Income
Compared with 2003, income received from the Advertising Standards Board of Finance Ltd rose by £31,128 (0.68%) to £4,596,128. Additionally, income of £1,467,000 was received from the Broadcast Advertising Standards Board of Finance Ltd, which had been established to collect monies from a levy from broadcast advertising in like manner to the levy on non-broadcast advertising. The total income was £6,063,128. Interest received fell by £2,074 but produced additional income of £29,961.

Expenditure
The expenditure budget for 2004 was initially agreed at £4,744,000: an increase of £154,844 (3.4%) on the actual expenditure in 2003. However, in anticipation of the Authority’s remit being extended to include broadcast advertising, a ‘New ASA’ Business Plan was prepared in January 2004, which revised the estimated expenditure for the year to £6,614,000, for the combined operation. The main assumptions were that the new operation would be effective from 1 July 2004; staff numbers would increase from 76 to 107; and new premises providing some 14,000 sq ft of office space would be required. In the event, formal approval for the contracting-out of broadcast advertising was not granted until mid-July 2004, and a go-live date of 1 November 2004 was anticipated.

In August 2004, the combined budget was revised using the same assumptions for staff numbers, salary rates and accommodation requirements, but taking account of the later start date, and a revised budget of £6,125,000 was agreed. This latest budget also reflected a decision to ‘lease finance’ some £800,000 of capital IT equipment, and office fit-out and equipment costs, rather than to purchase them outright, so as to smooth and reduce the call on funds in the early years of operation when income from the new broadcast levy was uncertain.

In the autumn of 2004, end of year forecasts were made against the revised budget and expenditure of £5,982,600 was anticipated. At the turn of the year, pre-audit estimates of expenditure against the revised budget and the end of year forecast for 2004 saw expenditure rising to £6,783.885. In cash terms, expenditure would be within budget and forecasts. But in terms of profit and loss, a considerable loss would be made. This was because accounting reporting standards required the potential liability for the premises at Torrington Place, and the outstanding depreciation of the leasehold improvements therein, to be recognised in 2004. Additionally, the rent-free period of 15 months and the financial inducement of some £300,000 to rent Mid City Place had to be apportioned over the period of the new lease. Discounting the exceptional items of the premises liability and the write down of leasehold assets, expenditure overall would be under budget by about £70,000, but because of the exceptional items a pre-tax loss of some £750,000 was anticipated.

The audited figures reflected the estimates very closely. During the audit the premises liability was updated as advised by independent external property consultants, and resulted in the liability being assessed at £698,800. Overall, the audit confirmed expenditure of £6,860,266, which included exceptional items of £800,037. Discounting these items, expenditure was £6,060,189 against a budget of £6,125,000.

The finalised Report and Financial Statements for the two companies reflect a split of costs between non-broadcast and broadcast activity based on applying 57% and 43% respectively (the Asbof/Basbof agreed budget for staff costs) and applying them to the non-specific costs – overheads, general office costs and the like. Specifically identifiable costs were allocated in full to the relevant function.

Profit/loss
The combined loss before tax for both non-broadcast and broadcast activity was £764,187. After tax the combined loss was £789,101.

Non-broadcast and broadcast combined
For the year ended 31 December 2004
	2004	2003
	£	£
Income
Cash received from the Advertising Standards Board of Finance Ltd	4,596,128	4,565,000
Cash received from the Broadcast Advertising Standards Board of Finance Ltd	1,467,000
Total	6,063,128	4,565,000
Expenditure
Salaries and staff costs	2,937,154	2,770,103
Rent and accommodation costs	672,189	343,898
Travel, subsistence and entertaining	72,857	54,975
Consultancy and professional fees	745,067	284,644
Council remuneration and expenses	277,634	160,381
Depreciation	270,286	134,304
Telephone, postage, printing, stationery and other general expenses	685,710	521,949
Advertising and promotion	395,595	314,995
Admark scheme	2,937	3,907
Onerous lease provision	696,800	-
Write down of leasehold assets	104,037	-
Total	6,860,266	4,589,156
Operating loss	(797,138)	(24,156)
Profit on sale of tangible fixed asset	6,200	-
Interest receivable	29,961	32,035
Finance charges payable under finance leases	(3,210)	-
(Loss)/profit on ordinary activities before tax	(764,187)	7,879

Registered office:
The Advertising Standards Authority Ltd
Mid City Place
71 High Holborn
London
WC1V 6QT
Telephone:
020 7492 2222

Registered in England:
No 733214

Registered office:
The Advertising Standards
Authority (Broadcast) Ltd
Mid City Place
71 High Holborn
London
WC1V 6QT
Telephone:
020 7492 2222

Registered in England:
No 5130991