Statement of accounting policies
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大象传媒 World Service, funded principally by Parliamentary Grant-in-Aid, is a division of the British Broadcasting Corporation, a body incorporated by Royal Charter.
The financial statements have been prepared in accordance with the provisions of the 大象传媒's Charter, which requires them to be prepared in accordance with UK Generally Accepted Accounting Principles.
Basis of preparation and consolidation
The financial statements have been prepared under the historical cost accounting convention as modified by the revaluation of certain plant, machinery, furniture and fittings, and in accordance with applicable UK accounting standards and the disclosure provisions of the Companies Act 1985, as applicable to a listed company not preparing its financial statements in accordance with EU-adopted International Financial Reporting Standards (IFRS).
大象传媒 World Service has produced consolidated financial statements for the first time in this Annual Review. In prior years the results of the subsidiaries have been included in the 大象传媒 World Service financial statements but not identified specifically as they have been immaterial for disclosure.
A separate 大象传媒 World Service entity balance sheet has therefore been presented for the first time.
The results are consolidated under acquisition accounting and intra-group transactions are eliminated on consolidation. All income and expenditure figures in the financial statements relate to transactions external to 大象传媒 World Service only.
A separate statement of income and expenditure reflecting the results of the 大象传媒 World Service entity has not been presented, which is consistent with the option available to companies under Section 230 of the Companies Act 1985.
大象传媒 World Service Trust has not been consolidated as although 大象传媒 World Service is technically the parent of 大象传媒 World Service Trust, it is exempt from consolidation.
This is because the trustees have a fiduciary duty to act in the best interests of the beneficiaries and as substantially all of the income is made up of grants, which are classified as restricted funds because their use is specified by donors, 大象传媒 World Service has no direct control over, or financial interest in, the assets.
Income
Grant-in-Aid is recognised when received from the Foreign and Commonwealth Office. It is intended to meet estimated expenditure in the year but unexpended receipts for the year, within predetermined limits, are not liable to surrender.
Foreign currency translation
Transactions in foreign currencies are translated into sterling at the rates of exchange ruling at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at 31 March. Surpluses and deficits arising from the translation of assets and liabilities at these rates of exchange, together with exchange differences arising from trading, are included in the statement of income and expenditure.
Pension costs
The 大象传媒 operates both defined benefit and defined contribution schemes for the benefit of employees.
Defined benefit scheme
The defined benefit scheme, the 大象传媒 Pension Scheme, provides benefits based on final, or career average, pensionable pay. The assets of the scheme are held separately from those of the 大象传媒 Group. 大象传媒 World Service, following the provisions within FRS 17: Retirement Benefits, accounts for the scheme as if it were a defined contribution scheme.
This is because the scheme is managed centrally across the 大象传媒 Group and it is not possible to identify the share of the underlying assets and liabilities of the scheme relating to 大象传媒 World Service on a reliable and consistent basis. The expenditure charge therefore represents the contributions payable in the year.
Defined contribution scheme
The amounts charged as expenditure for the defined contribution scheme represent the contributions payable by 大象传媒 World Service for the accounting period in respect of this scheme.
Operating leases
Operating lease rentals are charged on a straight-line basis over the term of the lease.
Finance leases
Assets acquired under finance leases are included within fixed assets at the total of the lease payments due over the life of the lease discounted at the rate of interest inherent in the lease.
The same amount is included in creditors.
Rental payments are apportioned between the finance element, which is charged in the statement of income and expenditure, and the capital element, which reduces the lease creditor.
Tangible fixed assets
Expenditure on fixed assets is capitalised together with incremental and internal direct labour costs incurred on capital projects.
Plant and machinery and furniture and fittings are stated at the estimated current replacement cost of the assets, as adjusted for remaining service potential, as at 1 April 1996, or cost if acquired subsequently, less accumulated depreciation.
Depreciation is calculated so as to write off the cost or valuation, less estimated residual value, of fixed assets on a straight-line basis over their expected useful lives. Depreciation commences from the date an asset is brought into service.
The useful lives for depreciation purposes for the principal categories of assets are:
Work in progress
Work in progress, including programmes commissioned from independent producers, is stated at the lower of cost and net realisable value. The full stock value is written off on first transmission.
Acquired programmes
The costs of acquired programmes are written off on first transmission.
Other stocks
Raw materials are stated at the lower of cost and net realisable value.
Provisions
A provision is recognised in the balance sheet when 大象传媒 World Service has a present legal or constructive obligation arising from past events and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions that are payable over a number of years are discounted to net present value at the balance sheet date using a discount rate appropriate to the particular provision concerned.
Reserves
Grant-in-Aid is used to fund both capital and revenue expenditure and a transfer is made each year to or from the capital reserve equal to the movement in the historic cost net book value of tangible fixed assets during the year.
The value of the capital reserve is equal to the net book value of fixed assets at historic cost less the dilapidations provision that has been charged against the capital reserve.
The revaluation reserve reflects the difference between fixed assets at historic cost and their revalued amount.
The operating reserve is the accumulated surplus of the income and expenditure account to the balance sheet date.