How the BBC collects and uses the licence fee.
The way in which the BBC is funded places significant responsibilities on the BBC as an organisation. Specifically, it has to:
- provide value for money by focusing expenditure on the programmes and services the public most wants from the BBC;
- ensure that its output is then delivered as cost efficiently as possible;
- ensure effective and efficient collection of the licence fee; and
- maximise funding from other sources, most significantly BBC Worldwide, the BBC’s commercial trading operation, in a manner consistent with the terms of its Charter and other obligations.
Adjustment to last year's published results
Changes in accounting standards for pension costs mean our comparative figures have been restated this year. The change predominantly impacts the interest calculation on our plan assets and means that our previously reported surplus before taxation of £367million has reduced to £196million and the previously reported net liabilities position of £60million has improved to a net assets position of £40million.
Results for the year
Our results this year once again show that we have successfully managed the financial challenges facing us so as to ensure a sound base for meeting our future commitments and delivering our strategic ambitions. Disposal of commercial businesses including Lonely Planet mean total income for the year has fallen from £5,102million to £5,066million, but this was offset by lower overall operating costs resulting in group surplus of £154million for the year (2012/13 restated: £157million). Through our efficiency programmes and a step-down in activity following the London Olympics last year, our operating costs have fallen from £4,808million to £4,722million.
Income
Total licence fee income collected increased by £16million from £3,706million to £3,722million as a result of modest household growth.
Licence fee income is adjusted for the costs of the Digital Switchover (DSO) initiative to give net licence fee income. In the year, net licence fee income increased by £70million to £3,726million. 2012/13 was the final year of DSO, although there was some limited ongoing activity this year where none was originally scheduled. Savings against DSO funding are paid over to the Government, and deducted from our income. In 2012/13 the savings amounted to £50million with a £4million carry over of cost into 2013/14.
| 2013/14 £m | 2012/13 £m | |
| Licence fee collected | 3,722 | 3,706 |
| DSO overspend/(savings) | 4 | (50) |
| Net licence fee | 3,726 | 3,656 |
Summary Consolidated Income Statement
For the year ended 31 March 2014
Note: Due to the adoption of IAS 19 (revised) during 2014, the 2013 comparatives have been restated. Further information is available in the financial statements.
Income statement classification: | 2014 | Restated | What has happened this year? |
Licence fee income | 3,726 | 3,656 | Reduced Digital Switchover funding and limited household growth |
| Other income and revenue Commercial (mainly BBC Worldwide) income and Grant-in-Aid for World Service | 1,340 | 1,446 | Fall in sales in Worldwide partially offset by Global News |
| Total income | 5,066 | 5,102 | |
| Operating costs The cost of producing all content and of running the BBC | (4,722) | (4,808) | Fall reflecting additional cost of Olympics last year |
| Exceptional impairment of tangible and intangible assets One-off significant item | - | (52) | Prior year write-off of DMI |
| Restructuring costs Sums provided to fund future efficiency initiatives | (16) | (44) | Release of accounting provision in 2013/14 as result of lower actual restructuring costs than originally budgeted for completed moves |
| Total operating costs | (4,738) | (4,904) | |
| Share of results of associates and joint ventures Our share of the profit of the businesses where we control less than 50% | 23 | 23 | |
| Gain on sale of operations and disposal of fixed assets Profit on asset disposals | 4 | 111 | Profit last year principally from the sale of Television Centre and Lonely Planet |
| Other gains and losses Share of net liabilities of joint ventures | (17) | - | The BBC's accounting share of the net liabilities of UKTV not previously recognised |
| Net financing costs The net interest on the BBC's pension assets and liabilities, interest on loans and fair value movements on derivatives | (149) | (136) | Higher accounting charge for the BBC pension plan liabilities |
| Tax The net tax liability of the BBC on its taxable profits | (35) | (39) | |
| Group surplus for the year | 154 | 157 |
Licence fee collection
Effective financial management is a key part of the BBC’s unique relationship with its audiences. This includes spending the licence fee efficiently and collecting a television licence fee from everyone who is required to buy one.
Collection costs have reduced as the new contract with Capita continues to deliver savings – costs were £102million this year, down from £111million last year, falling below 3% of licence fee collected for the first time. Total cost savings of £220million will be delivered over the eight years of the contract, which started in 2012, releasing funding to be spent on our programmes and services.
Licence fee statement
As in previous years, we also prepare a licence fee revenue statement audited by the National Audit Office (NAO). This account sets out the amounts we collected in the year and paid over to HM Government. Alongside their audit work, the NAO examines our collection arrangements and reports on them to Parliament.
More on the licence fee revenue statement can be found on our About the BBC website.
