BBC to make its programmes continued
D2 Investment properties
2016
£m

2015
£m

Cost
At 1 April

22.4

–

Transfer from property, plant and equipment

112.9

22.4

At 31 March

135.3

22.4

At 1 April

7.9–

Charge for the year

3.1–

Transfer from property, plant and equipment

39.1

7.9

At 31 March

50.1

7.9

Net book value

85.2

14.5

Depreciation

The BBC holds investment properties as at 31 March 2016 valued at £167.8 million. The valuation of these investment properties was carriedout by Lambert Smith Hampton, independent valuers not connected with the Group, in accordance with the RICS Valuations – Professional
Standards January 2014 (revised April 2015). The valuation conforms to International Valuation Standards. In estimating the fair value1 of theproperties, the highest and best use of the properties is their current use.
The property rental income earned by the Group from its investment properties, which are leased out under operating leases, amounted to£14.4 million (2015: £2.3 million). Direct operating expenses arising on the investment properties, which generated rental income during theyear, amounted to £2.5 million (2015: £2.2 million). Direct operating expenses arising on the investment properties, which did not generaterental income during the year, amounted to £0.3 million (2015: £2.4 million).
D3 Assets available for sale1

Unquoted equities

2016
£m

2015
£m

7.5

4.4

1 See Glossary for further details

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D4 Obligations under finance leases1

Due within one year
Due after more than one year

2016
£m

2015
£m

7.6

7.9

842.6

848.4

850.2

856.3

Interest£mPrincipal£m

See note F3 for full analysis of borrowings, including obligations under finance leases.
Finance lease liabilities are payable as follows:
Minimum
lease
payments£m

2016
Not later than one year

85.6

78.0

7.6

Later than one year but not later than five years

359.6

303.9

55.7

1,403.0

616.1

786.9

1,848.2

998.0

850.2

Later than five years
2015
Not later than one year

86.2

78.3

7.9

Later than one year but not later than five years

351.1

307.4

43.7

Later than five years

1,495.1

690.4

804.7

1,932.4

1,076.1

856.3

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 and Pacific Quay). 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 lease agreement is extended for a further term. In addition, the BBC has the right to repurchase each property at the end of therespective lease agreement.
Interest rates are fixed at the contract date. Leases with a carrying value of £846.3 million (2015: £850.2 million) have contingent elements
included within their contracts and result in contingent rents of £8.2 million (2015: £8.8 million) being reflected in operating costs.
Included within the carrying amounts of assets in note D1 are amounts held under finance leases. Set out below is the analysis of the carrying
amount of assets held under finance leases by asset category:Land andbuildings£mPlant andmachinery
£m

Total
£m

At 31 March 2016

556.5

3.3

559.8

At 31 March 2015

662.5

4.3

666.8

Net book value

D5 Financing costs of leasing arrangements
Interest costs relating to the finance lease obligations are recognised in the income statement at a constant rate over the term of the lease.

Financing costs of leasing arrangements

Note

2016
£m

2015
£m

F9

79.1

80.3

1 See Glossary for further details

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Group financial statements for the year ended 31 March 2016

Notes to the accounts
D. The property, technology and equipment used by the BBC to make its programmes continued
D6 Operating leases1
The total future minimum lease payments under non-cancellable operating leases are payable as follows:
2016
£m

2015
£m

Not later than one year

100.3

99.8

Later than one year but not later than five years

316.2

357.0

Later than five years

585.9

570.3

1,002.4

1,027.1

The BBC Group’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 are accounted for on a straight line basis) or periodic rent reviews. All leases
have been entered into on commercial terms.
The BBC Group has entered into a number of sublease arrangements. The total future minimum sublease income expected to be received
under non-cancellable subleases at 31 March 2016 is:
2016
£m

2015
£m

Due within one year

6.1

5.4

Due after one year but not later than five years

24.0

8.6

Due after more than five years

33.0

2.7

63.1

16.7

D7 Property provisions
Property provisions relate to the cost of returning leasehold properties (accounted for as operating leases) to their original condition at the endof 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 the remainder of the lease. The majority of this provision is expected to be paid after more than five years and only £1.8 million
expected to be paid during the next financial year. For full analysis of provisions and contingent liabilities see note F8.
At
1 April£m

Charge forthe year£m

Utilisedduringthe year£m

Releasedduringthe year£m

At
31 March
£m

2016

38.7

2.8

(2.1)

(2.2)

37.2

2015

22.2

16.8

(0.1)

(0.2)

38.7

2016
£m

2015
£m

Disposal of properties

95.2

7.9

Disposal of investments in associates and joint ventures

1.5–

Total gain on disposal of non-current assets

96.7

7.9

D8 Gain on disposal of non-current assets

On 5 June 2015, the BBC agreed to sell freehold land from the West London Media Village site to Stanhope and Mitsui Fudosan UK Ltd, resulting
in a gain on disposal of £75.8 million.
The remaining £19.4 million gain on disposal of properties related to overage on the sale of BBC Television Centre in 2012/13, together witha £1.2 million gain on the sale of BBC Television Centre freehold land during the year.
The gain on disposal of properties in the prior year related to overage on the sale of BBC Television Centre in 2012/13.
On 25 April 2015, BBC Worldwide disposed of its interest in Temple Street Productions for a cash consideration of £4.5 million, resulting ina gain on disposal of investments in associates and joint ventures of £1.5 million. Net assets at the date of disposal were £3.0 million.

1 See Glossary for further details

52

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E. Investments in the BBC’s commercial activities
The following section is primarily driven by the commercial activities of the BBC Group and includes information on what assets are used
to generate economic benefits for the BBC Group. The section also includes intangible assets such as goodwill and programme acquisitions,balances held to represent the BBC’s interest in associates and joint ventures and the results of any sale of operations that have occurred.
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
E1 Intangible assets
Goodwill£m

Programmerights£m

Software£m

Other
intangibles
£m

Total
£m

Cost
At 1 April 2014

34.1

431.8

183.6

9.7

659.2

Additions

–

159.1

23.5

0.1

182.7

Disposals

–

(0.2)

(15.3)–(15.5)

Transfer to property, plant and equipment

–

–

(1.2)

–

(1.2)

Exchange movements

(0.7)

1.7

–

(0.7)

0.3

At 31 March 2015

33.4

592.4

190.6

9.1

825.5

Additions

0.4

122.4

14.5

0.5

137.8

Disposals

–

(2.8)

(34.2)–(37.0)

Transfer from property, plant and equipment

–

–

18.2

–

18.2

Exchange movements

0.4

0.5

–

0.4

1.3

At 31 March 2016

34.2

712.5

189.1

10.0

945.8

At 1 April 2014

–

304.5

117.9

3.6

426.0

Charge for the year

–

113.0

17.5

–

130.5

Write off

–

–

–

7.2

7.2

Disposals

–

(0.2)

(8.7)

(6.6)

(15.5)

Exchange adjustments

–

1.9

–

(0.3)

1.6

At 31 March 2015

–

419.2

126.7

3.9

549.8

Charge for the year

–

121.0

18.7

0.5

140.2

Transfer from property, plant and equipment

–

–

0.7

–

0.7

Disposals

–

(2.8)

(34.2)–(37.0)

Amortisation and impairment

Exchange adjustments

–

0.5

–

0.3

0.8

At 31 March 2016

–

537.9

111.9

4.7

654.5

At 31 March 2016

34.2

174.6

77.2

5.3

291.3

At 31 March 2015

33.4

173.2

63.9

5.2

275.7

2016
£m

2015
£m

Acquired carrier agreements

4.6

5.0

Other

0.7

0.2

5.3

5.2

Net book value

Other intangibles include:

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Group financial statements for the year ended 31 March 2016

Notes to the accounts
E. Investments in the BBC’s commercial activities continued
E2 Goodwill
All goodwill is recognised in BBC Worldwide.
Goodwill, allocated by cash-generating unit1 (CGU), is analysed as follows:
2015

2016
Goodwill by cash-generating unit£m£m

Consumer Distribution

25.4

25.4

Australian Channels

8.4

8.0

South African Production

0.4

–

34.2

33.4

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions used for these calculations are thoseregarding discount rates and growth rates. Management estimates discount rates using pre-tax rates that reflect current market assessments ofthe time value of money and the risk 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.
No goodwill impairment has been recognised to date.
Consumer Distribution business
The goodwill in this CGU arose as a result of the acquisition of 2entertain on 6 August 2009. The cash flow projections used in determining value
in use are based on the current business plan approved by management, which covers a five-year period after which cash flows have been
extrapolated using an expected growth rate of -6% (2015: -6%).
A discount rate of 14.9% (2015: 11.7%) has been applied to the cash flows.
Management are of the view that any reasonable 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 UKTV on 1 July 2008. Cash flow projections used in the recoverable amountcalculation are based on financial budgets approved by management covering a period of five years (2015: five years) and a discount rate of 16.0%(2015: 11.9%). Cash flows beyond the forecast period have been extrapolated using an expected growth rate of 1.0% (2015: 1.0%).
The main assumption on which the forecast cash flows are based is licence fee rates. In forming its assumptions about licence fee rates, theGroup has used a combination of long-term trends and recently contracted terms.
Management believe that any reasonably possible change in the key assumptions on which the value in use of UKTV is based would not result in
any impairment.
South African Production
The goodwill in this CGU arose as a result of the acquisition of Rapid Blue (Pty) Limited on 28 March 2016. As the acquisition took place so close
to year end, no impairment review has been conducted.
E3 Gain on sale and termination of operations
As part of the normal course of business, the commercial entities may decide to sell or terminate a particular part of their operations. This noteshows the impact of such a decision on the income statement. A gain is recognised when the fair value of consideration received or receivable isgreater than the carrying value of the assets of that operation, at the point of sale.

New Video Channel America LLC

2016
£m

2015
£m

–

115.9

–

115.9

1 See Glossary for further details

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On 23 October 2014, BBC Worldwide sold a 49.9% stake in New Video Channel America LLC (‘NVCA’), formerly a wholly owned subsidiaryof BBC Worldwide Americas Inc. to AMC Networks Inc. in return for proceeds of US$200 million (£123.0 million), with BBC Worldwide
retaining an investment of 50.1% in NVCA. The US$200 million proceeds comprised US$160 million (£98.4 million) in cash and US$40 million(£24.6 million) deferred consideration in the form of a six-month promissory note, due by 23 April 2015, settled during the year ended
31 March 2016.
The disposal was a strategic move to take advantage of the greater negotiating power and sector knowledge of the larger US networks. While
the Group retains a 50.1% shareholding in NVCA, AMC Networks Inc. has control over the key decision-making activities. Therefore, whilst theGroup retains significant influence over NVCA, and has the right to variable returns, it no longer has control, and hence the Group has
deconsolidated NVCA from the date of sale and accounts for its retained interest since that date as an associate.
The net assets of NVCA at the date of disposal were:23 October
2014£m

Property, plant and equipment

0.1

Programme rights and other inventories

54.8

Trade and other receivables

22.0

Trade and other payables(15.7)Cash and cash equivalents

0.1
61.3

£m

Consideration for disposal

123.0

Net assets disposed of(30.6)

Cumulative currency translation gain

(6.1)

Gain on disposal

86.3

Fair value of associate recognised

119.9

Share of net assets reclassified to associates(30.7)

Gain on fair vale uplift of associate

89.2

Fair value of retained liabilities, and transaction costs, in respect of business disposal(59.6)Net gain

115.9

£m

Satisfied by:
Cash and cash equivalents
Deferred consideration

98.4
24.6
123.0

Net cash inflow arising on disposal:
Consideration received in cash

98.4

Less: cash and cash equivalents disposed of(0.1)

Less: transaction costs(33.8)
64.5

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Group financial statements for the year ended 31 March 2016

Notes to the accounts
E. Investments in the BBC’s commercial activities continued
E4 Interests in associates1 and joint ventures1
This note details the BBC Group’s share of net assets in associates and joint ventures, along with the impact that they have on the income
statement. Details of significant associates and joint ventures along with principal subsidiary undertakings, including their activities, are provided
in note G5.
2016
£m

2015
£m

Interest in joint ventures

12.2

0.7

Interest in associates

159.6

148.2

Total interest in associates and joint ventures

171.8

148.9

Share of results of joint ventures

28.7

25.5

Share of results of associates

11.0

8.0

Total share of results of associates and joint ventures

39.7

33.5

The following table presents summarised financial information for joint ventures, including the BBC Group’s share of the results:
DaunusLimited£m

UKTV Media
Limited£m

Freesat(UK) Limited
£m

Other
£m

Total
2016
£m

Non-current assets

567.9

6.8

0.1

0.1

574.9

Current assets

52.7

220.0

12.2

6.5

291.4

Current liabilities(49.2)(137.9)

(4.7)

(8.2)

(200.0)Non-current liabilities(753.2)(54.1)(29.7)–(837.0)Shareholders’ equity(181.8)34.8(22.1)(1.6)(170.7)

Adjustment to reflect the BBC Group’s effective obligation

181.8(17.5)

15.0

1.8

181.1

Provision for unrealised profit

–

(5.3)

–

–

(5.3)

Group’s share of net assets/(liabilities) of joint ventures

–

12.0

(7.1)

0.2

5.1

The net book value is presented within:
Interest in associates and joint ventures

12.2

Provisions1

(7.1)
5.1

Income

14.2

329.4

8.0

38.4

Profit/(loss) after tax

13.2

61.4

(4.1)

(0.6)

69.9

Adjustment to reflect the BBC Group’s effective obligation(13.2)(30.7)

2.1

0.6(41.2)

–

30.7

(2.0)

–

28.7

Share of results of joint ventures

390.0

1 See Glossary for further details

56

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DaunusLimited£m

UKTV Media
Limited£m

Freesat(UK) Limited
£m

Other
£m

Total
2015
£m

591.8

Non-current assets

585.7

5.6

0.2

0.3

Current assets

21.3

186.5

11.8

5.7

225.3

Current liabilities(56.4)(127.8)

(4.6)

(5.3)

(194.1)

Non-current liabilities(792.0)(53.5)(27.4)–(872.9)

Shareholders’ equity(241.4)10.8(20.0)

0.7(249.9)Adjustment to reflect the BBC Group’s effective obligation

241.4

(5.5)

13.8

(0.3)

249.4

Provision for unrealised profit

–

(5.0)

–

–

(5.0)

Group’s share of net assets/(liabilities) of joint ventures

–

0.3

(6.2)

0.4

(5.5)

The net book value is presented within:
Interest in associates and joint ventures

0.7

Provisions

(6.2)

1

(5.5)
Income

56.7

288.0

7.7

29.9

382.3

Profit/(loss) after tax

4.4

53.8

(4.4)

0.7

54.5

Adjustment to reflect the BBC Group’s effective obligation(4.4)(26.9)

2.2

0.1(29.0)

–

26.9

(2.2)

0.8

25.5

Share of results of joint ventures

The following table presents summarised financial information for associates, including the BBC Group’s share of the results:

Non-current assets

New Video
ChannelAmerica LLC£m

YouView
Limited£m3sixtymedia
Limited
£m

Other
£m

Total
2016
£m

135.9

0.2

0.8

4.4

141.3

Current assets

69.2

8.4

5.2

42.8

125.6

Current liabilities(25.5)

(8.3)

(1.9)

(28.1)(63.8)

Non-current liabilities(6.0)(14.9)–(8.4)(29.3)Net assets/(liabilities)

173.6(14.6)

4.1

10.7

173.8

Group share net assets

87.0

–

0.4

3.2

90.6

Provision for unrealised profit

(3.7)

–

(0.4)

(0.2)

(4.3)

Goodwill

60.2

–

–

12.9

73.1

–

–

–

0.2

0.2

143.5

–

–

16.1

159.6

Other
Total net book value
The net book value is presented within:
Interest in associates and joint ventures

159.6
159.6

Income

113.6

11.9

7.7

51.5

184.7

Profit/(loss) after tax

18.0(31.0)(1.4)

1.7(12.7)

Adjustment to reflect the BBC Group’s effective obligation

(9.0)

31.0

1.4

0.3

23.7

Group share of results

9.0

–

–

2.0

11.0

1 See Glossary for further details

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Group financial statements for the year ended 31 March 2016

Notes to the accounts
E. Investments in the BBC’s commercial activities continued
E4 Interests in associates1 and joint ventures1 continued
New Video
ChannelAmerica LLC£m

YouView
Limited£m3sixtymedia
Limited£m

Non-current assets

251.9

0.3

Current assets

64.2

5.3

Current liabilities(26.5)

(5.6)

Other
£m

Total
2015
£m

0.9

6.0

259.1

6.4

36.4

112.3

(1.7)

(20.2)(54.0)

Non-current liabilities

(7.3)

(6.8)

–

(8.1)

(22.2)Net assets/(liabilities)

282.3

(6.8)

5.6

14.1

295.2

Group share net assets

141.4

–

0.4

4.0

145.8

Provision for unrealised profit

(3.5)

–

(0.4)

–

(3.9)

–

–

–

10.5

10.5

Other

(1.2)

–

–

–

(1.2)

Total net book value

136.7

–

–

14.5

151.2

Goodwill

The net book value is presented within:
Interest in associates and joint ventures

148.2

Assets held for sale

3.0
151.2

Income

42.8

18.9

7.4

48.4

117.5

Profit/(loss) after tax

15.0

(6.7)

–

4.1

12.4

Adjustment to reflect the BBC Group’s effective obligation

(7.5)

6.6

–

(3.5)

(4.4)

Group share of results

7.5

(0.1)

–

0.6

8.0

1 See Glossary for further details

58

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F. Managing funding (including future costs)
This section contains the notes to the balance sheet that detail the funding of the BBC Group as well as the assets and liabilities that are primarily
used in the day-to-day trading transactions of the BBC Group.
It also sets out the external borrowings of the BBC Group. The BBC Group is subject to two specific constraints on its borrowing levels as set
out below:—— the Public Service borrowing limit of £200 million is set by the Secretary of State in accordance with the Framework Agreement between
the BBC and DCMS.
—— under a direction granted by the Secretary of State for the DCMS a borrowing limit of £350 million has been set for the BBC commercialgroup.
Included within this section are certain disclosures required to be provided to DCMS in respect of the above borrowing thresholds.
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
F1 Analysis of net funds for DCMS borrowing1 ceilings
At 1 April
2015
£m

Cash
flows
£m

Non-cashchanges£m

Exchange£m

At 31 March2016£mTotal cash and cash equivalents

405.8(71.5)

–

0.5

334.8

Loans and loan notes(209.4)(18.6)–(3.9)(231.9)

1.7

–

5.5

–

7.2

(856.3)93.7(87.6)–(850.2)(658.2)

3.6(82.1)(3.4)(740.1)

Derivatives associated with loans
Finance leases
Leases not included in DCMS borrowing limits

847.7

843.8

Net funds

189.5

103.7

PSB Group

305.5

266.0

Centre House Productions

(0.1)

1.0

Made up of:

BBC Worldwide

65.7

45.4

Other commercial businesses(181.6)(208.7)

Net funds

189.5

103.7

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

1 See Glossary for further details

bbc.co.uk

BBC Full Financial Statements 2015/16

59Group financial statements for the year ended 31 March 2016

Notes to the accounts
F. Managing funding (including future costs) continued
F2 Reconciliation of net funds to the DCMS borrowing ceilings
Public Services1
Capitalor current
expenditure£mCommercial
businesses*£m

Net funds/(debt)

266.0(163.3)

Borrowing ceiling(200.0)(350.0)

Headroom

466.0

186.7

2016

2015
Net funds/(debt)

305.5(115.9)Borrowing ceiling(200.0)(350.0)

Headroom

505.5

234.1

* Under the terms of the DCMS agreement, BBC Commercial Holdings Limited must satisfy two financial covenants. These covenants are required to be met at 31 March each year. As at 31 March 2016 and
31 March 2015, BBC Commercial Holdings Limited was in compliance with both of these covenants.

As at 31 March 2016, 31 March 2015, and throughout both financial years, the BBC Group did not breach the borrowing ceilings.
F3 Borrowings
F3.1 Borrowings due within one year
2016
£m

2015
£m

Bank loan

54.0

35.3

Obligations under finance leases

7.6

7.9

Total

61.6

43.2

2016
£m

2015
£m

177.9

174.1

F3.2 Borrowings due after more than one year

Bank loan
Obligations under finance leases
Total

842.6

848.4

1,020.5

1,022.5

Analysis of the BBC Group’s borrowing facilities is set out in note F4.

1 See Glossary for further details

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F4 Borrowing facilities

Facility

Total
available
31 March
2016
£m

Drawn
down at
31 March
2016
£m

Total
available
31 March
2015
£m

Drawn
down at
31 March
2015£mExpiryor review
date

200

–

150

–

15 July
2020

25

–

25

–

October
2016

25

–

25

–

Reviewed
annually

5

–

5

–

Reviewed
annually

Banks’ short-term offered rates for the relevant
currency plus 1%

5

–

5

–

Reviewed
annually

Bank base rate plus 1%. Excess usage atbank base rate plus 2%

1

–

1

–

Reviewed
annually

210

45

210

35

July 2019

Interest rate

PSB Group
Sterling revolving credit
facility agreement

LIBOR* plus 0.3% rising to LIBOR* plus
0.15% on utilisations over 1/3 and LIBOR*
plus 0.3% on utilisations over 2/3

Uncommitted money
market lines (short-termborrowings)

Margin of 0.45% over LIBOR*

Uncommitted money
market lines (short-termborrowings)

Margin of 0.5% over LIBOR*

GBP overdraft

Bank base rates plus 1.5%

Multicurrency overdraft
Overdraft*

BBC Commercial Holdings Limited
Multicurrency, revolving
credit facility agreement forloans and letters of credit

LIBOR* plus 0.6% rising to LIBOR* plus
0.15% on utilisations over 1/3 and LIBOR*
plus 0.15% on utilisations over 2/3

Overdraft or money
market lines

Money market line – margin of 1.0%
(2015: 1.0%)

20

9

20

–

Reviewed
annually

US Private Placement

Fixed interest at 2.36%

28

28

28

28

June 2020

US Private Placement**

Fixed interest at 2.71%

150

150

146

146

June 2020

2

–

2

–

Reviewed
annually

1

–

1

–

Reviewed
annually

BBC Worldwide
Overdraft*
Overdraft or working
capital loan for Indian
RupeesBank base rate plus 1% up to £100k,bank base rate plus 3% over £100k
Market rate at drawdown* The base rate used varies according to the currency drawn. GBP drawings are linked to LIBOR.
** The US$216 million US placement is hedged to a sterling value of £143 million, valued at the time of the facility being put in place.

There have been no defaults or breaches of covenants on these facilities during the year (2015: none).

bbc.co.uk

BBC Full Financial Statements 2015/16

61Group financial statements for the year ended 31 March 2016

Notes to the accounts
F. Managing funding (including future costs) continued
F5 Cash generated from operations
2016
£m

2015
£m

Group surplus/(deficit) before taxation

59.5(95.2)

Depreciation, amortisation and impairment

290.6

300.8

Difference between pension charge and cash contribution(60.3)(137.3)

4.6

13.5

Fair value impact of other derivatives(13.7)(4.4)

Gain on disposal of tangible and intangible fixed assets(86.0)(1.8)–(115.9)Fair value impact of derivatives associated with loans

Gain on sale and termination of operations
Other gains

(1.5)

–

Share of results of associates and joint ventures(39.7)(33.5)

Financing income(12.7)(19.8)

Financing costs

119.5

163.1

Decrease/(increase) in programme-related assets and inventories

23.0(32.0)(Increase)/decrease in debtors(41.9)

43.6(Decrease)/increase in creditors(48.5)

91.4(Decrease)/increase in provisions(13.0)

5.5

Cash generated from operations

179.9

178.0

F6 Trade and other receivables
This note discloses the balances that are owed to the BBC Group by third parties and balances that have been prepaid by the BBC Group.
F6.1 Other receivables due after more than one year
2016
£m

2015
£m

Other prepayments and receivables

83.6

19.6

Loans to other entities

3.0

8.2

Amounts owed by associates and joint ventures

6.0

0.5

Total

92.6

28.3

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F6.2 Trade and other receivables due within one year
2016
£m

2015
£m

Trade receivables

233.1

249.6

Licence fee receivables

392.9

387.0

Amounts owed by associates and joint ventures

25.3

26.6

VAT recoverable

42.3

39.7

Other receivables

91.3

61.5

Prepayments and other assets

190.6

182.8

Total

975.5

947.2

Included in the BBC Group’s trade and other receivables at 31 March 2016 are balances of £29.9 million (2015: £35.3 million) which are past
due at the reporting date but not impaired. The aged analysis of these balances is as follows:
Trade receivables past due but not impaired

2016
£m

2015
£m

Up to 3 months

11.6

27.3

3 to 6 months

13.4

5.2

Over 6 months

4.9

2.8

29.9

35.3

In determining the recoverability (likelihood of receiving payment) of a trade receivable the Group considers any change in the credit quality ofthe trade receivable from the date credit was initially granted up to the reporting date. Trade receivables are provided for based on estimatedirrecoverable amounts, determined by reference to past default experience of the counterparty and an analysis of the counterparty’s financial
situation.
There are no significant impairment provisions relating to balances 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 £5.2 million at 31 March 2016 (2015: £3.6 million).
The movement in the allowance for doubtful debts is set out below:
2016
£m

2015
£m

Balance at the beginning of the year

3.6

5.5

Impairment losses recognised

4.8

3.4

Amounts written off as uncollectable

(1.3)

(4.3)

Amounts recovered during the year

(1.9)

(1.0)

Balance at the end of the year

5.2

3.6

No significant amount has been provided for items that are not yet due for payment.

bbc.co.uk

BBC Full Financial Statements 2015/16

63Group financial statements for the year ended 31 March 2016

Notes to the accounts
F. Managing funding (including future costs) continued
F7 Trade and other payables
This note details the amounts payable to third parties by the BBC Group.
F7.1 Other payables due within one year
2016
£m

2015
£m

Trade and employment-related payables

483.9

463.8

Amounts owed to associates and joint ventures

10.7

9.4

Other taxation and social security

27.4

27.7

Other payables

23.2

49.5

Accruals

126.3

153.1

Deferred income (including licence fee payables)

288.5

302.3

Licence savings stamp deposits and direct debit instalments

46.4

48.6

1,006.4

1,054.4

2016
£m

2015
£m

Other payables

14.5

13.8

Total

14.5

13.8

Total

F7.2 Other payables due after more than one year

It is the BBC’s policy to comply with the Better Payment Practice Code in relation to the payment of suppliers, provided that the supplier iscomplying with their contracted terms and conditions. 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 2016 was 22 days (2015: 23 days).

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F8 Provisions and contingent liabilities
At
1 April
2015£m

Charge forthe year£m

Utilisedduringthe year£m

Releasedduringthe year£m

At
31 March
2016£m

Restructuring

37.1

26.2

(27.5)

(9.1)

26.7

Litigation and insurance

21.4

1.4

(4.5)

(0.3)

18.0

38.7

2.8

(2.1)

(2.2)

37.2

1.5

–

–

(1.5)

–

Note

Property

D7

Decommissioning
Share of joint ventures net liabilities

6.2

0.9

–

–

7.1

Other

E4

12.9

17.8

(12.4)

(0.3)

18.0

Total

117.8

49.1

(46.5)(13.4)

107.0

Included in current liabilities

66.2

64.8

Included in non-current liabilities

51.6

42.2

Total

117.8

107.0

At
1 April2014£m

Charge forthe year£m

Utilisedduringthe year£m

Releasedduringthe year£m

At
31 March
2015£m

Restructuring

53.7

11.9

(25.8)

(2.7)

37.1

Litigation and insurance

20.3

3.3

(2.0)

(0.2)

21.4

22.2

16.8

(0.1)

(0.2)

38.7

5.4

–

(1.8)

(2.1)

1.5

5.2

–

–

1.0

6.2

Other

3.3

10.9

(0.7)

(0.6)

12.9

Total

110.1

42.9

(30.4)

(4.8)

117.8

Included in current liabilities

53.3

Note

Property

D7

Decommissioning
Share of joint ventures net liabilities

E4

66.2

Included in non-current liabilities

56.8

51.6

Total

110.1

117.8

The restructuring charge for the year mainly relates to the restructuring programmes within the PSB Group and BBC Worldwide. The balance
at 31 March 2016 predominantly relates to the redundancies generated through the Delivering Quality First strategy which is due to complete in
2016/17 and the move of staff from London to Birmingham and Salford. A significant proportion of this balance is expected to be paid out within
the next financial year. There is little uncertainty surrounding this provision.
Litigation and insurance provisions relate to ongoing legal, insurance and compensation claims against the BBC. The BBC Group has a numberof contingent liabilities arising from litigation. The BBC makes specific provision for its best estimate of any damages and costs which may beawarded. A provision is only made to the extent that the BBC Group considers it probable that there will be an outflow of economic benefits
and the amount can be reliably estimated. There are currently no known individually material outstanding litigations.
The decommissioning provision was created at 31 March 2013 for the costs of decommissioning the Cyprus shortwave transmission site in
BBC World Service.
Other provisions consist of a number of items arising across the BBC Group in the normal course of business, none are individually material.
There were no other significant contingent liabilities known at the year end (2015: no significant).

bbc.co.uk

BBC Full Financial Statements 2015/16

65Group financial statements for the year ended 31 March 2016

Notes to the accounts
F. Managing funding (including future costs) continued
F9 Net financing costs
Set out below is an analysis of the finance income and expenses incurred in the year. These amounts include interest relating to finance leaseliabilities (see note D4) and defined benefit pension schemes (see note C7).
Note

2016
£m

2015
£m

Financing income
Interest income

6.3

6.3

Fair value gains on interest rate swaps

6.4

13.5

12.7

19.8

(5.1)

(6.6)

Financing costs
Interest expense
Investment expense on liabilities available for trading

(0.1)

(0.2)

Exchange loss on borrowings(3.8)(16.3)

Fair value loss on interest rate swaps

(1.3)

–

Interest on obligations under finance leases
Interest cost on pension plan liabilities1

G4.3

D5

(80.3)(89.4)(103.4)(30.1)(59.7)(119.5)(163.1)(106.8)(143.3)

2016
£m

2015
£m

Net financing costs of leasing arrangements(79.1)(80.3)Net financing costs related to pension obligations(30.1)(59.7)Net financing costs

C7.3(79.1)The net impact of financing can be analysed as follows:

Net financing income/(cost) related to loans and financial instruments

2.5

(3.3)

(106.7)(143.3)F10 Long-term commitments not reflected in the balance sheet – contracts placed for future expenditureThis note shows amounts to which the BBC Group is contractually committed, but which do not meet the criteria for inclusion in the balance
sheet. The BBC has chosen to include fixed (but not variable) payments due under outsourcing contracts for the life of those contracts.
Functions covered by these long-term outsourcing contracts include IT support, content distribution and transmission, facilities management andelements of finance support.

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

2016
£m

2015
£m

31.4

21.5

1,089.0

929.2

138.8

188.5

2,206.6

2,251.6

3,465.8

3,390.8

2016
£m

2015
£m

Long-term commitments not reflected in the balance sheet are payable as follows:

Not later than one year

737.9

823.8

Later than one year but not later than five years

1,535.4

1,374.2

Later than five years

1,192.5

1,192.8

3,465.8

3,390.8

1 See Glossary for further details

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G. Other
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
G1 Assets held for saleNon-current assets (and assets and liabilities of a group earmarked for disposal) are classified as held for sale if their carrying amount (amountheld on the balance sheet) will be recovered principally through sale rather than continuing use, they are available for immediate sale and the saleis highly probable, normally within the next 12 months.
When non-current assets or disposal groups are recategorised to this note, they are stated at the lower of their previous carrying amount andfair 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.
Note

2016
£m

2015
£m

E4

–

3.0

–

3.0

Non-current assets:
Interests in associates and joint ventures
Total assets classified as held for sale

The asset classified as held for sale in the prior year related to BBC Worldwide’s investment in the Temple Street associate, which on 31 March
2015 was approved by the Board for disposal. The Group disposed of its interest in Temple Street Productions during the year.
G2 Taxation
G2.1 Recognised in the income statement
The charge for the year, based on the rate of corporation tax of 20% (2015: 21%) comprised:
2016
£m

2015
£m

UK corporation tax

(3.2)

(1.5)

Adjustments in respect of prior years(16.9)

(3.4)

Note

Current tax(20.1)(4.9)

Foreign tax

15.5

18.2

Total current tax

(4.6)

13.3

Origination and reversal of temporary differences

5.1

15.4

Changes in tax rate

0.5

0.4

Adjustments in respect of prior years

(0.8)

0.9

Deferred tax1

Total deferred tax

G2.5

4.8

16.7

Total taxation expense in the consolidated income statement

G2.2

0.2

30.0

1 See Glossary for further details

bbc.co.uk

BBC Full Financial Statements 2015/16

67Group financial statements for the year ended 31 March 2016

Notes to the accounts
G. Other continued
G2.2 Reconciliation of taxation expense
The PSB Group is only liable to taxation on those activities carried out with a view to making a profit and on rent, royalties and interest
receivable and does not therefore receive relief for all its expenditure. However, the commercial subsidiaries in the BBC Group are taxed inaccordance with tax legislation. Therefore, as the BBC Group’s public sector ‘free-to-air’ broadcasting activities are not subject to taxation,
the tax charge is primarily driven by the results of the commercial businesses. The items affecting the standard rate of corporation tax are
explained below:
2016
£m

2015
£m

Surplus/(deficit) before tax

59.5(95.2)

Surplus/(deficit) before tax multiplied by standard rate of corporation tax in the UK of 20% (2015: 21%)11.9

(20.0)

Public service taxable external income

24.0

5.1

Utilisation of unrecognised capital losses(15.0)

–

4.3

54.8

Note

Effects of
Public service activities

Non-taxable public service activities
Commercial activities
Disallowed expenditure (including goodwill impairment)

3.6

5.5

High-end television tax relief(10.7)(12.6)Tax exempt investment sale

(0.3)

(11.3)Tax differential on overseas earnings

5.6

16.1

Tax differential in associates and joint ventures

(6.0)

(5.6)

Tax rate decrease

0.5

0.4

(17.7)

(2.4)

0.2

30.0

Adjustments in respect of prior years*
G2.1

Total tax charge for the year
* Adjustments in respect of prior years relate to overprovisions made during 2014/15.

G2.3 Factors that may affect future tax charges
The UK corporation tax rate reduced from 21% to 20% on 1 April 2015.
On 26 October 2015, The Summer Finance Bill 2015, which reduces the main rate of corporation tax to 19% from April 2017 and 18% from
April 2020 were substantively enacted. As these reductions to the rate were substantively enacted at the balance sheet date, the deferred tax
assets have been calculated at 18% in line with when the company anticipates temporary differences to unwind.
The Chancellor announced his Budget 2016 on 16 March 2016 including the publication of the Business Tax Road Map, which sets out a further
reduction in the main rate of corporation tax from 18% to 17% from 1 April 2020, and measures relating to the OECD Base Erosion and Profit
Shifting Actions. These include limiting the utilisation of brought forward losses and interest deductions, to be effective from 1 April 2017. Whilst
a full analysis cannot be presently carried out until final legislation is published, it is expected that these measures will have limited impact onthese current year financial statements.
G2.4 Current tax assets
The current tax assets of £26.1 million (2015: £20.5 million) relates to amounts due in respect of film tax credits outstanding on high-end drama
and comedy productions and amounts due following overprovisions made in 2014/15.
G2.5 Deferred tax assets/(liabilities)
Fixed asset
temporarydifferences£m

Provisions£mFinancial
instruments
£m

Joint
ventures andassociates£m

Programmerights
£m

Other
£m

Net deferred
tax asset/(liability)£m

At 1 April 2015

5.2

7.0

1.2

(26.8)

(6.1)

12.1

(7.4)

Net (credit)/charge to the income statement

(4.8)

(0.8)

(3.4)

(2.4)

13.1

–

(11.3)

Charge to reserves

–

–

2.5

–

–

–

2.5

Exchange differences

(0.1)

0.3

–

(2.0)

(0.2)

1.1

(0.9)

At 31 March 2016

4.3

3.9

1.3

(15.7)(6.3)

1.9(10.6)

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Deferred tax asset/(liability) presented within:

2016
£m

2015
£m

Non-current assets

10.9

12.3

Non-current liabilities(21.5)(19.7)(10.6)(7.4)

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through futuretaxable profit is probable. The BBC Group has unrecognised deferred tax assets arising on capital losses totalling £145.2 million (2015: £232.0
million). These assets are not recognised on the basis that there is insufficient certainty that capital or operating gains will arise against which the
BBC Group can utilise these losses.
G3 Pension plans
Note G3 sets out the additional detailed disclosures related to the BBC Pension Scheme which were not included in note C7 or C8.
G3.1 Changes in the present value of plan liabilities1
The table below illustrates the movement on the scheme liabilities during the year. The key items which affect this are the additional year ofpension benefits earned, any gains or losses relating to participants leaving the pension scheme, changes in assumptions made and benefits paidout during the year.
2016
£m

2015
£m

13,707.0

12,192.7

Current service cost

185.4

181.0

Past service cost

(30.9)

1.1

Administration cost

7.7

8.4

459.3

533.1

Opening present value of plan liabilities

Interest on pension plan liabilities
Remeasurement (gains)/losses:– Experience gains arising on plan liabilities(179.1)(317.3)– Changes in financial assumptions1

125.3

1,499.4

0.9

0.8

Contributions by plan participants
Liabilities extinguished on settlements(32.9)–

Benefits paid and expenses(417.9)(392.2)

13,824.8

13,707.0

Closing present value of plan liabilities

G3.2 Changes in the fair value of plan assets
The table below illustrates the movement on the plan assets during the year. The key items which affect this are the additional year ofcontributions made, changes in the value of the pension plan assets (including the investment return) and benefits paid during the year.
The employee contributions to the scheme by members are mainly paid via a salary sacrifice arrangement. These have been treated as employer
contributions.

Opening fair value of plan assets

2016
£m

2015
£m

12,766.3

10,684.2

Interest income on assets

429.4

473.6

Remeasurements on plan assets1(146.5)

1,672.5

Contributions by employer

219.8

327.4

Contributions by plan participants

0.9

0.8

Assets distributed on settlements(30.6)–

Benefits paid and expenses(417.9)(392.2)

12,821.4

12,766.3

Closing fair value of plan assets

1 See Glossary for further details

bbc.co.uk

BBC Full Financial Statements 2015/16

69Group financial statements for the year ended 31 March 2016

Notes to the accounts
G. Other continued
G3.3 Plan assets
The allocation of assets by the pension Trust Trustees is governed by the need to manage risk against the desire for high 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.
Restated^ 20152016
Type of asset

Equities – quoted
Equities – unquoted
Pooled vehicles – quoted

£m

%

£m

%

1,279.2

10

1,491.8

12

4.9

–

6.6

–

1,222.910

1,228.8

10

Pooled vehicles – unquoted

767.0

6

840.8

7

Repurchase agreements(1,718.1)(13)(763.2)(6)(33.5)–(54.6)–

Derivatives
Fixed interest bonds– Public sector

617.0

5

558.9

4

1,076.7

8

1,055.9

84,939.039

4,377.5

34

– UK

855.1

7

743.1

6

– Overseas

391.7

3

368.3

3

Alternatives*

3,055.1

22

2,494.0

19

364.4

3

418.4

3

12,821.4

100

12,766.3

100– OtherIndex-linked bonds– Public sector
Property

Cash and other current assets
Total assets
Actual return on pension plan assets**

282.9

2,146.1^ Comparatives have been restated to align disclosures to the BBC Pension Scheme financial statements.
* Alternatives are investments in asset classes other than the traditional quoted equities, bonds, property and cash. They include investments in private equity, private credit, hedge funds, infrastructure andrenewable energy investments. They are generally illiquid investments as some may require sufficient time to find buyers willing to pay full market value. They are useful for managing risk as they enhance
portfolio diversification and potentially reduce risk as their cash flows can be well suited to meeting the scheme’s liabilities.
** 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.

G3.4 BBC Pension Scheme gains/(losses) in the consolidated statement of comprehensive income

Return on plan assets (excluding amounts included within interest)

2016
£m

2015
£m

(146.5)

1,672.5

Remeasurement gains/(losses)1 arising from:– Experience gains on plan liabilities

179.1

317.3

– Changes in financial assumptions(125.3)(1,499.4)

Net gain recognised in the consolidated statement of comprehensive income(92.7)

490.4

1 See Glossary for further details

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G3.5 Principal actuarial assumptions
The calculation of the scheme liabilities and pension charges, for IAS 19 purposes, requires a number of financial and demographic assumptions
to be made. The principal assumptions used by the actuaries at the balance sheet date were:Principal financial assumptions

2016
%

2015
%

Rate of increase in salaries

1.00

1.00

– Old Benefits*

2.95

2.90

– New Benefits*

2.75

2.70

– Career Average Benefits (2006)*

2.40

2.40

– Career Average Benefits (2011)*

1.85

1.80

Inflation assumption (RPI)

2.95

2.90

Inflation assumption (CPI)

1.95

1.90

Discount rate

3.40

3.40

2016
Number of
years

2015
Number ofyears– Male27.6

27.5– Female

30.0

29.9

– Male29.5

29.4– Female

32.0

31.9

Rate of increase in pension payments:

1* For more information on the different pension arrangements, please refer to the Remuneration Report.

The average life expectancy assumptions, for members after retirement at 60 years of age, are as follows:

Principal demographic assumptions

Retiring today:

Retiring in 20 years:

The mortality assumptions have been selected to reflect the characteristics and experience of the membership of the scheme and are basedon those used for the actuarial investigation which was carried out for funding purposes as at 1 April 2013. The standard ‘S1’ series of tables,
published by the CMI, reflect recent research into mortality experience in the UK. A subset of these tables have been used for males andfemales, with a multiplier of 122% for males and 107% for females. For the allowance for future improvements, the CMI 2012 core projection
has been adopted with a long-term trend of 1.25% for both males and females.
G3.6 Scheme membership analysis and maturity1 profile
Principal demographic assumptions

2016
Number

2015
NumberContributors

11,405

12,237Pensioners

19,536

19,306

Dependants

4,276

4,196

Deferred pensioners

29,11029,374

The total number of scheme beneficiaries as at 31 March 2016 was 50,797 (2015: 51,658). Membership numbers in the table above are higher
as members can hold more than one record. For example, contributing members who have transferred to the Career Average Benefits 2011section from another section of the scheme may have a deferred pensioner record for their benefits built up in the Old Benefits, New Benefits
or Career Average Benefits 2006 sections and a contributing record for their Career Average Benefits 2011 benefits.
The average duration of the benefit obligation at the end of the reporting period is 19 years (2015: 20 years). This number can be subdivided into
the duration related to:—— contributors: 25 years (2015: 25 years)—— pensioners: 13 years (2015: 14 years)—— deferred pensioners: 26 years (2015: 27 years)

1 See Glossary for further details

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71Group financial statements for the year ended 31 March 2016

Notes to the accounts
G. Other continued
G4 Financial instruments
This section details the financial instruments held by the BBC Group. A financial instrument is a contract that results in one entity recording
a financial asset (a contractual right to receive financial assets, e.g. cash) in their accounts and another entity recording a financial liability.
The BBC 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.
G4.1 Financial risk management
The BBC Group’s financial risk management operations are carried out by a BBC Group Treasury function, within parameters defined formallywithin the policies and procedures manual agreed by the BBC Executive Board. BBC Group Treasury’s activity is routinely reported and issubject to review by internal auditors.
The BBC Group Treasury function uses financial instruments to raise finance and to manage financial risk arising from the BBC’s operations inaccordance with its objectives which are:—— to ensure the business of the BBC Group, both PSB Group and Commercial, is funded in the most efficient manner 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;and—— to maximise the return on surplus funds, whilst ensuring sufficient cash is retained to meet foreseeable liquidity requirements.
The BBC 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 BBC Group
were designated as hedging instruments in effective cash flow hedges. Hedge accounting is only applied where there is appropriate designationand documentation.
The BBC Group is exposed to the following areas of risk arising from financial instruments:—— market risk, principally currency and interest rate risk;—— liquidity risk; and—— credit risk1. The largest element is the licence fee debtor, £392.9 million (2015: £387.0 million). The amount of income that the BBC receives
is directly related to the amount of licence fee collected from households in the UK.
The material risks to the BBC Group are:
Currency risk
The BBC Group is principally a UK-based organisation with the majority of transactions, assets and liabilities being sterling based; however, the
BBC Group undertakes some transactions in currencies other than sterling. Due to movements in exchange rates over time, the amount the
BBC Group expects to receive or pay when it enters into a transaction may differ from the amount that it actually receives or pays when thetransaction is settled.
The most significant currency exposure by total value of transactions is to US dollars. Due to the relative size of this exposure in comparison
to the BBC Group’s sterling-denominated business, the BBC does not consider this to be significant for the BBC Group, but does, however,generally enter into forward currency contracts to manage, or hedge, this currency risk, which allows the BBC Group to settle transactions at
known exchange rates, reducing uncertainty.
The overall income or expenditure to be recognised in relation to contracts denominated in foreign currency (and the related hedges) istherefore fixed; however, where these contracts span financial years, the recognition of the fair value of the forward currency contracts resultsin timing gains/losses in each financial year. These timing gains/losses are therefore a result of market conditions and not variances in underlying
contract value.
As a result of this certainty of cash flows the BBC Group has mitigated its underlying sensitivity to currency fluctuations and therefore has notpresented sensitivity analysis as any potential variation is insignificant.
At 31 March 2016, the BBC Group had entered into a net commitment to sell foreign currencies amounting to £322.1 million (2015: net
commitment to sell £366.3 million) that mature in the period through to 2019 in order to fix the sterling cost of commitments through thisperiod (mainly euros and US dollars). These forward foreign exchange contracts mean the BBC Group had no significant currency exposure.

1 See Glossary for further details

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Interest rate risk
The Group’s main exposure to interest rate fluctuations arises on external borrowings. BBC Commercial Holding’s 2013 private placement
included a tranche of fixed rate sterling debt alongside a tranche of fixed rate US dollar debt, with the latter swapped to fixed rate sterling
throughout the period of the instrument. Since March 2003, the Group has been borrowing under its revolving credit facilities 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 collars1 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 theinterest rate swaps, caps and collars is that in the longer term the Group has no significant underlying sensitivity to interest rate fluctuations andhence no sensitivity analysis has been presented.
Sterling fixed rate borrowings are achieved by entering into interest rate swap transactions; all outstanding swaps mature by the end of June
2020. In total, £240.3 million (2015: £236.5 million) of swaps were entered into. The coverage is £8.4 million higher (2015: £27.1 million higher)
than the current level of bank loans of £231.9 million (2015: £209.4 million).
Fair value movements in respect of interest rate swaps and interest rate options are recorded through the income statement within financing
income/financing costs as hedge accounting is not applied.
Liquidity risk
Liquidity risk is the risk that the BBC 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 F1). In order to comply withthese ceilings, together with the terms of any individual debt instruments, the BBC’s Group Treasury function manages the BBC Group’s
borrowings by regularly monitoring BBC Group cash flow forecasts. The BBC holds its surplus liquidity in term deposit accounts with highly
rated financial institutions.
G4.2 Fair value of financial instruments
The following table shows the fair value of the BBC Group’s financial instruments, in categories according to how the financial instrument ismeasured. 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

2016 – Fair value
Financial assets at fair value
Derivative financial instruments:
Derivatives that are designated in hedge relationships

0.7

0.1

–

0.8

Derivatives through the income statement

3.2

10.0

–

13.2

Trade and other receivables

626.9

–

2.5

629.4

Cash and cash equivalents

334.8

–

–

334.8

Other investments

–

–

158.9

158.9

Investment properties

–

–

167.8

167.8

Derivatives that are designated in hedge relationships(12.0)(5.0)–(17.0)

Derivatives through the income statement

(7.3)

(7.8)

–

(15.1)

(2.0)

(0.6)

–

(2.6)

Bank loans, overdrafts and loan notes(54.0)(177.9)–(231.9)Trade and other payables(472.1)––(472.1)

Obligations under finance leases(48.9)(222.5)(1,146.8)(1,418.2)

Loans and receivables

Available for sale financial assets

Financial liabilities at fair value
Derivative financial instruments:

Trade and other payables
Financial liabilities measured at amortised costbbc.co.uk

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Notes to the accounts
G. Other continued
G4.2 Fair value 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

Derivatives that are designated in hedge relationships

7.5

2.7

–

10.2

Derivatives through the income statement

3.9

5.6

–

9.5

Trade and other receivables

636.8

–

12.3

649.1

Cash and cash equivalents

405.8

–

–

405.8

Other investments

–

–

154.3

154.3

Investment properties

–

–

57.3

57.3

Derivatives that are designated in hedge relationships

(8.6)

(5.4)

–

(14.0)

Derivatives through the income statement(8.4)(13.3)–(21.7)

(0.5)

(0.4)

–

(0.9)

Bank loans, overdrafts and loan notes(35.3)–(174.1)(209.4)

Trade and other payables(493.3)––(493.3)Obligations under finance leases(46.4)(190.3)(1,209.7)(1,446.4)

2015 – Fair value
Financial assets at fair value
Derivative financial instruments:

Loans and receivables

Available for sale financial assets

Financial liabilities at fair value
Derivative financial instruments:

Trade and other payables
Financial liabilities measured at amortised cost

The fair value and carrying value of financial instruments was the same with the exception of finance leases. At 31 March 2016, the fair value of
the Group’s obligations under finance leases was £568.0 million higher (2015: £590.1 million higher) than their carrying value. The fair value at
31 March 2016 was determined by recalculating the finance lease liability using the current market interest rates, adjusted for an appropriate risk
premium. The movement in the interest rates between the inception of each finance lease (used to generate the finance lease models) and
31 March 2016 creates a difference between the carrying value and the fair value.

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G4.3 Derivative1 financial instruments
When calculating the fair value of the BBC Group’s financial instruments (subsequent to the initial recognition), the technique used in eachcalculation has to be allocated to the relevant level of hierarchy in the table below. This disclosure helps to show the level of judgement that the
BBC Group has used in calculating fair values, subsequent to the initial recognition.
Categorisation into the following headings is based on the inputs used for the valuation technique as opposed to the technique itself:—— level 1 fair value measurements are those derived from quoted market prices (unadjusted) in active markets (where transactions occur ona frequent basis and in sufficient volumes for the pricing information to be available on an ongoing basis). The prices are therefore available to
the general public for identical instruments and occur on a regular basis, thus ensuring they are continually up to date;—— level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for theasset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Instruments that would typically fall into this category
include those where quoted prices are available for similar, but not identical instruments and instruments where a quoted price is available,
but in a non-active market, i.e. the price may be out of date and therefore require some limited adjustments; 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). This can include methods such as projected future cash flows and occur where there is little,
or no, market activity.
Fair value
hierarchy level

Assets£m

Liabilities£m

Forward foreign currency contracts

1

2.4(10.5)

Interest rate swaps

2

7.7

(0.1)

Embedded derivatives

3

–

(2.2)

Investment properties

3

167.8

–

Other investments

3

158.9

–

Other payables

3

–

(0.6)

Finance leases

3–(1,369.3)

336.8(1,382.7)

2016
Greater than one year

Less than one year
Forward foreign currency contracts

1

3.9(18.9)

Embedded derivatives

3

–

(0.4)

Other payables

3

–

(2.0)

Finance leases

3–(48.9)

3.9(70.2)

2015
Greater than one year
Forward foreign currency contracts

1

5.7(18.1)

Interest rate swaps, caps and collars

2

2.5

(0.6)

Embedded derivatives

2

0.1

–

Investment properties

3

57.3

–

Other investments

3

154.3

–

Other payables

3

–

(0.4)

Finance leases

3–(1,400.0)

219.9(1,419.1)

Less than one year
Forward foreign currency contracts

1

11.4

(16.3)

Interest rate swaps, caps and collars

2

–

(0.2)

Embedded derivatives

2

–

(0.5)

Other payables

3

–

(0.5)

Finance leases

3–(46.4)

11.4(63.9)

1 See Glossary for further details

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75Group financial statements for the year ended 31 March 2016

Notes to the accounts
G. Other continued
G4.3 Derivative financial instruments continued
Level 3 financial assets recorded at fair value include £151.4 million (2015: £149.9 million) for the asset held in Daunus Limited, the entity that
redeveloped Broadcasting House. The BBC holds a 10% share of the issued share capital (preferential in nature) of that company, due to maturein 2033 at which point in time the BBC receives certain rights in respect of Broadcasting House. The BBC’s shares in Daunus Limited entitles it to
the first £90 million (plus RPI from the start of the lease) of any proceeds on termination of the lease. The fair value estimate has been based onthe £90 million, inflated by RPI, and discounted back to present day. The estimated interest rate used (linked to RPI) was 1.0% (2015: 3.0%) andthe rate used to discount the future cash flows was 2.1% (2015: 2.1%).
The fair value of the investment in Daunus is not included on the balance sheet as it is equity accounted for. See note E4.
Level 3 financial liabilities recorded at fair value and included within other payables relate to written put options1 issued to non-controllinginterests in the Group’s subsidiaries. The fair value of such instruments is calculated based on the strike price1 of the options and management’s
best estimate of the date at which options may be exercised1. Embedded derivatives were also assessed as a level 3 financial liability.
As the BBC’s main finance leases include provisions to provide for the BBC’s share of any appreciation in market value these have been classified
as level 3 financial liabilities.
The change in fair value of level 3 financial instruments is reconciled as follows:
Restated*
2015
£m

2016
£m

Opening balance

FinancialassetsFinancialliabilities

FinancialassetsFinancialliabilities(1,382.9)

211.7(1,448.7)

108.9

Settlements and payments

–

87.4

0.1

82.3

Unwinding of discount recorded within finance expense–(79.2)–(80.5)

118.7

(1.6)

57.3

–

0.1

(3.3)

–

(0.1)

Additions
Change in fair value recorded in operating costs
Change in fair value recorded within reserves

2.9

–

–

–

Change in fair value

(6.7)

22.0

45.4

(67.5)

326.7(1,423.4)

211.7(1,448.7)* Comparatives have been restated to incorporated finance leases.

Additions relate to the BBC’s properties reclassified as investment properties during the year. See note D2 for further details.
The BBC Group applies cash flow hedge accounting for trades taken out by certain of its commercial subsidiaries in respect of their forecasted
foreign currency transactions1. Hedge accounting is only applied where appropriate designation and documentation exists. Net losses (before
tax and non-controlling interests) recognised in the hedging reserve on forward foreign exchange contracts in cash flow hedge relationships at
31 March 2016 were £12.5 million (2015: £10.9 million net gains). 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 three years.

1 See Glossary for further details

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The following table details the BBC Group’s remaining contractual maturity for its non-derivative financial liabilities (including obligations underfinance leases) but excludes trade and other payables that were settled in the normal course of business and are due within one year. The tablehas been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the BBC Group can berequired to pay:
Cash flow£mInterest£mPrincipal
£m

53.9

–

53.9

90.3

82.7

7.6
233.6

2016
Variable interest rate instruments
Not later than one year
Fixed interest rate instruments
Not later than one year
Later than one year but not later than five years
Later than five years

556.4

322.8

1,403.1

616.1

787.0

2,103.7

1,021.6

1,082.1

35.3

–

35.3

2015
Variable interest rate instruments
Not later than one year
Fixed interest rate instruments
Not later than one year

90.8

82.9

7.9

Later than one year but not later than five years

372.0

328.3

43.7

Later than five years

1,671.5

692.7

978.8

2,169.6

1,103.9

1,065.7

G5 Interests in joint ventures, associates and subsidiaries
The BBC 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 andsubsidiaries is available on request from the General Counsel and Secretary, BBC, Broadcast Centre, 201 Wood Lane, London W12 7TP.
G5.1 Significant joint ventures and their activities
The BBC Group has an 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

Place of incorporation andprincipal place of businessHolding of issued
ordinary shares%

Activity

TV channel operator

Commercial joint ventures:
UKTV Media Holdings Limited

England and Wales

50%

Daunus Limited*

England and Wales

10%

Property

Freesat (UK) Limited

England and Wales

50%

Broadcasting* 33% voting rights.

G5.2 Significant associates and their activities
Holding of issued
ordinary shares%

Activity

Name of entity

Place of incorporation andprincipal place of business

YouView Limited

England and Wales

14.2%

Multiplatform broadcasting

New Video Channel America LLC*

United States

50.1%

TV channel operator

3sixtymedia Limited**

England and Wales

10.0%

Production* Whilst BBC Worldwide Limited retain a significant influence over New Video Channel America LLC and has the rights to variable returns, it is not deemed to have control and is therefore recognised as an
associate undertaking.
** The BBC holds 10% of the total share capital of 3sixtymedia Limited but 20% of the Class A ordinary shares, which gives it significant influence.

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77

Group financial statements for the year ended 31 March 2016

Notes to the accounts
G. Other continued
G5.3 Subsidiary undertakings1
Except where noted below, all entities are incorporated in England and Wales.
Name of entity

Principal place of business

Commercial subsidiaries (all 100% owned unless stated):
BBC Commercial Holdings Limited

England and Wales*

BBC Worldwide Limited

Global**BBC Global News Holdings Limited

Global**BBC Ventures Group Limited

England and Wales**

BBC Studios and Post Production Limited

England and Wales**

BBC Grafton House Productions Limited

England and Wales**

BBC Children’s Productions Limited

England and Wales**

BBC Comedy Productions Limited

England and Wales**

BBC Store Limited

England and Wales**

BBC Worldwide Investments Limited

England and Wales**

BBC Earth MD (WWD) Limited

England and Wales**

BBC Earth Productions (Africa) Limited

England and Wales**

BBC Earth Productions (Life) Limited

England and Wales**

BBC Earth Productions Limited

England and Wales**

BBC Worldwide Productions (UK) Limited

England and Wales**

BBC Magazines Rights Limited

England and Wales**

BBC Magazine Holdings Limited

England and Wales**

BBC World Service Television Limited

England and Wales**beeb Ventures Limited

England and Wales**European Channel Management Limited

England and Wales**

BBC Worldwide Corporate Services Limited

England and Wales**beeb Rights Limited

England and Wales**European Channel Broadcasting Limited

England and Wales**

2 entertain Video Limited

England and Wales**

Demon Music Group Limited

England and Wales**

DVDS2 Limited

England and Wales**

BBC Earth Productions (Giant Films) Limited

England and Wales**

Earth Film Productions Limited

England and Wales**

BBC Magazines Rights 3 Limited

England and Wales**

BBC Magazines Rights 5 Limited

England and Wales**

2 Entertain Management Limited

England and Wales**

BBC Video Limited

England and Wales**

MCI Music Publishing Limited

England and Wales**

Crimson Productions Limited

England and Wales**

F-Beat Records Limited

England and Wales**

Demon Records Limited

England and Wales**

Bedder 6 Limited

England and Wales**

BBC Worldwide Music Limited

England and Wales**

BBC Worldwide Productions (Africa) (Pty) Limited

Africa**BBC Worldwide (Africa) (Pty) Limited

Africa**BBC Worldwide Australia Pty Limited

Australia**

BBC Worldwide Australia Publishing Pty Limited

Australia*** Directly owned** Indirectly owned

1 See Glossary for further details

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Name of entity

Commercial subsidiaries: (all 100% owned unless stated) continued
BBC Worldwide Intermediadora de Programadora Estangeira Ltd
Nine Productions Incorporated
Worldwide Channel Investments (Ontario) Ltd
2004370 Ontario Incorporated
Worldwide Knowledge (Beijing) Business Consulting Company Ltd
BBC Worldwide Productions Nordics ApS
Erste Weltweit Medien GmbHBBC Worldwide Media Private Ltd
BBC Worldwide Channels Mexico S.A de C.V
BBC Worldwide Mexico S.A de C.V
BBC Worldwide Polska
BBC Worldwide Channels (Singapore) Pte. Ltd
BBC.com US, Incorporated
BBC Worldwide Americas (401) k Plan Trustees
Worldwide Americas Investments Incorporated
Global Hybrid Productions LLC
Sun Never Sets Productions LLC
Bad Wolf Productions LLC
Adjacent Productions, LLC
BBC Worldwide Reality Productions LLC
DWTS Productions LLC
Worldwide Competition Productions LLC
BBC Global News Limited
BBC World Distribution Limited
BBC World Japan Limited (Incorporated in Japan)
BBC World (Singapore) Private Limited (Incorporated in Singapore)
BBC Global News India Private Limited (Incorporated in India)
BBC.com Limited
BBC Global News US LLC
2 entertain Limited
BBC Worldwide Americas Incorporated
BBC Worldwide Australia Holdings Pty Limited
BBC Worldwide Canada Limited
BBC Worldwide France Sarl
BBC Worldwide Germany GmbHBBC Worldwide Holdings B.V
BBC Worldwide Japan Limited
DVDS3 Limited
Rapid Blue
Tonto Films and Television Limited
UK Programme Distribution Limited
Worldwide Channel Investments Limited
Subsidiaries incorporated to act on behalf of the PSB Group:
BBC Property Limited
BBC Property Investment Limited
BBC Property Development Limited
Centre House Productions Limited
BBC News Limited
DSHS Limited
BBC Free to View (Satellite) Limited

Principal place of businessBrazilCanadaCanadaCanadaChina
Denmark
Germany
India
MexicoMexicoPolandSingapore
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
England and Wales
England and Wales
Japan
Singapore
India
England and Wales
AmericaEngland and Wales
USA
Australia
CanadaFranceGermany
Netherlands
Japan
England and WalesSouth Africa
England and Wales
England and Wales
England and Wales

**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**

England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales

*
*
*
*
*
*
*

* Directly owned** Indirectly owned

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79Group financial statements for the year ended 31 March 2016

Notes to the accounts
G. Other continued
G5.3 Subsidiary undertakings1 continued
Name of entity

Principal place of businessSubsidiaries incorporated to act on behalf of the PSB Group: continued
BBC Free To View Limited
Media Applications Technologies Limited
BBC Investments Limited
BBC Subscription Television Limited
BBC Digital Programme Services Limited
World Service Trading Limited
BBC World Service Holdings Limited
BBC Holdings M LLC
LLC BBC R News

England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
RussiaRussia

*
*
*
*
*
*
*
**
**

* Directly owned** Indirectly owned

G6 Reserves
G6.1 Operating reserve
At 31 March 2016, the cumulative goodwill written off to reserves on acquisitions prior to 1999 amounted to £6.8 million. This amount isunchanged from the prior year and remained in equity upon transition to IFRS as permitted by IFRS1 First time adoption of IFRS.
G6.2 Hedging reserve
The hedging reserve is used to record the effective portion of cumulative net changes in the fair value of cash flow hedging instruments related
to hedged transactions that have not yet occurred (net of tax). During the current year, losses of £0.7 million were removed from hedging
reserves and credited to the income statement (2015: gains of £6.2 million).
G6.3 Translation reserve
The translation reserve comprises all foreign exchange differences arising since the transition to IFRS, from the translation of the financial
statements of foreign operations, as well as from the translation of liabilities that hedge the Group’s net investment in foreign subsidiaries.
G6.4 Other reserve
Other reserve includes revaluation of available for sale financial assets of £2.9 million (2015: £nil) and the fair value of the put option liabilities
arising on acquisition of new subsidiaries.
G7 Post-balance sheet events
There are no material events after the balance sheet date to disclose.
G8 Related party transactions
The following table represents transactions with related-parties excluding key management personnel.
Associates, joint ventures andother investments
2016£m

BBC Pension Scheme

2015
£m

2016
£m

2015
£m

–

Rendering of services

76.2

64.3

–

Receiving of services(76.4)(80.0)––

Pension contributions

–

–

219.8

327.4

Dividends received

26.6

32.0

–

–

26.4

16.3

219.8

327.4

1 See Glossary for further details

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Amounts owed byrelated parties
2016£m

BBC Pension Scheme
Associates, joint ventures and other investments

Amounts owed torelated parties
2015
£m

2016
£m

2015
£m

(1.1)

–

–

(0.7)

31.3

27.1

(10.7)

(9.4)

31.3

27.1

(11.4)(10.5)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.
Related-party transactions with key management personnel are disclosed in note C6.
G9 Segment reporting
Geographical location of income and non-current assets
PSB
Group
£m

BBC
Worldwide£m

Othercommercials
£m

Group
adjustments
£m

Group
£m

1,221.1

353.4

4.3

(35.8)

1,543.0

41.4

201.1

0.3

–

242.8

1,262.5

554.5

4.6

(35.8)

1,785.8

118.4

192.0

5.4

(34.8)

281.0

3,905.8

200.5

30.7

(85.6)

4,051.4

19.3

654.9

101.4

–

775.6

3,925.1

855.4

132.1

(85.6)

4,827.0

1,252.6

298.8

4.1

(29.6)

1,525.9

47.7

155.8

0.4

–

203.9

1,300.3

454.6

4.5

(29.6)

1,729.8

122.8

220.8

1.5

(29.6)

315.5

3,916.6

194.1

73.8

(140.8)4,043.7

10.5

657.2

93.7

–

761.4

3,927.1

851.3

167.5

(140.8)4,805.1

2016
Non-current assets excluding deferred tax and financial instruments:
UK
Rest of world
Additions included in fixed assets and investments
External income:UK
Rest of world2015
Non-current assets excluding deferred tax and financial instruments:
UK
Rest of world
Additions included in fixed assets and investments
External income:UK
Rest of world

G10 Contingent liabilities
The Group has a number of contingent liabilities arising from litigation and from the rights of customers and suppliers to undertake routine
audits. These arise from trading activities undertaken in the ordinary course of business. The Group makes specific provision for the best
estimate of any amounts which might be awarded as a result of these. A provision is only made to the extent that the directors consider it
probable that there will be an outflow of economic benefits and the amount can be reliably estimated.

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81Group financial statements for the year ended 31 March 2016

Notes to the accounts
H. Basis of preparation of the financial statements and other accounting policies
The BBC is incorporated in the United Kingdom under the Charter.
Statement of accounting policies
The BBC Group is required to select andapply accounting policies for each type oftransaction entered into throughout the year
and in the preceding year. An accounting
policy will specify the timing for recognisingand derecognising assets, liabilities, income
and expenditure, how those items willsubsequently be measured and where they
are presented in the statement of total
income and expenditure, balance sheet andstatement of cash flows.
For ease of reference, the accounting policies
are grouped below into the section headings
used above for the notes to the accounts.
Use of estimates and judgements
The preparation of financial statements inconformity with IFRS requires the use ofcertain critical accounting estimates. It also
requires the BBC Executive Board to
exercise judgement in applying the BBCGroup’s accounting policies. These areas
involve a higher degree of judgement orcomplexity, or areas where assumptions or
estimates are significant to the consolidated
financial statements. We have presented
such estimates or judgements alongside therelated accounting policy within the relevant
section of the notes.
Basis of preparation
These consolidated financial statements
for the BBC Group have been prepared inaccordance with IFRS as adopted by the EU.
The financial statements are principally
prepared on the historical cost basis,
meaning that after initial recognition, thecarrying amount of assets and liabilities are
determined by reference to their originalcost. Areas where other bases are applied
are identified in the accounting policies within
the relevant section of the notes.
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 BBC Group’s financial
position and performance.

Adoption of new and revised accounting
standards
The following new and revised standards andinterpretations have been adopted for the
first time, as they became effective for thisfinancial year. They have been applied since
1 April 2015 and have not had a significant
impact on the results or financial position of
the Group:—— amendments resulting from Annual
improvements 2010 – 2012 Cycle (2013)—— amendments resulting from Annual
improvements 2011 – 2013 Cycle (2013)—— amendments to IFRS 7 (2011 and 2013)
Financial Instruments: Disclosures—— amendments to IAS 19 Employee
Benefits (2013)
Going concern1
The financial statements are prepared on agoing concern basis. The directors believe
this to be appropriate for the reasons set
out below.
The directors have prepared and reviewed
cash flow forecasts for the 24-month period
to 31 March 2018, 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 thecontinuity of the Charter and licence fee(the quantum of which has been agreed
until 2017), the BBC Pension Scheme
deficit and the resultant deficit recovery
payments agreed with the pension
scheme Trustees and the realisation ofplanned cost savings under the ‘Delivering
Quality First’ programme.
The Charter and licence fee give the BBCGroup a secure source of income, however,
the timing of cash flows is an importantfactor in the consideration of going concern
given the borrowing restrictions agreed
with the DCMS for both the PSB Group(£200 million) and the commercial
operations of the BBC (£350 million).
The BBC Group has external funding
available, including a £200 million sterling
revolving credit facility which expires on
31 March 2020, which is currently unutilised.
PSB net funds at 31 March 2016 were£239 million, this equates to a headroom of£389 million.

The BBC Group also has a £381 million
multicurrency revolving credit facility
available to the BBC commercial operations,with funding split between a US$259 million
US Private Placement (fixed through foreignexchange swap transactions at £171 million)
until June 2020 and a £210 million facility until
July 2019. As at the year end the Group had
drawn down £231.9 million of the facilities
available (2015: £209.4 million).
The directors of the BBC Group havereviewed these forecasts and taking all above
factors into consideration, together with thesensitivities and mitigating factors in thecontext of available funds, they expect the
BBC Group to be able to meet its debts asthey fall due for the foreseeable future.
As a result, the directors are satisfied that thegoing concern basis is appropriate for the
preparation of these financial statements.
Basis of consolidation
The BBC Group accounts include the resultsof the BBC and all businesses controlled by
the BBC (subsidiaries1) together with theBBC’s share of the results of businesses overwhich the BBC has significant influence but
not control (associates1) and those which the
BBC jointly controls (joint ventures1).
The BBC Group accounts for its interests inassociates and joint ventures using the equity
method. The equity method means that the
BBC presents its interest in the associates orjoint ventures as a single line item in thebalance sheet, measured at the cost of theinvestment plus the share of the net result,less dividends received. The equity accounted
result for the year is presented as a single
line item in the statement of income
and expenditure.
Changes in the BBC Group’s interestsin subsidiaries that do not result in a lossof control are accounted for as equity
transactions, being movements between
reserves attributable to the BBC andnon-controlling interests. A non-controllinginterest is the interest in a subsidiary that is
not owned, directly or indirectly, by the BBC.
The non-controlling interest reflects theamount of the net result for the year andthe net assets/(liabilities) which are not
attributable to the BBC. The carrying
amounts of non-controlling interests are
1 See Glossary for further details

82

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adjusted to reflect any changes in their, andthe BBC Group’s, relative interests in thesubsidiaries. Any difference between
the amount by which the non-controllinginterests are adjusted and the fair valueof the consideration paid or received isrecognised directly in equity and attributed
to the BBC.
When the BBC Group loses control ofa subsidiary, the profit or loss on disposal
is calculated as the difference between(i) the aggregate of the fair value of theconsideration received and the fair value of
any retained interest and (ii) the previous
carrying amount of the net assets of thesubsidiary (including attributable goodwill)
and any non-controlling interests.
Amounts previously recognised in othercomprehensive income in relation to thesubsidiary are reclassified to the income
statement or transferred directly to retained
earnings as appropriate. The fair value of any
interest retained in the former subsidiaryat the date when control is lost is regarded
as the cost on initial recognition of aninvestment in an associate or joint venture.
Business combinations
The acquisition of subsidiaries is accounted
for using the acquisition method. The costof an acquisition is measured at the aggregateof the fair values, at the date of exchange, ofassets given by the BBC Group in exchange
for control of the acquiree. The acquiree’s
identifiable assets, liabilities and contingent
liabilities that meet the conditions forrecognition under IFRS 3 are recognised
at their fair value at the acquisition date.
Subsequent adjustments to the fair valuesof net assets acquired are made within
12 months of the acquisition date where
original fair values were determined
provisionally. These adjustments areaccounted for from the date of acquisition.
Transaction costs that the BBC Group incurs
in connection with a business combination,such as legal fees, due diligence fees andother professional and consulting fees, areexpensed as incurred. On acquisition, the
BBC Group recognises any non-controllinginterest either at fair value or at the
non-controlling interest’s proportionate
share of net assets.

When control is obtained in successive sharepurchases (a ‘step acquisition’), it is accounted
for using the acquisition method at theacquisition date. The previously held interestis remeasured to fair value at the acquisition
date and a gain or loss is recognised in theincome statement.
Foreign currency transactions1
Transactions in foreign currencies aretranslated into sterling at the rates of
exchange ruling at the date of thetransactions.
Monetary assets and liabilities denominatedin foreign currencies at the balance sheet
date are translated into sterling at the rateof exchange ruling at that date. Foreign
currency gains or losses arising from thetranslation of 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 within operating costs. Nonmonetary assets and liabilities measured athistorical cost are translated into sterling at
the rate of exchange on the date of initialrecognition.
Financial statements of foreign operations
The assets and liabilities of foreign operations
are translated into sterling at the rate ofexchange ruling at the balance sheet date.
The income and expenses of foreign
operations are translated into sterling at
average monthly rates of exchange ruling
during the financial period, which is a good
approximation for the actual rate. Exchange
differences arising on translation arerecognised directly in the translation reserve.
On disposal of an investment in a foreign
operation the associated translation reservebalance is released to the income statement.

Accounting policies relevant to section A
Licence fee income
Income from television licences is treatedas an amount due from the relevant
Government department, principally the
DCMS. This represents the value of licences
issued in the year, less a deduction forrefunds and cancellations.
Where an element of the licence fee income
has been ring-fenced by the Government fora specific purpose, that income is recognised
when it is due, except if it becomes virtuallycertain 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 and recognised as suchin the year the obligation to repay arises.
Other income
Other income arises from activities such as
the sale of goods, provision of services andgranting of licences. Revenue is measured
after deductions for value added tax, anyother sales taxes, trade discounts and sales
between BBC 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 of goods arestated after deduction of the sales valueof actual and estimated returned goods.
Examples of goods sold include magazines,
books and DVDs.
—— Sale of services
Revenue is recognised at the point theservice has been delivered and the receipt of
the income is probable. Where the delivery
is over a period of time, the revenue isrecognised on a straight line basis. Examplesof services sold include advertising andcommercial licences for specific rights
associated with TV programmes.
—— Royalties
Royalty income is recognised on receipt oron an accruals basis, in accordance with thedetail of the relevant agreements, where
sufficient information is available.

1 See Glossary for further details

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83Group financial statements for the year ended 31 March 2016

Notes to the accounts
H. Basis of preparation of the financial statements and other accounting policies continued—— Rental income
Rental income is recognised on a straightline basis over the term of the lease.
—— Grants from Government departments
Grants are recognised as income in thefinancial year that they relate to.
—— Grants from other public bodies
Grants from other public bodies arerecognised as income consistently withthe related costs, provided that there isreasonable assurance that the BBC willcomply with any conditions attached to the
grant and that the grant will be received.
—— Construction contracts
When the outcome of a construction
contract can be estimated reliably, revenue
and costs are recognised by reference to thestage of completion of the contract activity
at the balance sheet date. This is normallymeasured by the proportion that contract
costs incurred for work performed to datebear to the estimated total contract costs,
except where this would not be
representative of the stage of completion.
When it is probable that total contract costs
will exceed total contract revenue, theexpected loss is recognised as an expense
immediately.
—— Use of estimates and judgements –Commercial income
Revenue recognition in the BBC’scommercial operations is complex, witha number of different revenue streams
including sale of content to global
broadcasters, subscription income andrevenue from the sale of physical anddigital products.

Accounting policies relevant to section B
Completed originated programmes1,
programmes in production andprepayments to acquire future
programme-related rights
Completed originated programmes andprogrammes in production are held at cost.
Cost includes all direct costs, production
overheads and a proportion of otherattributable overheads. The proportion ofprogrammes necessarily taking a substantial
period of time to produce is small and as suchno borrowing costs are included in cost.
Where, exceptionally, a programme is unable
to be broadcast, as soon as it is virtuallycertain that this is the case, the full value ofthe programme will be written off to theincome statement.
Programme development costs are
expensed to the income statement
until such time as there is a strong indicationthat the development work will result in
a commissioned programme1, when any
further costs are recognised asprogramme‑related assets.
Originated programmes that are still in
production at the balance sheet date arerecognised as programmes in production,
except that prepayments to acquire future
programme-related rights are shown
separately where the BBC has madepayments to independent producers, or theholders of certain rights (for example, rights
to broadcast sporting events), to receive theprogramme on completion.

The complexity of individual contractual
terms may require the Group to makejudgements in assessing when the triggers
for revenue recognition have been met,
particularly whether the Group has
sufficiently fulfilled its obligations under thecontract to allow revenue to be recognised.

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 number of further
showings are contractually agreed, when they
are written off according to the expectedtransmission profile. Assets and liabilities
relating to acquired programmes arerecognised at the point of payment orcommencement of 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 as purchase commitments.
Where the BBC has invested in independent
productions, in addition to broadcastingrights, the BBC may obtain rights to futureroyalties from the sale of rights associatedwith the production. These residual interests
are recognised initially at cost subject toamortisation as royalties are received andimpaired if anticipated royalties do notmaterialise.
Other inventories
Raw materials and other physical inventory,
including finished goods, are stated at thelower of cost and net realisable value.
Works in progress comprises direct materials
and, where applicable, direct labour costs
and those overheads that have been incurredin bringing the assets to their present locationand condition. Net realisable value
represents the estimated selling price less all
estimated costs of completion and costs to
be incurred in selling and distribution.

1 See Glossary for further details

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Accounting policies relevant to section C
Other employee benefits
Other short and long-term employee
benefits, including holiday pay and longservice leave, are recognised as an expense
over the period in which they accrue.
Termination benefits
Termination benefits are expensed at theearlier of when the Group can no longer
withdraw the offer of those benefits andwhen the Group recognises costs for a
restructure.
Defined contribution plans
The amounts charged as expenditure forthe 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 Pension Scheme are held
separately from those of the BBC Group.
Pension scheme assets are measured
at fair value. Pension scheme liabilities aremeasured using the projected unit credit
method. The present value of scheme
liabilities is calculated by discounting
estimated future cash outflows at thecurrent rate of return on a high-quality
corporate bond of equivalent term andcurrency to the liabilities.
Remeasurement comprising gains and losses
and the return on scheme assets (excludinginterest) are recognised immediately in thebalance sheet with a charge or credit to thestatement of comprehensive income in the
period in which they occur. Remeasurement
recorded in the statement of comprehensive
income is not recycled. When the benefitsof a plan are changed the resulting change
in benefit that relates to past service isrecognised immediately in the income
statement. Net interest is calculated byapplying a discount rate to the net defined
benefit liability or asset. Defined benefit
costs are split into three categories:

bbc.co.uk—— current service cost, past-service costand gains and losses on settlements andcurtailments;—— net interest expense or income; and—— remeasurement.
The current service cost and past-service
cost are included within operating costsin the consolidated income statement.
Curtailments gains and losses are accounted
for as past-service cost. Net interest expense
or income relating to the funded defined
benefit pension plans is included within‘finance income’ or ‘finance costs’, as relevant,in the consolidated income statement.
Administration costs directly related to the
management of plan assets are deductedfrom the return on plan assets, which arerecorded as remeasurements in thestatement of comprehensive income. Other
administrative scheme expenses associatedwith running the scheme are recorded within
operating expenses when incurred.
The retirement benefit obligation recognisedin the consolidated balance sheet represents
the deficit or surplus in the Group’s defined
benefit schemes. Any surplus resulting fromthis calculation is limited to the present valueof any economic benefits available in theform of refunds from the schemes or
reductions in future contributions to theschemes.
Use of estimates and judgement –post retirement benefits
The pension costs and obligations of
the BBC Group’s defined benefit schemes
are calculated on the basis of a range ofassumptions, 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 smallchange in assumptions can have a significant
impact on the valuation of the liabilities.
Further analysis on the sensitivity of pension
assumptions is given in note C8.1.

Accounting policies relevant to section D
Owned assets
Other than as noted below, items ofproperty, plant and equipment are stated atcost 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 arecapitalised within property, plant andequipment and depreciation is provided as
appropriate. On initial recognition the asset
is measured at the lower of its fair value
and the present value of the minimum
lease payments.
Depreciation
Depreciation is provided to write off
the cost of each item of property, plant andequipment, less its estimated residual value,
on a straight line basis over its estimateduseful life. The major categories of property,
plant and equipment are depreciatedas follows:—— Land and buildings
Freehold land – not depreciatedFreehold buildings – 50 years
Freehold building improvements –10 to 50 years
Leasehold buildings – shorter of 50 years
or life of lease
Leasehold building improvements – shorterof 50 years or life of lease—— 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 eachreporting date.

BBC Full Financial Statements 2015/16

85Group financial statements for the year ended 31 March 2016

Notes to the accounts
H. Basis of preparation of the financial statements and other accounting policies continued—— Use of estimates and judgements –capital projects
The BBC is completing a number ofsignificant capital projects for whichamounts have been capitalised on theGroup’s balance sheet.
The recoverability of these assets isdependent on the achievement of projectcompletion and the assets being used in themanner intended as part of the original
business case.
Investment properties
Investment properties are initially recognised
at cost and subsequently carried at cost lessaccumulated depreciation and accumulated
impairment losses. Depreciation is calculatedusing a straight line method to allocate thedepreciable amounts over the estimateduseful lives of the properties. The residual
values, useful lives and depreciation methodof investment properties are reviewed, andadjusted as appropriate, at each balance
sheet date. The effects of any revision are
included in the profit and loss when thechanges arise.
Lease payments
Payments made under operating leases arerecognised in the income statement on astraight line basis over the lease term.
Payments made under finance leases areapportioned between financing costs andthe reduction of the outstanding liability.
The financing costs are allocated to eachperiod so as to produce a constant periodic
rate of interest on the remaining balanceof the liability.
Use of estimates and judgements – leases
The determination of whether anarrangement is, or contains, a lease, is basedon the substance of the arrangement andrequires an assessment of whether thefulfilment of the arrangement is dependent
on the use of a specific asset or assets andwhether the arrangement conveys the rightto use the asset.
In assessing whether a lease is an operatinglease or a finance lease, judgement needs tobe exercised in determining whether or
not substantially all the risks and rewards ofownership of the leased asset are held by the
BBC Group. Given that finance leases arerecognised as liabilities, and operating leases
are not, this can have a significant effect on

the reported financial position of the BBC.
Another key judgement is the determinationof the commencement date of a lease.
When determining the accounting fora finance lease, the BBC has assessed
whether it has the right to use the leased
asset at the inception of the lease, orwhether this right passes at a later date(‘the commencement date’).
Where a significant site is being redeveloped,
occupation may occur in distinct phases;
consequently, the leased asset and liabilities
are recognised based on the proportion of thesite occupied at each commencement date.
Non-current assets held for saleNon-current assets (and disposal groups
comprising assets and liabilities) are classified
as held for sale if their carrying 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 aremeasured at the lower of their previous
carrying amount and fair value less costs tosell. No amortisation or depreciation ischarged on non-current assets (including
those in disposal groups) classified as held
for sale.
Investments in equity securities
Investments in equity securities held by theGroup are classified as being available for saleand are stated at fair value, with any resultant
gain or loss being recognised in the statementof comprehensive income, except for
impairment losses. When these investments
are derecognised the cumulative gain or loss
previously recognised in the statement ofcomprehensive income is recognised in theincome statement.

Accounting policies relevant to section E
Programme-related intangible assets
Programme-related intangible assets, which
include programme rights and residual
programme rights1, are stated at cost, after
writing off the costs of programmes that areconsidered irrecoverable, less accumulated
amortisation. The cost and accumulated
amortisation of programme-related
intangible assets are reduced byprogrammes which are fully written off.
Research and development1 expenditure– internally generated intangible assets
Expenditure on research activities is written
off in the income statement when incurred.
Expenditure on development activities is
included on the balance sheet as an asset only
if both of the following conditions are met:—— it is probable that the asset will generate
future economic benefits; and—— the development costs of the asset canbe measured reliably.
The assets are measured at cost lessaccumulated amortisation and any
accumulated impairment losses.
For the PSB Group it is generally unlikely that
future economic benefits in the form of cash
inflows will be received, and as a result, otherthan assets created for use by the business indelivering its public purposes, development
costs are only capitalised by the BBC Group’scommercial businesses.
Other intangible assets
Other intangible assets acquired separatelyby the BBC Group are stated at cost lessaccumulated amortisation and any
accumulated impairment losses. The
identifiable intangible assets acquired as partof a business combination are shown at fairvalue at the date of acquisition (in accordancewith IFRS 3 Business Combinations) lessaccumulated amortisation and any
accumulated impairment losses.
Amortisation1
Amortisation is charged to the income
statement on a systematic basis over theestimated useful lives1 of intangible assets,from the date that they are available for use,
unless such lives are indefinite. The useful
lives and amortisation methods for eachmajor class of intangible asset are as follows:
1 See Glossary for further details

86

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00-00
27-92The BBC’s consolidated financial statements—— programme rights and residual
programme rights – charged to theincome statement to match the averagerevenue profile of the programme genre
over the estimated average marketable
life, generally between 2 and 10 years;
and—— other intangibles:
UKTV carrier Straight line
agreement
Software
Other

Straight line
Straight line

Unexpiredterm ofagreement
2 – 5 years
3 – 8 years

Amortisation methods, useful lives andresidual values are reviewed at each balance
sheet date and adjusted if appropriate.
Impairment1: Non-financial assets
At each balance sheet date, the BBC Group
reviews the carrying amount (net amountheld on the balance sheet) of those assetsthat are subject to amortisation 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 todetermine the extent of any impairment loss.
For goodwill the recoverable amount isestimated each year at the same time.
The recoverable amount of an asset is thehigher of fair value1 less costs to sell and value
in use. For the purposes of impairment
testing, assets are grouped at the lowest levelat 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 thatreflects current market assessments of thetime value of money and the risks specific to
the asset for which the estimates of future
cash flows have not been adjusted.
An impairment loss is recognised in theincome statement for the amount by which
the asset’s carrying amount exceeds its
recoverable amount. Where a cashgenerating unit is impaired the impairment
loss will first be allocated to reduce goodwill
and then to the other assets of the cashgenerating unit on a pro rata basis, exceptthat 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 estimatesused to determine the recoverable amount.
An impairment loss is reversed only to theextent that the asset’s carrying amount does
not exceed the carrying amount that would
have been determined, net of depreciationor amortisation, if no impairment loss has
been recognised.
Goodwill1
Goodwill is recorded in the balance sheet as
the difference between the fair value of theconsideration transferred by the BBC andthe recognised amount of non-controllinginterests in the acquire compared to the fairvalue of the identifiable assets and liabilities
acquired. These are all measured at the dateof acquisition. Where the consideration isless than the net assets acquired, thedifference is recognised immediately in theincome 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 Groupelected to restate only those businesscombinations that occurred on or after
1 April 2007. In respect of acquisitions prior
to 1 April 2007, goodwill is recognised atdeemed 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 arising on the acquisition of
associates and joint ventures is included in
the carrying amount of the joint venture orassociate and is tested for impairment as partof the overall balance.
Subsequent measurement of separately
recognised goodwill – goodwill is tested
annually for impairment and is measured atcost 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 relevant business combination.

Accounting policies relevant to section F
Trade and other receivables
Trade receivables are recognised initiallyat fair value and subsequently measured
at fair value less an allowance for estimatedimpairment. The allowance is based on
objective evidence that the BBC Groupwill not be able to recover all amounts due.
Changes in the carrying amount of theallowance are recognised in the income
statement.
Trade and other payables
Trade and other payables are recognised
initially at fair value and subsequently
measured at amortised cost using theeffective interest method.
Borrowing costs
Borrowing costs directly attributable to theacquisition, construction or production ofqualifying assets (those necessarily taking asubstantial period of time to get ready for
their intended use) are added to the cost of
those assets, until such time as the assets areready for their intended use.
Originated programmes can be qualifying
assets, but those necessarily taking asubstantial period of time to get ready forbroadcast 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.
All finance income and other borrowing
costs are recognised in income and expensein the period in which they are incurred.
Use of estimates and judgements –provisions
Judgement and estimation techniques are
employed in the calculation of the best
estimate of the amount required to settle
obligations, including determining how likely
it is that expenditure will be required by theBBC. This can be very complex, especiallywhen there is a wide range of possible
outcomes.
The BBC Group recognises decommissioning
liabilities as part of the initial cost of the asset,
discounted to present value. The Groupreassesses whether there has been a change
in this liability based on the facts andcircumstances at each balance sheet date.

1 See Glossary for further details

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87Group financial statements for the year ended 31 March 2016

Notes to the accounts
H. Basis of preparation of the financial statements and other accounting policies continued
Accounting policies relevant to section G
Taxation
The tax charge for the period comprises
both tax currently payable and deferredtax. Taxation is recognised in the income
statement except to the extent that it relates
to items recognised directly in reserves, inwhich case it is recognised in reserves.
Current tax is the expected tax payable forthe year, using tax rates that are enacted or
substantively enacted at the balance sheet
date, and any adjustment to tax payable inrespect of previous years. In respect of tax
currently payable:—— the PSB Group 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. Expenditure on capital assets is
not eligible for capital allowances giving
rise to temporary differences thatwould lead to deferred tax assets or
liabilities. Movements of fair value
adjustments in the income statement
give rise to deferred tax balances—— the BBC’s commercial subsidiaries areliable for corporation tax based on
taxable profit for the year
Current tax assets and current tax liabilities
are offset if, and only if, there is a legally
enforceable right to set off the recognised
amounts; and the entity intends either tosettle on a net basis, or to realise the asset
and settle the liability simultaneously.
Deferred tax is provided using the balance
sheet liability method on any temporary
differences between the carrying amountsof assets and liabilities for financial reporting
purposes and the amounts used fortaxation purposes. The amount of deferred
tax provided is based on the tax rates
expected to apply in the period when theliability is settled or the asset is realisedusing tax rates enacted or substantively
enacted at the balance sheet date.
Deferred tax assets and deferred tax
liabilities are offset only where there is alegally enforceable right to set off current

tax assets against current tax liabilities; andthe deferred tax assets and the deferred tax
liabilities relate to income taxes levied by thesame taxation authority on either:—— the same taxable entity; or—— different taxable entities which intend
either to settle current tax liabilities
and assets on a net basis, or to realise
the assets and settle the liabilities
simultaneously, in each future period inwhich significant amounts of deferred
tax liabilities or assets are expected to
be settled or recovered.
Financial instruments
The BBC Group holds various derivative1 andnon-derivative financial instruments (including
assets such as trade investments and liabilities
such as borrowings). All financial assets arerecognised and derecognised on a trade date.
The accounting policy for the major categories
of financial instruments is set out below.
Cash and cash equivalents
Cash and cash equivalents comprise cash
balances and call deposits with maturitiesof 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 recognised.
Derivative financial instruments
The BBC Group does not enter into
speculative derivative contracts, however,some derivative financial instruments areused to manage the BBC’s exposure tofluctuations in interest rates (interest rate
swaps1, caps1 and collars1) and foreign
currency exchange rates (foreign currency
forwards contracts and currency options).
Derivative financial instruments, excluding
derivatives held as qualifying hedges, areinitially recognised at fair value and aresubsequently remeasured to fair value
at the balance sheet date with movements
recorded in the income statement.
The fair value of interest rate swaps, caps andcollars is the estimated amount that the BBCGroup would receive or pay to terminate theswap, cap or collar at the balance sheet date,taking into account current interest rates,

the current creditworthiness of swap,
cap or collar counterparties and thecreditworthiness of the BBC.
The fair value of foreign currency forward
contract rates is determined using forward
exchange rates at the balance sheet date.
Hedge accounting
The BBC Group designates certain
derivatives as cash flow hedges by
documenting the relationship between thehedging instrument and the hedged item,
along with the risk management objectives
and its strategy for undertaking various
hedge transactions. Where the hedge isdeemed to have been effective, the effective
portion of any changes in the fair value of thederivatives that are designated in the hedge
are recognised in other comprehensive
income. The accumulated amount in the cash
flow hedge reserve is reclassified to profit orloss in the same period as the hedged cash
flows affect profit or loss. Any ineffective
portion of the hedge is recognised
immediately in the income statement.
Embedded derivatives
These derivatives are found embedded
within other financial instruments or otherhost contracts. Once identified they aretreated as derivatives in their own right if
their risks and characteristics are not closely
related to those of the host contract and thehost contract is not carried at fair value.
Embedded derivatives are carried on thebalance sheet at fair value from inception1 of
the host contract. Unrealised changes1 in fairvalue are recognised as gains/losses within
the income statement during the period inwhich they arise.
Use of estimates and judgements –Impairment of financial assets
Financial assets are assessed at each balance
sheet date to determine whether there is any
objective evidence of 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 are tested for impairment on
an individual basis. The remaining financial
assets are assessed collectively in groups thatshare similar credit risk characteristics.

1 See Glossary for further details

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27-92The BBC’s consolidated financial statements

The amount of the loss is measured as thedifference between the asset’s carrying
amount and the present value of estimatedfuture cash flows discounted at the financial
asset’s original effective interest rate1. All
impairment losses are recognised in theincome statement.

Reserves
The operating reserve is the accumulated
surplus/deficit to date.
Available for sale reserve includes fairvalue gains and losses on available for salefinancial assets.

The hedging reserve is used to record
the effective portion of the cumulative netchange in the fair value of 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 theretranslation of the net assets and resultsof overseas subsidiaries.

New standards and interpretations not yet adopted
At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in thesefinancial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):IFRS 9IFRS 15IFRS 7IFRS 16IFRS 14
Amendments resulting from Annual Improvements
2012-2014 Cycle
IFRS 10 (amendments) and IAS 28 (amendments)
IFRS 11IFRS 12
IAS 1 (amendments)
IAS 16 (amendments) and IAS 38 (amendments)
IAS 27IAS 7
IAS 12Financial Instruments
Revenue from Contracts with Customers
Financial Instruments: Disclosures
LeasesRegulatory Deferral Accounts

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Joint Arrangements
Disclosures of Interests in Other Entities
Presentation of Financial Statements
Clarification of Acceptable Methods of Depreciation and Amortisation
Separate Financial Statements
Statement of Cash Flows
Income Taxes

The directors do not expect that the adoption of the standards and interpretations listed above would have a material impact on the financial
statements of the Group in future periods, except for the following:—— IFRS 9 will impact both the measurement and disclosures of financial instruments;—— IFRS 16 will impact both the measurements and disclosures of leases; and—— IFRS 15 may have an impact on revenue recognition and related disclosures
IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. It includes revised
guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment
on financial assets, and the new general hedge accounting requirements. The Group is assessing the potential impact on its consolidated financial
statements resulting from the application of IFRS 9.
IFRS 16 replaces the existing guidance in IAS 17 Leases. A single model for lessees will be required, eliminating off balance sheet accounting for
non-exempt operating leases. Related lease assets and liabilities will therefore come onto the balance sheet and the presentation and timing ofincome and expense recognition in the income statement will change. The Group is assessing the potential impact on its consolidated financial
statements resulting from the application of IFRS 16.
IFRS 15 is a converged standard from the IASB and FASB on revenue recognition. It provides a single, principles-based five-step model to be
applied to all contracts with customers and establishes a comprehensive framework for determining whether, how much and when revenue isrecognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer
Loyalty Programmes. This is likely to impact the Group’s royalty based income. New disclosures about revenue will also be introduced.
Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 and IFRS 15 until a detailed review
has been completed.

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Group financial statements for the year ended 31 March 2016

Glossary
With the aim of improving comprehension, the table below explains the financial terms used within the financial statements:
Term

Note

Definition

Amortisation

H

Amortisation is the reduction reflected in the carrying value of the asset as a consequence of the regular use ofthat asset by the organisation.

Assets available for sale

D3

Assets available for sale are interests in entities in which the BBC has neither control nor a significant interest.

Associate

E4

An associate is an entity that the BBC Group has significant influence over, but that does not meet the definitionof a joint venture or subsidiary. Significant influence is the power to participate in the financial and operating
decisions of an entity but is not control or joint control over those policies.

Cash-generating units

E2

Cash-generating units are the smallest group of assets that can independently generate cash flows.

Changes in demographic andfinancial assumptions

G3.1

Changes in demographic and financial assumptions represent the changes in estimates used to value the future
liability. Demographic assumptions include mortality rates, staff turnover and early retirement. Financial
assumptions encompass items such as discount rate and future salary levels.

Commissioned programme

H

A commissioned programme is where an agreement has been made for the programme to be produced forbroadcast.

Credit risk

G4.1

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails tomeet its contractual obligation.

Current service cost

C7.2

The current service cost is the underlying cost to the BBC of pension rights earned by employees during the year.

DCMS borrowings

F1

The DCMS definition of ‘borrowings’ excludes leases which would be classified as operating under UK GAAP, butwhich are classified as finance leases under IFRS at the date of transition to IFRS. These leases are therefore
excluded when comparing net debt/funds to DCMS borrowing ceilings.

Deferred tax

G2.1

Deferred tax is the amount of income tax payable or recoverable in future periods in respect of taxable ordeducible temporary differences, the carry forward of unused losses, and/or the carry forward of unused tax
credits. Temporary differences are differences between the carrying amount of an asset or liability in thestatement of financial position and its tax base, where the tax base of an asset or liability is the amount attributed
to that asset or liability for tax purposes.

Derivative

G4.3

A derivative is an asset or liability that is dependent on, or derives its value from, another asset or liability and is tobe settled in the future.

Discount rate

G3.5

The discount rate for the IAS 19 valuation has been derived with reference to market yields at the end of thereporting period on AA rated sterling-denominated corporate bonds with maturities consistent with theestimated term of the post-employment benefit obligations. Certain types of bonds are excluded from thecalculating model, either because they have unusual features, are relatively small or potential outliers, in order toremove the distortion that might otherwise occur from including unusual, less liquid or potentially mis-rated
bonds. Extrapolation is performed when the profile of the Scheme’s expected benefit outgo is longer than the
cash flows of the available bonds.

Effective interest rateH

An effective interest rate is the rate used to discount future cash flows over the life of the contract back topresent value.

Effective tax rate

G2.2

The tax charge for the year as a percentage of Group surplus/deficit excluding tax.

Exercise

G4.3

Exercise is the point at which the rights in the option are implemented or acted upon.

Fair value

D, G

The fair value of an asset is the amount for which the asset could be exchanged between knowledgeable, willing
parties in an arm’s length transaction.

Finance lease

D4

A finance lease is a lease where the lessee has substantially taken on the risks and rewards of ownership andoperating the asset. As such, both the asset and future liability are recognised on the balance sheet.

Foreign currency transactions

G

As these financial statements are prepared in sterling the BBC’s foreign currency transactions and balances mustbe translated at appropriate exchange rates, into sterling. This means that variations in exchange rates can cause
the valuation of investments to fluctuate even when there has been no change in the health of the underlying
business.

Forward foreign currency
contracts

G4.3

Under forward exchange contracts you buy or sell a currency at a fixed exchange rate with delivery made on agiven date or dates in the future.

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Term

Note

Definition

Going concern

H

The directors are required to make a statement that the BBC is a going concern which means it can meet its
debts and continue trading for a period of at least 12 months from the date on which these financial statements
were signed.

Goodwill

H

Goodwill is the difference between the value paid for a business and the fair value of its net assets. It represents
the premium the purchaser is prepared to pay for the business.
Consideration, in this context, is the monetary value transferred in exchange for the share in ownership ofanother entity.
Where the BBC does not own an entity outright, the other shareholders are known/disclosed as non-controllinginterests.

IAS 19 valuation

C8.1

The IAS 19 valuation takes assets at their market value and discounts the accrued liabilities by reference to thediscount rate of an AA rated corporate.

Impairment

H

An impairment occurs when the carrying value of an asset is higher than the amount that is recoverable from its
use or sale.

Inception

H

Inception is the point at which a contract is confirmed, this is normally the point at which the contract is signed.

Interest cost on pension plan
liabilities

F9

The interest cost on pension plan liabilities represents the increase during the year in the value of the plan
liabilities because the benefits are one year closer to settlement.

Interest rate caps

G4.1

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 falling interest rates.

Interest rate collars

G4.1Interest 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

G4.1

Interest rate swaps effectively swap a floating rate loan into a fixed rate loan, or vice versa.

Joint venture

E4

A joint venture is where the BBC Group has joint control over an entity with another partner(s).

Maturity

G3.6

The maturity of a scheme provides an indication of the cash requirements of the scheme and the likely attitude of
the Trustees to risk within their investment policy. The more mature a scheme, the more likely that Trustees will
favour low risk investments.

Net finance income/(cost)

C7.2

Net finance income/(cost) is the difference between the expected return on assets and the interest liabilities.

Operating lease

D6

An operating lease is a lease where the lessee has not taken on the risks and rewards of owning and operating theasset. The lessee (the BBC) is hiring rather than buying an asset.

Originated programmes

B5

Originated programmes are programmes produced internally by the BBC Group for broadcasting and/or sale of
the rights to broadcast.

Past service cost

C7.2

The past service charges arise from changes to the terms and conditions relating to member’s defined retirement
benefits, resulting in a credit for years of service already given.

Pension Increase Exchange

C7.2

A PIE exercise involves offering defined benefit (DB) scheme members the choice of exchanging future annual
increases on their pensions for a one-off immediate uplift. The uplifted pension does not then attract any further
annual increases. The offer can be made to members currently receiving pensions, or to members at the point of
retirement.

Pension scheme

C7

On retirement, members of the BBC’s defined benefit Pension Scheme are paid their pensions from a fund whichis kept separate from the Group to which the BBC makes cash contributions.

Plan liability

F9The plan liability represents the expected amount of money that will be needed in the future to pay employees
for their current and future service to the company.

Programme rights

H

Programme rights are rights held by the BBC that permit a future transmission of a particular programme or
event.

Provisions in relation toassociates and joint ventures

E4

Where the BBC has an obligation to settle an individual net liability of a joint venture, this is reflected withinprovisions.

Public services

F2

Public Services in this context represent the PSB Group (excluding Centre House Productions Limited – see note
G4.2).

Put option

G4.3

A put option issued by the BBC provides the holder the rights, but not the obligation to require the BBC to buy
shares at a future date and price determined by the option agreement.

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91Group financial statements for the year ended 31 March 2016

Glossary
Term

Note

Definition

Related parties

C6

Related parties include key management personnel, their immediate families and external entities controlled bythem.

Remeasurement gains and losses

G3.4

These gains and losses arise from actual performance being different from that predicted. Only defined benefit
schemes give rise to gains and losses in the statement of comprehensive income.

Remeasurements

C7.2

Remeasurements which arise from actual performance being different from that predicted give rise to gains andlosses in the statement of comprehensive income.

Remeasurements on plan assets

G3.2

Remeasurements on plan assets represent the amount by which the assets held by the scheme (such as equities,
bonds and property) have performed better or worse than the expected prior year value.

Research and development

B1

Research and development costs are incurred to explore ideas for new programmes or assets, such as the BBC
iPlayer. Research costs are where the ideas are generated, some of which are then developed further into a planor design where the costs are then categorised as development.

Strike price

G4.3

The strike price is the price the option will sell at.

Subsidiary undertaking

G5.3

A subsidiary undertaking is an entity that is directly or indirectly controlled by the Group. Control exists where
the Group has the power to govern the financial and operating policies of the entity so as to obtain benefits fromits activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into
account.

Unrealised changes

H

Unrealised changes are those changes that occur to the value of the embedded derivative prior to the point at
which the derivative is exercised.

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BBC in the nations

BBC in the nations

In the following section, we report
income, expenditure and performancefor the BBC in the devolved Nationsof the UK – Wales, Scotland andNorthern Ireland.
Network services are pan-UK
services, and local services are thosededicated services for audiences
within that Nation.

The following pages do not form part of the audited financial
statements and have not been audited by Ernst & Young LLP.
However, Ernst & Young LLP have:— ensured the data has been properly extracted fromthe BBC systems— ensured the data presented is consistent with thefinancial statements
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93BBC in the nations

Wales
The BBC’s expenditure in Wales during 2015/16 was £177.7 million across all services and platforms. Total expenditure represents an increaseof £8.5 million on network content and £1.7 million on local content when compared to the previous year. Network TV in 2015/16 included
BBC Wales productions The Game and the Sherlock Special along with Casualty, Doctor Who, Crimewatch, Coast, Bargain Hunt and a number ofFactual productions for Daytime television.
In terms of volume for local content there has been little change, around 700 hours of English language TV content in both years (including
repeats) and a small increase of 14 hours on content for S4C relating to repeats of Pobol y Cwm. Similarly the BBC Wales radio services are
relatively static year on year with Radio Wales transmitting 7,439 hours in 2015/16 and Radio Cymru at 7,000 hours.
The reduction in time spent by BBC audiences consuming our television output in 2015/16 reflects wider trends and changes in audiencebehaviour.
The following pages provide additional detail on the BBC’s performance in Wales, including income, high level expenditure and performanceacross services provided in Wales.

IncomeThese numbers are estimated as figures for each nation and have been calculated by applying the proportion of licenced premises to the total
number of licences in force. The exact number of licences in force varies on a daily basis. The number of licenced premises are different to thenumber of licences in force as, in some cases, a premise may need more than one licence. Figures exclude concessionary licences for those living
in residential care.
2016
£m

2015
£m

UK

3,742.8

3,735.4

Wales

186.5

186.0

2016
£m

2015
£m

TV (inc. Sport and Childrens)*

69.4

60.8

Radio

3.8

3.8

Online & Red Button

1.5

1.6

Total network spend

74.7

66.2

TV – BBC One

21.7

21.4

TV – BBC Two

12.0

10.5

Radio Wales

15.1

15.5

Radio Cymru

14.2

14.1

Online & Red Button

6.4

6.2

Total local spend

69.4

67.7

Estimated income

Expenditure by service
Direct and indirect spend relating to programmes produced in the nation.

Network content

Local content

National Orchestra of Wales

4.7

4.6

S4C**

28.0

27.1

Development
Total

0.9

1.2

177.7

166.8

* Network content is attributed on an Ofcom basis, which excludes foreign productions.
** This represents the television programmes commissioned and produced by BBC Wales and supplied to S4C (i.e. excluding programmes commissioned directly by S4C from other producers).

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BBC in the nations

TV hours
Local opt-out hours^ (including repeats) on BBC One and BBC Two
2016
Hours

2015
Hours

Drama, Comedy, Entertainment, Music & Arts

31

27

Daily, Weekly News and Current Affairs

400

390

Sport & Leisure

168

166

Education, Factual & Religion

98

117

Childrens

–

–

697

700

2016
Hours

2015
Hours

Drama, Comedy, Entertainment, Music & Arts**

246

220

Daily, Weekly News and Current Affairs

263

273

Sport & Leisure98

99

Education, Factual & Religion

98Childrens

–

2

616

602

Total
^ Television content commissioned specifically for audiences in the nation.

S4C*

Total

* This represents the television programmes commissioned and produced by BBC Wales and supplied to S4C (i.e. excluding programmes commissioned directly by S4C from other producers).
** This includes repeats where BBC Wales has incurred a charge associated with the transmission of the programmes. The 2016 hours include 100 hours of repeats (including 77 hours of Pobol y Cwm) and the2015 hours include 38 hours of repeats (including 35 hours of Pobol y Cwm).

Radio hours
BBC Radio Wales
2016
Hours

2015
Hours

News and Current Affairs

2,168

2,206

General

5,271

5,217

Total

7,439

7,423

2016
Hours

2015
Hours

News and Current Affairs

1,418

1,323

General

5,582

5,613

Total

7,000

6,936

2016
Number

2015
Number

1,158

1,145

2016
Number

2015
Number

1,394

1,444

BBC Radio Cymru

Headcount
Average headcount reflects those individuals employed to directly support the services produced in Wales.

Average number of persons employed in the year

Average headcount of individuals based in Wales across all services including support functions.

Average number of persons employed in the year

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BBC in the nations

Wales’ performance by service
Content (£m)
We spent a totalof £103.1 million onthese services lastyear in Wales

Reach (%)
Wales population
who use the service
each week

Time spent
watching a channel
each week (h:m)
Length of time theaverage Wales viewer
spent each week withthe channel£77.1m

75.9%

08:39

£22.2m

49.9%

03:17

£0.4m*

19.5%^

01:50

£3.4m

13.0%

01:41

–

4.4%

02:35

–

6.6%

04:19

Television
BBC One is our flagship service and the UK’s mostpopular television channel. It unites and inspires thenation with high-quality programmes across a range ofgenres which includes news and current affairs, drama,
comedy, entertainment and factual.

2014/15: £68.0m
BBC Two is a mixed-genre channel with programmesof depth and substance. It includes the greatest amountand range of knowledge-building programming on
the BBC, complemented by distinctive comedy, drama
and arts programming.

2014/15: £15.2m
BBC Three is constantly innovating to provoke
thought and to entertain audiences from 16-year-olds
to 30-somethings with original comedy, drama andfactual programming that celebrates new British talent.

2014/15: £1.4m
BBC Four aims to be British television’s mostintellectually and culturally enriching channel, offering an
ambitious range of UK and international arts, music,
culture and factual programmes.

2014/15: £3.3m
The CBBC channel offers a distinctive mixed schedulefor 6- to 12-year-olds, with mainly UK programmes
served in a stimulating, creative and enjoyable
environment.

2014/15: £3.7m
CBeebies provides a mix of high-quality, mostly
UK-produced, programmes designed to encouragelearning through play in a consistently safe environment
for children under six.

2014/15: £1.1m

2014/15: 77.5%

2014/15: 51.4%

2014/15: 20.8%

2014/15: 13.2%

2014/15: 4.7%

2014/15: 9.4%

2014/15: 08:53

2014/15: 03:19

2014/15: 01:54

2014/15: 01:44

2014/15: 02:21

2014/15: 04:22

Reach definition: 15+ minutes consecutive for all channels and services and audiences aged 4+ (TV).
Source: BARB (TV reach and time spent – all channels include their simulcast HD channel where applicable).
^ BBC Three: among its target group of 16-34 year-olds reach was 25.2%. Owing to the channel moving online, BBC Three BARB data to 14/02/2016.
* BBC Three as a linear service closed in March 2016, being replaced with an online service from February 2016. Spend on BBC Three Online formed part of the BBC Online & Red Button service from thatpoint onwards.

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BBC in the nations

Wales’ performance by service
Content (£m)
We spent a totalof £3.8 million onthese services lastyear in Wales

Reach (%)
Wales population
who use the service
each week

Time spent listening
to a service eachweek (h:m)
Length of time theaverage Wales listenerspent each week withthe service–

24.9%+

07:49

–

2.0%^

2014/15: 1.8%

02:20§

2014/15: 02:55–

36.6%**

13:30

£2.6m

3.4%

05:42

£1.2m

16.6%

11:51

–

3.0%

07:06

–

9.1%

06:33

–

2.8%

03:44

Radio
BBC Radio 1 broadcasts a distinctive mix of new musicand entertainment for 15- to 29-year-olds as wellas providing tailored news, documentaries and advice
campaigns for young adults.

2014/15: –2014/15: 26.4%

2014/15: 07:12

BBC 1Xtra plays the best in contemporary black music,
with a strong emphasis on delivering high-quality live
music and supporting new artists.

2014/15: –BBC Radio 2 broadcasts a unique mix of music andspeech programmes covering a diverse mix of live pop
and rock, comedy, documentaries and religious output,
as well as running social action campaigns to over
14 million listeners.

2014/15: –BBC Radio 3 centres on classical music, around which
it provides a broad spectrum of jazz, world music, arts
programmes, religion and drama. There is a strongemphasis on musical performance across the UK.

2014/15: £2.6m
BBC Radio 4 is a mixed-speech radio station, offering
in-depth news and current affairs and a wide range ofother speech programmes including drama, readings,
comedy, factual and magazine programmes.

2014/15: £1.2m
Originally launched in 2002 as BBC 7, the station was
relaunched in April 2011 as BBC Radio 4 extra. The
digital-only network is the principal outlet for theBBC’s archive of speech entertainment, including
comedy, drama and readings.

2014/15: –BBC Radio 5 live broadcasts continuous news and live
sports coverage, bringing major news stories and sports
events to its listeners as they happen, and providing
context through wide-ranging analysis and discussion.

2014/15: –2014/15: 38.2%

2014/15: 3.1%

2014/15: 06:43

2014/15: 18.0%

2014/15: 3.0%

2014/15: 8.3%

2014/15: 12:26

2014/15: 11:43

2014/15: 05:14

2014/15: 06:02

BBC Radio 5 live sports extra brings a greater choice oflive action to sports fans by extending live coverage ofvarious sporting events.

2014/15: –bbc.co.uk

2014/15: 1.7%

2014/15: 04:03

BBC Full Financial Statements 2015/16

97BBC in the nations

Wales’ performance by service
Content (£m)
We spent a totalof £3.8 million onthese services lastyear in Wales

Reach (%)
Wales population
who use the service
each week

Time spent listening
to a service eachweek (h:m)
Length of time theaverage Wales listenerspent each week withthe service

–

3.1%

08:11

–

0.1%

*

2014/15: 0.6%

2014/15: *Content (£m)
We spent a total of
nil on these services
last year in Wales

Reach (%)
Wales population
who use the service
each week

Time spent watchingor listening to a service
each week (h:m)
Length of time theaverage Wales viewer
or listener spent eachweek with the service–

12.5%*

03:13

–

0.7%*

01:53

Radio
BBC 6 Music is a digital radio station that entertains
lovers of popular music with a service that celebrates thealternative spirit of popular music from the 60s to thepresent day, complemented by music news anddocumentaries.

2014/15: –BBC Asian Network offers speech and music appealing
to British Asians, with a focus on news and current
affairs. It broadcasts mainly in English, but does offersome programmes in other languages.

2014/15: –2014/15: 3.8%

2014/15: 09:41

Reach definition: 15+ minutes for all stations and audiences aged 15+.
Source: RAJAR (Radio reach and time spent).
Excludes programme ‘Coming up on 5 live sports extra’.
+ BBC Radio 1: among its target group of 15-29 year-olds reach was 50.6% and time spent was 07:17.
^ BBC Radio 1Xtra: among 15-24 year-olds reach was 7.5%.
** Radio 2: among its target group of 35+ year-olds reach was 42.4% and time spent was 14:47.
* Sample size for time per user is too low to report.
§ Lower sample size may be responsible for greater variability in the data.

News
The BBC News Channel is a 24‑hour impartial andindependent news service offering breaking news,
analysis and insight. It provides fast and comprehensive
coverage of local, UK and international events asthey unfold.

2014/15: –PARLIAMENT

BBC Parliament is the UK’s only channel dedicatedto politics. It shows debates and committees from
Westminster, Holyrood, Stormont, Cardiff Bay andStrasbourg as well as political programmes fromacross the UK.

2014/15: –2014/15: 12.4%

2014/15: 0.5%

2014/15: 03:10

2014/15: 01:48

Reach definition: 15+ minutes for all channels and services and on audiences aged 4+.
Source: reach and time spent BARB (TV).
* Three-minute reach for BBC News Channel and BBC Parliament – in line with industry standards – would be 16.5% and 1.4% respectively (18.6% and 1.6% among 16+ population).

DigitalBBC Online comprises the BBC’s portfolio of online
products on desktop, connected TV, mobile and tablet,
including news, sport and weather; our children’s
services CBBC and CBeebies; and Knowledge &Learning – as well as IP-delivered TV and radio services,with both live and on-demand programmes available on
BBC iPlayer.

Content (£m)
We spent a totalof £7.9 million onthese services lastyear in Wales

Reach (%)
Wales population
who use the service
each week

Time spent with eachservice each week (h:m)
Length of time theaverage Wales user
spent each week withthe service

£7.9m

62.8%

n/a

2014/15: £7.8m

2014/15: 67.3%

2014/15: n/a

Reach definition: 3+ mins for both services, and on adults aged 16+.
Source: Cross-Media Insight Survey by GfK, 16+. UK data financial years, Wales data calendar years.

98

BBC Full Financial Statements 2015/16

bbc.co.uk

93-109
BBC in the nations

ScotlandAward-winning news and investigations, compelling drama, popular comedy and a range of documentaries and entertainment shows for
network television and for radio were at the heart of BBC Scotland’s output across the year, and changes to the Radio Scotland schedule broughtsizeable increases in audience numbers.
The BBC’s expenditure in Scotland during 2015/16 was £176.5 million across all services and platforms. This represents a decrease fromthe previous year 2014/15, in which significant additional investment was made by the BBC to provide comprehensive coverage of theCommonwealth Games in Glasgow and Scotland’s Independence Referendum. The extended range of programmes across both events thatyear, which included debates, documentaries and live sport, on radio and on TV, was understandably not reflected in programme output in2015/16. This also accounts for the drop in BBC Scotland’s average annual headcount figure, to 1,096 in 2015/16.
The major impact on network TV investment in 2015/16 was the decommissioning of the long-running drama, Waterloo Road. In addition, there
was a reduction in the volume of Daytime Quiz programming from Scotland over the same period. However, the value of network TV content
from Scotland will increase again in 2016/17. We are confident of exceeding the target of 8.6% of qualifying BBC network TV spend in 2016.
The following pages provide additional detail on the BBC’s performance in Scotland, including income, high level expenditure and performanceacross services provided in Scotland.

IncomeThese numbers are estimated as figures for each nation and have been calculated by applying the proportion of licenced premises to the total
number of licences in force. The exact number of licences in force varies on a daily basis. The number of licenced premises are different to thenumber of licences in force as, in some cases, a premise may need more than one licence. Figures exclude concessionary licences for those living
in residential care.
2016
£m

2015
£m

3,742.8

3,735.4

320.1

323.0

2016
£m

2015
£m

TV (inc. Sport and Childrens)*

65.7

87.3

Radio

4.0

4.3

Online & Red Button

3.2

2.6

Total network spend

72.9

94.2

TV – BBC One

45.2

49.4

TV – BBC Two

15.5

18.5

TV – BBC ALBA

5.5

6.0

Radio Scotland

22.9

21.7

Radio Nan Gàidheal

3.9

3.7

Online & Red Button

5.1

4.6

Total local spend

98.1

103.9

Scottish Symphony Orchestra

4.3

4.3

Development

1.2

0.8

176.5

203.2

Estimated income
UK
ScotlandExpenditure by service
Direct and indirect spend relating to programmes produced in the nations.

Network content

Local content

Total* Network content is attributed on an Ofcom basis, which excludes foreign productions.

bbc.co.uk

BBC Full Financial Statements 2015/16

99BBC in the nations

TV hours
Local opt out hours^ (including repeats) on BBC One and BBC Two
2016
Hours

2015
Hours

Drama, Comedy, Entertainment, Music & Arts

139

152

Daily, Weekly News and Current Affairs

544

557

Sport & Leisure

174

170

Education, Factual & Religion

104

103

Childrens

–

4

961

986

2016
Hours

2015
Hours

Drama, Comedy, Entertainment, Music & Arts

685

590

Daily, Weekly News and Current Affairs

189

206

Sport & Leisure

246

271

Education, Factual & Religion

877

889

Childrens

668

662

Total*

2,665

2,618

2016
Hours

2015
Hours

News and Current Affairs

3,072

2,965

General

5,521

6,123

Total

8,593

9,088

2016
Hours

2015
Hours

Total
^ Television content commissioned specifically for audiences in the nation.

Hours (including repeats) on BBC ALBA

* This includes repeat hours 1,972 (2015: 1,916).

Radio hours
BBC Radio Scotland

BBC Radio nan Gàidheal

News and Current Affairs

647

655

General

4,281

4,204

Total

4,928

4,859

2016
Number

2015
Number

1,096

1,146

2016
Number

2015
Number

1,230

1,261

Headcount
Average headcount reflects those individuals employed to directly support the services produced in Scotland.

Average number of persons employed in the year

Average headcount of individuals based in Scotland across all services including support functions.

Average number of persons employed in the year

100 BBC Full Financial Statements 2015/16

bbc.co.uk

93-109
BBC in the nations

Scotland’s performance by service
Content (£m)
We spent a totalof £126.4 million onthese services lastyear in Scotland

Reach (%)
Scotland population
who use the service
each week

Time spent
watching a channel
each week (h:m)
Length of time theaverage Scotland
viewer spent eachweek with the channel£76.9m

75.2%

08:11

£33.0m

49.1%

03:11

£2.6m*

17.9%^

01:41

£4.0m

13.6%

01:41

£7.5m

3.5%

02:25

£2.4m

6.4%

04:21

Television
BBC One is our flagship service and the UK’s mostpopular television channel. It unites and inspires thenation with high-quality programmes across a range ofgenres which includes news and current affairs, drama,
comedy, entertainment and factual.

2014/15: £86.1m
BBC Two is a mixed-genre channel with programmesof depth and substance. It includes the greatest amountand range of knowledge-building programming on
the BBC, complemented by distinctive comedy, drama
and arts programming.

2014/15: £37.2m
BBC Three is constantly innovating to provoke
thought and to entertain audiences from 16-year-olds
to 30-somethings with original comedy, drama andfactual programming that celebrates new British talent.

2014/15: £13.8m
BBC Four aims to be British television’s mostintellectually and culturally enriching channel, offering
an ambitious range of UK and international arts, music,
culture and factual programmes.

2014/15: £3.5m
The CBBC channel offers a distinctive mixed schedulefor 6- to 12-year-olds, with mainly UK programmes
served in a stimulating, creative and enjoyable
environment.

2014/15: £10.7m
CBeebies provides a mix of high-quality, mostly
UK-produced, programmes designed to encouragelearning through play in a consistently safe environment
for children under six.

2014/15: £3.9m

2014/15: 76.1%

2014/15: 08:15

2014/15: 49.9%

2014/15: 19.6%

2014/15: 01:49

2014/15: 13.6%

2014/15: 3.6%

2014/15: 6.7%

2014/15: 03:04

2014/15: 01:37

2014/15: 02:21

2014/15: 03:20

Reach definition: 15+ minutes consecutive for all channels and services and audiences aged 4+ (TV).
Source: BARB (TV reach and time spent – all channels include their simulcast HD channel where applicable).
^ BBC Three: among its target group of 16-34 year-olds reach was 20.4%. Owing to the channel moving online, BBC Three BARB data to 14/02/2016.
* BBC Three as a linear service closed in March 2016, being replaced with an online service from February 2016. Spend on BBC Three Online formed part of the BBC Online & Red Button service from thatpoint onwards.

bbc.co.uk

BBC Full Financial Statements 2015/16 101BBC in the nations

Scotland’s performance by service
Content (£m)
We spent a totalof £4.0 million onthese services lastyear in Scotland

Reach (%)
Scotland population
who use the service
each week

Time spent listening
to a service eachweek (h:m)
Length of time theaverage Scotland
listener spent eachweek with the service£0.1m

18.7%**

05:53

–

0.9%+

*

2014/15: 0.6%

2014/15: *£0.1m

26.9%^

11:29

£2.0m

3.2%

05:10

£1.8m

14.3%

10:06

–

3.0%

05:24

–

6.8%

06:34

–

1.5%

01:57§Radio
BBC Radio 1 broadcasts a distinctive mix of new musicand entertainment for 15- to 29-year-olds as wellas providing tailored news, documentaries and advice
campaigns for young adults.

2014/15: £0.1m

2014/15: 17.0%

2014/15: 07:11

BBC 1Xtra plays the best in contemporary black music,
with a strong emphasis on delivering high-quality live
music and supporting new artists.

2014/15: –BBC Radio 2 broadcasts a unique mix of music andspeech programmes covering a diverse mix of live pop
and rock, comedy, documentaries and religious output,
as well as running social action campaigns to over
14 million listeners.

2014/15: £0.2m
BBC Radio 3 centres on classical music, around which
it provides a broad spectrum of jazz, world music, arts
programmes, religion and drama. There is a strongemphasis on musical performance across the UK.

2014/15: £2.1m
BBC Radio 4 is a mixed-speech radio station, offering
in-depth news and current affairs and a wide range ofother speech programmes including drama, readings,
comedy, factual and magazine programmes.

2014/15: £1.9m
Originally launched in 2002 as BBC 7, the station was
relaunched in April 2011 as BBC Radio 4 extra. The
digital-only network is the principal outlet for theBBC’s archive of speech entertainment, including
comedy, drama and readings.

2014/15: –BBC Radio 5 live broadcasts continuous news and live
sports coverage, bringing major news stories and sports
events to its listeners as they happen, and providing
context through wide-ranging analysis and discussion.

2014/15: –2014/15: 27.2%

2014/15: 3.0%

2014/15: 13.9%

2014/15: 2.2%

2014/15: 7.3%

2014/15: 11:19

2014/15: 06:05

2014/15: 11:16

2014/15: 06:22

2014/15: 06:25

BBC Radio 5 live sports extra brings a greater choice oflive action to sports fans by extending live coverage ofvarious sporting events.

2014/15: –102 BBC Full Financial Statements 2015/16

2014/15: 1.1%

2014/15: 03:01

bbc.co.uk

93-109
BBC in the nations

Scotland’s performance by service
Content (£m)
We spent a totalof £4.0 million onthese services lastyear in Scotland

Reach (%)
Scotland population
who use the service
each week

Time spent listening
to a service eachweek (h:m)
Length of time theaverage Scotland
listener spent eachweek with the service

–

3.7%

10:01

–

0.5%

*

2014/15: 0.5%

2014/15: *Content (£m)
We spent a total of
nil on these services
last year in Scotland

Reach (%)
Scotland population
who use the service
each week

Time spent watchingor listening to a service
each week (h:m)
Length of time theaverage Scotland
viewer or listenerspent each week withthe service–

10.7%*

03:07

–

1.1%*

01:53

Radio
BBC 6 Music is a digital radio station that entertains
lovers of popular music with a service that celebrates thealternative spirit of popular music from the 60s to thepresent day, complemented by music news anddocumentaries.

2014/15: –BBC Asian Network offers speech and music appealing
to British Asians, with a focus on news and current
affairs. It broadcasts mainly in English, but does offersome programmes in other languages.

2014/15: –2014/15: 3.1%

2014/15: 07:59

Reach definition: 15+ minutes for all stations and audiences aged 15+.
Source: RAJAR (Radio reach and time spent).
Excludes programme ‘Coming up on 5 live sports extra’.
** BBC Radio 1: among its target group of 15-29 year-olds reach was 37.2% and time spent was 06:21.
^ BBC Radio 2: among its target group of 35+ year-olds reach was 32.2% and time spent was 12:38.
+ BBC Radio 1Xtra: among 15-24 year-olds reach was 3.3%.
* Sample size for time per user is too low to report.
§ Lower sample size may be responsible for greater variability in the data.

News
The BBC News Channel is a 24‑hour impartial andindependent news service offering breaking news,
analysis and insight. It provides fast and comprehensive
coverage of local, UK and international events asthey unfold.

2014/15: –PARLIAMENT

BBC Parliament is the UK’s only channel dedicatedto politics. It shows debates and committees from
Westminster, Holyrood, Stormont, Cardiff Bay andStrasbourg as well as political programmes fromacross the UK.

2014/15: –2014/15: 11.0%

2014/15: 02:58

2014/15: 0.9%

2014/15: 01:55

Reach definition: 15+ minutes for all channels and services and on audiences aged 4+.
Source: reach and time spent BARB (TV).
* Three-minute reach for BBC News Channel and BBC Parliament – in line with industry standards – would be 15.5% and 1.9% respectively (17.0% and 2.1% among 16+ population).

DigitalBBC Online comprises the BBC’s portfolio of online
products on desktop, connected TV, mobile and tablet,
including news, sport and weather; our children’s
services CBBC and CBeebies; and Knowledge &Learning – as well as IP-delivered TV and radio services,with both live and on-demand programmes available on
BBC iPlayer.

Content (£m)
We spent a totalof £8.3 million onthese services lastyear in Scotland

Reach (%)
Scotland population
who use the service
each week

Time spent with eachservice each week (h:m)
Length of time theaverage Scotland user
spent each week withthe service

£8.3m

61.4%

n/a

2014/15: £7.2m

2014/15: 59.5%

2014/15: n/a

Reach definition: 3+ mins for both services, and on adults aged 16+.
Source: Cross-Media Insight Survey by GfK, 16+. UK data financial years, Scotland data calendar years.

bbc.co.uk

BBC Full Financial Statements 2015/16 103BBC in the nations

Northern Ireland
2015/16 was a remarkable year of programme-making and community engagement. We delivered output with range and editorial ambition andmade a big impact with large-scale BBC events, including Sports Personality of the Year. We developed our network presence with impactful, andcritically acclaimed drama productions, including Line of Duty and secured new commissions in childrens and online, and we maintained thestrength, reach and appeal of our journalism, discussion programmes and radio services.
The BBC’s total expenditure in Northern Ireland during 2015/16 was £73.4 million across all services and platforms. This represents an increaseon the previous year and reflects additional network television commissions and new investment in digital and online activity in Northern
Ireland. Increased expenditure on online developments for UK-wide audiences led to an uplift in the number of people directly employed by
the BBC in Northern Ireland – an average headcount increase of 23 on the previous financial year.
The reduction in time spent by BBC audiences consuming our television output in 2015/16 reflects wider trends and changes in audiencebehaviour.
The following pages provide additional detail on the BBC’s performance in Northern Ireland, including income, high level expenditure andperformance across services provided in Northern Ireland.

IncomeThese numbers are estimated as figures for each nation and have been calculated by applying the proportion of licenced premises to the total
number of licences in force. The exact number of licences in force varies on a daily basis. The number of licenced premises are different to thenumber of licences in force as, in some cases, a premise may need more than one licence. Figures exclude concessionary licences for those living
in residential care.
2016
£m

2015
£m

3,742.8

3,735.4

99.0

99.2

2016
£m

2015
£m

TV (inc. Sport and Children’s)*

18.1

16.2

Radio

1.6

1.7

Online & Red Button

0.4

0.2

Total network spend

20.1

18.1

TV – BBC One

24.1

23.7

TV – BBC Two

5.6

6.9

Radio Foyle/Ulster

17.7

17.3

Online & Red Button

5.9

4.6

Total local spend

53.3

52.5

Estimated income
UK
Northern Ireland

Expenditure by service
Direct and indirect spend relating to programmes produced in the nation.

Network content

Local content

Development
Total

–

0.1

73.4

70.7

* Network content is attributed on an Ofcom basis, which excludes foreign productions.

104 BBC Full Financial Statements 2015/16

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93-109
BBC in the nations

TV hours
Local opt out^ (including repeats) hours on BBC One and BBC Two
2016
Hours

2015
Hours

Drama, Comedy, Entertainment, Music & Arts

48

52

Daily, Weekly News and Current Affairs

474

469

Sport & Leisure83

85

Education, Factual & Religion

173

146

Childrens

–

–

778

752

2016
Hours

2015
Hours

News and Current Affairs

3,065

3,002

General

5,689

5,821

Total

8,754

8,823

2016
Number

2015
Number

623

600

2016
Number

2015
Number

666

653

Total
^ Television content commissioned specifically for audiences in the nation.

Radio hours
BBC Radio Foyle/Ulster

Headcount
Average headcount reflects those individuals employed to directly support the services produced in Northern Ireland.

Average number of persons employed in the year

Average headcount of individuals based in Northern Ireland across all services including support functions.

Average number of persons employed in the year

bbc.co.uk

BBC Full Financial Statements 2015/16 105

BBC in the nations

Northern Ireland’s performance by service
Content (£m)
We spent a totalof £47.8 million onthese services lastyear in NI

Reach (%)
NI population
who use the service
each week

Time spent
watching a channel
each week (h:m)
Length of time theaverage NI viewer
spent each weekwith the channel£33.9m

72.4%

06:41

£7.9m

41.7%

02:49

£0.8m*

16.2%

01:55

£1.2m

9.3%

01:31

£4.0m

6.4%

03:05

–

8.1%

04:19

Television
BBC One is our flagship service and the UK’s mostpopular television channel. It unites and inspires thenation with high-quality programmes across a range ofgenres which includes news and current affairs, drama,
comedy, entertainment and factual.

2014/15: £29.8m
BBC Two is a mixed-genre channel with programmesof depth and substance. It includes the greatest amountand range of knowledge-building programming on
the BBC, complemented by distinctive comedy, drama
and arts programming.

2014/15: £12.8m
BBC Three is constantly innovating to provoke
thought and to entertain audiences from 16-year-olds
to 30-somethings with original comedy, drama andfactual programming that celebrates new British talent.

2014/15: £0.5m
BBC Four aims to be British television’s mostintellectually and culturally enriching channel, offering an
ambitious range of UK and international arts, music,
culture and factual programmes.

2014/15: £1.0m
The CBBC channel offers a distinctive mixed schedulefor 6- to 12-year-olds, with mainly UK programmes
served in a stimulating, creative and enjoyable
environment.

2014/15: £2.7m
CBeebies provides a mix of high-quality, mostly
UK-produced, programmes designed to encouragelearning through play in a consistently safe environment
for children under six.

2014/15: –2014/15: 74.2%

2014/15: 42.7%

2014/15: 16.3%

2014/15: 10.1%

2014/15: 6.5%

2014/15: 8.6%

2014/15: 06:44

2014/15: 02:48

2014/15: 01:49

2014/15: 01:31

2014/15: 02:55

2014/15: 03:31

Reach definition: 15+ minutes consecutive for all channels and services and audiences aged 4+ (TV).
Source: BARB (TV reach and time spent – all channels include their simulcast HD channel where applicable).
* BBC Three as a linear service closed in March 2016, being replaced with an online service from February 2016. Spend on BBC Three Online formed part of the BBC Online & Red Button service from thatpoint onwards. Owing to the channel moving online, BBC Three BARB data to 14/02/2016.

106 BBC Full Financial Statements 2015/16

bbc.co.uk

93-109
BBC in the nations

Northern Ireland’s performance by service
Content (£m)
We spent a totalof £1.6 million onthese services lastyear in NI

Reach (%)
NI population
who use the service
each week

Time spent listening
to a service eachweek (h:m)
Length of time theaverage NI listenerspent each weekwith the service–

20.8%**

05:03

–

1.3%^

2014/15: 1.2%

2014/15: *–

14.1%+

08:39

£0.9m

1.7%

07:21§

£0.7m

9.0%

08:22

–

1.5%

*

Radio
BBC Radio 1 broadcasts a distinctive mix of new musicand entertainment for 15- to 29-year-olds as wellas providing tailored news, documentaries and advice
campaigns for young adults.

2014/15: –2014/15: 22.7%

2014/15: 06:19

BBC 1Xtra plays the best in contemporary black music,
with a strong emphasis on delivering high-quality live
music and supporting new artists.

2014/15: –BBC Radio 2 broadcasts a unique mix of music andspeech programmes covering a diverse mix of live pop
and rock, comedy, documentaries and religious output,
as well as running social action campaigns to over
14 million listeners.

2014/15: –BBC Radio 3 centres on classical music, around which
it provides a broad spectrum of jazz, world music, arts
programmes, religion and drama. There is a strongemphasis on musical performance across the UK.

2014/15: £0.9m
BBC Radio 4 is a mixed-speech radio station, offering
in-depth news and current affairs and a wide range ofother speech programmes including drama, readings,
comedy, factual and magazine programmes.

2014/15: £0.8m
Originally launched in 2002 as BBC 7, the station was
relaunched in April 2011 as BBC Radio 4 extra. The
digital-only network is the principal outlet for theBBC’s archive of speech entertainment, including
comedy, drama and readings.

2014/15: –bbc.co.uk*

2014/15: 13.7%

2014/15: 1.8%

2014/15: 8.6%

2014/15: 1.5%

2014/15: 08:09

2014/15: 03:42

2014/15: 08:42

2014/15: *BBC Full Financial Statements 2015/16 107BBC in the nations

Northern Ireland’s performance by service
Content (£m)
We spent a totalof £1.6 million onthese services lastyear in NI

Reach (%)
NI population
who use the service
each week

Time spent listening
to a service eachweek (h:m)
Length of time theaverage NI listenerspent each weekwith the service

–

9.9%

04:31

–

2.1%

*

–

2.0%

–

0.1%

Radio
BBC Radio 5 live broadcasts continuous news and live
sports coverage, bringing major news stories and sports
events to its listeners as they happen, and providing
context through wide-ranging analysis and discussion.

2014/15: –2014/15: 10.0%

2014/15: 05:43

BBC Radio 5 live sports extra brings a greater choice oflive action to sports fans by extending live coverage ofvarious sporting events.

2014/15: –BBC 6 Music is a digital radio station that entertains
lovers of popular music with a service that celebrates thealternative spirit of popular music from the 60s to thepresent day, complemented by music news anddocumentaries.

2014/15: –BBC Asian Network offers speech and music appealing
to British Asians, with a focus on news and current
affairs. It broadcasts mainly in English, but does offersome programmes in other languages.

2014/15: –2014/15: 1.6%

2014/15: 1.5%

2014/15: 0.1%

2014/15: **2014/15: **2014/15: *Reach definition: 15+ minutes for all stations and audiences aged 15+.
Source: RAJAR (Radio reach and time spent).
Excludes programme ‘Coming up on 5 live sports extra’.
** BBC Radio 1: among its target group of 15-29 year-olds reach was 44.6% and time spent was 05:48.
^ BBC Radio 1Xtra: among 15-24 year-olds reach was 4.4%.
+ BBC Radio 2: among its target group of 35+ year-olds reach was 16.6% and time spent was 09:19.
* Sample size for time per user is too low to report.
§ Lower sample size may be responsible for greater variability in the data.

108 BBC Full Financial Statements 2015/16

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93-109
BBC in the nations

Northern Ireland’s performance by service
Content (£m)
We spent a totalof nil on these
services last year
in NI

Reach (%)
NI population
who use the service
each week

Time spent watchingor listening to a service
each week (h:m)
Length of time theaverage NI viewer or
listener spent eachweek with the service

–

7.3%^

03:08

–

0.7%^

*

News
The BBC News Channel is a 24‑hour impartial andindependent news service offering breaking news,
analysis and insight. It provides fast and comprehensive
coverage of local, UK and international events asthey unfold.

2014/15: –PARLIAMENT

BBC Parliament is the UK’s only channel dedicatedto politics. It shows debates and committees from
Westminster, Holyrood, Stormont, Cardiff Bay andStrasbourg as well as political programmes fromacross the UK.

2014/15: –2014/15: 8.2%

2014/15: 03:11

2014/15: 0.5%

2014/15: *Reach definition: 15+ minutes for all channels and services and on audiences aged 4+.
Source: reach and time spent BARB (TV).
^ Three-minute reach for BBC News Channel and BBC Parliament – in line with industry standards – would be 11.9% and 1.5% respectively (13.8% and 1.7% among 16+ population).
* Sample size for time per user is too low to report.

DigitalBBC Online comprises the BBC’s portfolio of online
products on desktop, connected TV, mobile and tablet,
including news, sport and weather; our children’s
services CBBC and CBeebies; and Knowledge &Learning – as well as IP-delivered TV and radio services,with both live and on-demand programmes available on
BBC iPlayer.

Content (£m)
We spent a totalof £6.3 million onthese services lastyear in NI

Reach (%)
NI population
who use the service
each week

Time spent with eachservice each week (h:m)
Length of time theaverage NI user spenteach week with theservice

£6.3m

56.5%

n/a

2014/15: £4.8m

2014/15: 62.8%

2014/15: n/a

Reach definition: 3+ mins for both services, and on adults aged 16+.
Source: Cross-Media Insight Survey by GfK, 16+. UK data financial years, Northern Ireland data calendar years.

bbc.co.uk

BBC Full Financial Statements 2015/16 109110 BBC Full Financial Statements 2015/16

bbc.co.uk

111-121
Performance against public commitments 2015/16

Performance against public
commitments 2015/16
The BBC is accountable for anumber of public commitments
each year, including programmingand production quotas and service
licence commitments. This document
sets out the BBC’s performanceagainst these.

The following pages do not form part of the financial
statements and have therefore not been auditedby Ernst & Young LLP.
bbc.co.uk

BBC Full Financial Statements 2015/16 111Performance against public
commitments 2015/16
1. Ofcom tier 2 quotas
The data presented reflects a calendar rather than financial year.
Quota

2015
Achievement

Hours of qualifying programmes across all channels

25%

33%

Hours of qualifying programmes on BBC One

25%

30%

25%

39%

Spend on qualifying programmes

30%

48%

Hours of qualifying programmes

25%

58%

Hours of news on BBC One

1,380

1,630

Hours of news on BBC One in peak

275

296

Hours of current affairs on BBC One and BBC Two

365

552

Hours of current affairs on BBC One and BBC Two in peak

105

107

BBC One70%

84%

BBC One in peak

90%

99%

BBC Two

70%

89%

BBC Two in peak

80%

96%

BBC Three

70%

76%

BBC Three in peak

70%

71%

BBC Four

c.70%

86%

BBC Four in peak

50%

83%

CBeebies

70%

71%

CBBC

70%

74%

BBC News Channel

90%

98%

BBC Parliament

90%

98%

6,270

6,476

Hours of programmes made in the relevant area

95%

99.9%

Hours of BBC One news

3,920

4,771

Hours of BBC One news in peak

2,010

2,219

Hours of non-news programming in peak

655

723

All non-news programmes adjacent to peak

280

384

Note

Independent production quota

1

Hours of qualifying programmes on BBC Two
Regional programme making

News and current affairs programmes

Levels of original production

Regional programming
Hours of regional programming

2

3

4

5

1 The BBC is subject to a 25% independent production quota across all channels and on BBC One and BBC Two individually.
2 The BBC has used Ofcom’s definitions of regional production from 1 January 2006.
3 These quotas and performance figures are for network programming only. The News quota specifically excludes overnight transmissions of BBC news.
4 Original productions include all BBC commissioned programmes including repeats.
5 These figures represent regional programmes across BBC One and BBC Two.

112 BBC Full Financial Statements 2015/16

bbc.co.uk

111-121
Performance against public commitments 2015/16

2. Compliance with service licences 2015/16
Unless otherwise stated, hours commitments throughout this section include originations, acquisitions and repeats. The use of the word ‘new’means that the commitment includes originations only.

BBC Network Television
Note

Commitment

ActualHours of arts and music

40

51

Current affairs in peak

40

52

110

128

265

368

140

197

250

360

60

95

280

367

80

144

150

246

3

190

220

1

160

201

Hours of other (non-news) programming each year

1

55

202

BBC Three4

Hours of arts and music

26

30

Hours of new factual programming

88

88

Hours of new current affairs

13

14

Hours of arts and music

150

246

Hours of new factual programming

60

99

Hours of drama programming

665

1,449

Hours of news

85

93

Hours of factual programming

550

936

–

–

BBC OneHours of religious programmes

2

BBC One Scotland
Hours of news and current affairs
Hours of other (non-news) programming each year

1

BBC One Wales
Hours of news and current affairs
Hours of other (non-news) programming each year

1

BBC One Northern Ireland
Hours of news and current affairs
Hours of other (non-news) programming each year

1

BBC Two
Hours of arts and music
BBC Two Scotland
Hours of other (non-news) programming each year including Gaelic output
BBC Two Wales
Hours of other (non-news) programming each year
BBC Two Northern Ireland

BBC Four

CBBC

CBeebies
No specific commitments apply
1 This output may include repeats and acquisitions.
2 BBC One and BBC Two shared.
3 Repeats included but current affairs excluded.
4 BBC Three commitments are pro rata until 16 February 2016 when the channel went online.

BBC One peak time repeats (%)

8.0

8.4

8.4

2009/102010/112011/12bbc.co.uk

BBC Two peak time repeats (%)

6.4

7.1

2012/132013/14

4.8

5.7

2014/15

2015/16

29.0

28.3

2009/102010/1131.1

2011/12

28.2

28.4

2012/132013/1425.8

2014/15

27.4

2015/16

BBC Full Financial Statements 2015/16 113Performance against public commitments 2015/16

2. Compliance with service licences 2015/16 continued
BBC Network Radio
Note

Commitment 2015/16 results

BBC Radio 1
Hours of specialist music per week60

68

% of music from UK acts in daytime

40%

53%

% of new music in daytime

45%

61%

Number of live events and festivals broadcast

c.10

19

Number of new sessions (excluding repeats)

160

225

% of eligible hours commissioned from independent producers
Hours of news in daytime each weekday, including two extended bulletins

>10%

15%

1

1hr 6mins

Regular bulletins during daytime at weekends✓✓

Number of new documentaries

40

40

Number of major social action campaigns

2

2

60%

61%

% of music from UK acts in daytime

35%

50%

% of eligible hours commissioned from independent producers

c.10%

15%

Number of documentaries

40

42

Hours of news in daytime each weekday, including two extended bulletins11

Regular bulletins in daytime at weekends✓✓% of music from UK acts in daytime

40%

52%

% of new music in daytime

20%

22%

Hours of live music

260

266

Hours of specialist music programmes

1,100

1,107

Hours of arts programming

100

138

% of eligible hours commissioned from independent producers

10%

20%

BBC Radio 1 Xtra
% of new music in daytime

BBC Radio 2

Weekly hours of news and current affairs, including regular news bulletins

16

18

Hours of new documentaries

130

132

Hours of religious output covering a broad range of faiths

170

201

% of live or specially recorded music

40%

58%

Number of live or specially recorded performances

400

638

Number of new musical works commissioned (excluding repeats)

20

44

BBC Radio 3

Number of new drama productions broadcast (excluding repeats)20

26% of eligible hours commissioned from independent producers

10%

19%

Number of new documentaries on arts and cultural topics (excluding repeats)

30

50% or relevant spend incurred outside the M25

40%

42%

Hours of news and current affairs programmes

2,500

3,251

Hours of original drama and readings

600

624

Hours of original comedy (excluding repeats)

180

259

c.10%

15%

Hours of original documentaries (excluding repeats)

350

419

Hours of original religious programming (excluding repeats)

200

230

Weekly hours of comedy

55

67

Weekly hours of drama

55

73

BBC Radio 4% of eligible hours commissioned from independent producers

BBC Radio 4 extra% Radio 4 catch-up programming

<15%

9%

% of eligible hours commissioned from independent producers

10%

28%

114 BBC Full Financial Statements 2015/16

bbc.co.uk

111-121
Performance against public commitments 2015/16

BBC Network Radio
Note

Commitment 2015/16 results

BBC Radio 5 live
% of output that is news coverage

4

c.75%

75%

% of eligible hours commissioned from independent producers

1

10%

14%

1

10%

14%

2

<30%

32%

BBC Radio 5 live sports extra% of eligible hours commissioned from independent producers
BBC Radio 6 Music% of new music
Hours of archive concert performances

400

419

Number of concert tracks or sessions from the BBC music archive (total)

6,500

6,640

Number of concert tracks or sessions from the BBC music archive (daytime)

1,150

1,328

Number of new sessions (excluding repeats and acquisitions)

300

310

% of eligible hours commissioned from independent producers

10%

22%

Average weekly hours of speech-based features, documentaries and essays

1010

Weekly hours of news

6

6

BBC Radio Asian Network
Proportion of speech to music daytime

50:50

49:48

Hours of news and current affairs per week

3

24

24

% of music from UK artists

30%

36%

% of new music

30%

45%

% of music from South Asia

10%

12%

Coverage of live events or festivals

10

18

>10%

12%

20

20

% of eligible hours commissioned from independent producers
Average hours of language programming each week

1 Radio 5 Live and Radio 5 live sports extra combined.
2 6 Music exceeded its commitment to new music as a result of over-delivery of live music sessions.
3 The remaining 3% was non-speech/non-music content such as promotions.
4 Programmes contributing to 5 live’s commitment of 75% news and current affairs are: Morning Reports, Wake Up to Money, 5 live Breakfast, Breakfast: Your Call, 5 live Daily, Afternoon Edition, 5 live Drive, Late
Nights – Phil Williams/Question Time Extra Time/Stephen Nolan, Up All Night, Saturday/Sunday Breakfast, Pienaar’s Politics, 5 live Investigates, 5 live Science, 5 live Hit List and 5 live In Short.

BBC News
Note

Commitment 2015/16 results

BBC News Channel
More international news than other main continuous news channel(s) in the UK

1

✓

✓

More local/regional news and perspectives than other main continuous news channel(s) in the UK✓✓

Sports news throughout the day, including evening round-up

✓

✓

100

253

Hours of coverage of the Westminster Parliament during a normal sitting week including…

70

81…hours from committees

10

16

Hours of proceedings of the Scottish Parliament, Northern Ireland Assembly and Welsh Assembly

260

467

Hours of programming (including repeats) from Brussels and Strasbourg

100

180

Hours of sports news

2

BBC Parliament

1 Based on sample period; compared to Sky News Channel
2 There were a further 100 hours of Sport Today broadcast on our overnight joint service with BBC World News, bringing total hours of sport to 353.

bbc.co.uk

BBC Full Financial Statements 2015/16 115Performance against public commitments 2015/16

2. Compliance with service licences 2015/16 continued
BBC Nations and English regions
Note

Commitment 2015/16 results

BBC Local Radio% speech content in core hours (Monday-Friday 6am-7pm)

60%

69%

% speech content at breakfast peak time

100%

100%

85

109

Average minimum weekly hours per station of original, locally made programming

1,2,3

BBC Radio Scotland
Weekly hours of radio news and current affairs

43

62

Hours of arts coverage (including narrative repeats of daily arts show)

200

436

c.10%

14%

c.10%

12%

c.5

10

Hours per week aimed at Gaelic language learners (originations only)

2

15

Live news programmes each weekday evening (including peak time) and news review at weekends

✓

✓

>50%

82%

% eligible hours commissioned from independent producers
BBC Radio nan Gàidheal% eligible hours commissioned from independent producers
BBC Alba
Weekly hours of originated programming (excluding news), including current affairs and transfers from otherBBC services% age of eligible hours commissioned from independent producers
BBC Radio Wales
Weekly hours of news and current affairs

24

53

>10%

25%

16

36

>10%

21%

Weekly hours of news and current affairs on Radio Ulster

27

44

Weekly hours of news and current affairs on Radio Foyle

8

27

Hours of new comedy

20

26% of eligible hours commissioned from independent producers

10%

10%

Hours of indigenous minority language programming, including Ulster Scots and Irish

220

261

% eligible hours commissioned from independent producers
BBC Radio Cymru
Weekly hours of news and current affairs% eligible hours commissioned from independent producers
BBC Radio Ulster/BBC Radio Foyle

1 All Local Radio stations exceeded the minimum weekly hours of original locally made programming.
2 Following its establishment as a standalone station, BBC Somerset shares some programming with BBC Bristol. For service licence purposes these also contribute to BBC Somerset’s commitment.
3 BBC Lincolnshire shares origination of the lunchtime show with Humberside. These hours are listed under BBC Humberside but for service licence purposes may also be attributed to Lincolnshire. Combined
both services exceed 170 hours.

BBC Digital
Note

Commitment 2015/16 results

BBC Online% of eligible content and services commissioned from external suppliers (by value)
Increase the volume of clickthroughs to external sites

1

25%

31.5%

2014/15Monthly average forthe year 17.8m

17.8m
clickthroughs
per month––

BBC Red Button
No specific commitments apply
1 The volume of clickthroughs to external sites increased in 2015/16 but have been rounded to the nearest decimal in this report.

116 BBC Full Financial Statements 2015/16

bbc.co.uk

111-121
Performance against public commitments 2015/16

3. Access services
Audio described hours

Audio

Total

Total hours

Actual for year (%)

Target for year (%)

2015/16

2014/15

2015/162015/16

2014/15

2015/16

2014/15

1,947

1,867

8,736

22.3

21.4

20.0

20.0

2,323

2,060

8,736

26.6

23.6

20.0

20.0

8951

1,0911

2,8511

31.41

32.31

20.01

20.01

1,176

1,047

3,198

36.8

32.6

20.0

20.0

1,413

1,221

4,343

32.5

28.1

20.0

20.0

1,441

1,226

4,702

30.6

26.0

20.0

20.0

9,195

8,512

32,567

1 The BBC Three figures represent the period before the launch of the online service on 16 February 2016.

bbc.co.uk

BBC Full Financial Statements 2015/16 117Performance against public commitments 2015/16

3. Access services continued
Signinterpreted

Total

Sign interpreted hours

Total hours

Actual for year (%)

Target for year (%)

2015/16

2014/15

2015/162015/16

2014/15

2015/16

2014/15

457

495

8,736

5.2

5.7

5.0

5.0

457

451

8,736

5.2

5.2

5.0

5.0

1581

1861

2,8511

5.51

5.51

5.01

5.01

187

189

3,198

5.8

5.9

5.0

5.0

243

250

4,343

5.6

5.8

5.0

5.0

251

252

4,702

5.3

5.3

5.0

5.0

495

499

8,736

5.7

5.7

5.0

5.0

2,247

2,323

41,303

1 The BBC Three figures represent the period before the launch of the online service on 16 February 2016.

118 BBC Full Financial Statements 2015/16

bbc.co.uk

111-121
Performance against public commitments 2015/16

Subtitled

Total

Subtitled hours

Total hours

2015/16

2014/15

2015/162015/16

Actual for year (%)
2014/15

2015/16

Target for year (%)
2014/15

14,18814,08914,202

99.9

99.8

100.0

100.0

9,676

9,689

9,681

99.9

99.9

100.0

100.0

2,8511

3,3721

2,8511100.01100.01100.01100.01

3,198

3,214

3,198

100.0

100.0

100.0

100.0

4,341

4,340

4,343

100.0

99.9

100.0

100.0

4,701

4,707

4,702

100.0

100.0

100.0

100.0

1,132

1,002

8,736

13.0

11.5

48,81949,14356,450

1 The BBC Three figures represent the period before the launch of the online service on 16 February 2016.

bbc.co.uk

BBC Full Financial Statements 2015/16 119Performance against public commitments 2015/16

4. Window of Creative Competition (WOCC)
Television
The following table shows the levels of all BBC network television hours from in-house and external suppliers.
Proportion of all hours produced
by Qualifying Independent producers
for BBC television (%)

Proportion of all hours producedby Non Qualifying Independent
producers for BBC television (%)

Proportion of all hours produced
in-house for BBC television (%)

2015/16

2014/15% change

2015/16

2014/15% change

2015/16

2014/15% change

Drama

30

28

2

9

11

(2)

61

61

–

Entertainment

30

37

(7)

37

27

10

32

35

(3)

Comedy

47

51

(4)

10

2

8

43

47

(2)

Knowledge

26

34

(8)

14

8

6

60

58

2

Daytime

44

48

(4)

18

15

3

38

37

2

Sport

32

25

7

–

–

–

68

75

(7)

Childrens

38

36

2

6

4

2

56

60

(4)

Total

34

35

(1)

13

9

4

54

56

(2)

The following table shows the levels of all WOCC hours from in-house and external suppliers.
Proportion of WOCC hours produced
by Qualifying Independent producers
for BBC television

Proportion of WOCC hours producedby Non Qualifying Independent
producers for BBC television

Proportion of WOCC hours produced
in-house for BBC television

2015/16

2014/15% change

2015/16

2014/15% change

2015/16

2014/15% change

Drama

64

57

7

36

43

(7)

–

–

–

Entertainment

20

34

(15)

77

55

23

3

11

(8)

Comedy

68

74

(6)

32

7

26

–

19

(19)

Knowledge

27

58

(31)

53

31

22

20

11

9

Daytime

26

33

(8)

56

46

10

18

21

(2)

Sport

–

5

(5)

–

–

–

100

95

5

Childrens

52

44

8

27

18

9

22

38

(16)

Total

33

41

(7)

50

36

14

17

24

(7)

120 BBC Full Financial Statements 2015/16

bbc.co.uk

111-121
Performance against public commitments 2015/16

Radio
The following table shows the levels of radio hours from external suppliers.
Actual % 2015/16
Total
Total
WOCC
Indie

Indie
Guaranteed

Indie
WOCC

In-house
WOCC

BBC Radio 1

11

4

5

9

BBC Radio 1Xtra

15

0

5

BBC Radio 2

10

4

BBC 6 Music

14

BBC Radio 3

Actual % 2014/15
Total
Total
WOCC
Indie

Indie
Guaranteed

Indie
WOCC

In-house
WOCC

15

9

7

4

11

16

5

15

16

–

4

4

17

2

6

14

12

13

2

15

26

9

–

9

23

15

9

0

9

25

14

5

6

12

19

14

5

7

12

19

BBC Radio 4

10

5

7

12

15

10

4

7

11

14

BBC Radio 4 extra

28

28

12

BBC Radio 5 live
(Incl. sport extra)

14

9

–

9

24

13

8

–

8

21

Asian Network

11

2

9

12

14

12

2

8

10

13

Total

12

5

4

91

17

13

7

4

10

19

Target

10

10

10

12

10

1 Total WoCC hours across the BBC Radio network fell slightly below 10% as BBC Radio 1Xtra did not compete for all potential WoCC hours. These hours were reclassified as hours won by independent
producers (and not as part of the WoCC).

bbc.co.uk

BBC Full Financial Statements 2015/16 121122 BBC Full Financial Statements 2015/16

bbc.co.uk

Copyright credits
Front cover/Back cover
War and Peace – BBC/Mitch Jenkins/Kaia Zak
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War and Peace – BBC/Robert Viglasky; Radio 1
in Ibiza – BBC; War and Peace – BBC/Laurie
SparhamPage 04
Jazz Now – BBC/Jude Edington; Silent Witness –BBC/Todd Antony
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And Then There Were None – Mammoth Screen/
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