BRITISH EDUCATIONAL COMMUNICATIONS

AND TECHNOLOGY AGENCY REPORT AND ACCOUNTS for the year ended 31 March 2004

Registered Company No. 2090588 Registered Charity No. 297241

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY OFFICERS AND ADVISORS CHAIR: David Hargreaves COMPANY SECRETARY: Patricia Hunt BOARD OF MANAGEMENT: Lorna Cocking Dr Paul Kelley John Gray John Roberts Ben Andradi Michael Waters Stephen Gill BANKERS: Barclays Bank PO Box 1352 25 High Street Coventry CV1 5ZA SOLICITORS: Radcliffes 5 Great College Street Westminster London SW1P 3SJ EXTERNAL AUDITORS: Baker Tilly Park House Station Square Coventry CV1 2NS INTERNAL AUDITORS: PricewaterhouseCoopers Cornwall Court 19 Cornwall Street BIRMINGHAM B3 2DT

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY ACCOUNTS For the year ended 31 March 2004 CONTENTS Page Trustees' Annual Report 3-21 Statement of Responsibilities of the Board of Management and the Designated Accounting Officer 22 Statement on the System of Internal Control 23-24 Auditors’ Report on the System of Internal Control 25 Auditors' Report 26-27 Statement of Financial Activities 28 Balance Sheet 29 Cash Flow Statement 30 Accounting Policies 31-32 Notes on Accounts 33-41

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT 31 March 2004 The board of management presents its report and the audited accounts for the year ended 31 March 2004. Legal and administrative information The BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY (“BECTA”) is a non-departmental public body. Becta is a company limited by guarantee with charitable status, governed by its Memorandum and Articles of Association and Financial Memorandum (DfES). Registered Charity No. 297241 Company Registration No. 2090588 Registered Office: Milburn Hill Road Science Park Coventry CV4 7JJ Principal activities The objects of the company are “to promote the effective application of established and proven technologies. To monitor new technologies and systems as they evolve and evaluate them for their potential for enhancing both the process of learning and its management”. In furthering these objectives we comply with current statutory requirements, with the requirements of Becta’s governing documents, and the financial memorandum, and with any administrative requirements for the use of public funds. There have been no material changes in policies since the last report. Becta is funded basically from grants received from the Education Departments of England, Wales, Scotland and Northern Ireland. Further funds are derived from specific contracts with a range of other bodies. BECTA’s Senior Management team in 2003/2004 were:- Owen Lynch - Chief Executive Fred Daly - Director General for the National Grid for Learning (left 11 February 2004) Niel McLean - Executive Director for Institutional Development Stephen Lucey - Executive Director for Infrastructure Richard Pietrasik - Director of Schools (left 14 November 2003) Christine Vincent - Director for Learning and Teaching Peter Avis - Director for Board and Corporate Affairs Patricia Hunt - Director for Resources Nicola Newman - Director for Communications Specific restrictions The income and property of Becta shall be applied solely towards the promotion of its objects as set forth in the Memorandum of Association and no portion thereof shall be paid or transferred directly or indirectly by way of dividend, bonus or otherwise howsoever by way of profit to members of the company and no member of the Governing Council of the company shall be appointed to any office of Becta and be paid by salary or fees or receive any remuneration or other benefit in money or money’s worth from Becta.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004 Board members Board members are appointed by the Secretary of State for Education Services, usually for a term of three years, and are unpaid. Members of the board of management during the year ended 31 March 2004 were: Chairman David Hargreaves Board of Management Lorna Cocking Paul Kelley John Gray (from December 2003) John Roberts (from December 2003) Ben Andradi (from December 2003) Michael Waters (from December 2003) Stephen Gill (from December 2003) Christine Degraft-Hanson (until June 2003) Hyacinthe Fawcett (until June 2003) Susan Gray (until June 2003) Kay Hanson (until June 2003) William O’Donnell (until June 2003) John Plunkett (until June 2003) Graham Taylor (until June 2003) Sheila Penny (until September 2003) David Reynolds (until September 2003) Peter Weston (until September 2003) Assessors Helen Williams DfES, Curriculum & Communications Group Keith Davies Head of Standards and Performance Division, National Assembly for Wales Training and Education Department (retired June 2003) John Anderson Department of Education for Northern Ireland (retired June 2003) Eleanor Emberson Scottish Executive Education Department (retired June 2003) Ken Dyson OFSTED (retired June 2003) Observers Mike Baughan Chief Executive, LT Scotland (retired June 2003)

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004

Overview of the year 2003-04 was an important, transitional year for Becta. Following our very positive quinquennial review in 2002-03, we received a new remit from the Secretary of State in June 2003 which requires us to operate as ‘a strategic partner with the Government in taking forward and developing our wider objectives for ICT in education’. In response to this new responsibility, which we welcome, we have developed our vision for the future of ICT in education, which will shape and underpin our work over the next few years. We have also restructured the organisation to help us to translate our vision into reality and our newly appointed Board has worked with us to develop the organisation’s strategic direction. Becta continued to support and work in partnership with all four UK education departments on their strategic ICT developments. We also collaborated with national agencies and initiatives, LEAs, the research community and the commercial sector, covering all sectors of education from schools and colleges to all aspects of the learning and skills sector. Becta’s work in 2003-04 focused on delivering five strategic aims:

• Improve learning and teaching through the effective and embedded use of ICT • Increase the number of educational organisations making effective, innovative and sustainable use of

ICT • Improve the availability and use of high-quality educational content • Develop a coherent, sustainable and dependable ICT infrastructure for education • Continuously improve Becta’s ability to deliver.

Programmes of work were established for each of these strategic aims in 2003-04 and their activity and achievements are detailed in the rest of this report. Becta’s mission is to exploit the power of ICT to support learning. Our aim is to provide strategic leadership on ICT and learning, helping to develop a world-class education system and to establish and exploit reliable and sustainable educational technology.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004

Achievements: Learning and teaching Government We have continued to advise DfES on their subject-specific “offer” of support and guidance for primary teachers, KS3 and 14-19 teachers as well as working with the Home Office Task Force on internet safety issues. We led a cross-agency, cross-phase approach to pedagogy and ICT in partnership with QCA, TTA, the Strategies and DfES. This work has supported the national policy agenda on embedding ICT in learning and teaching in the schools sector and informed developments at the Primary and KS3 Strategies. We have undertaken research and collaborated with QCA and the Standards and Effectiveness Unit on the contribution that e-assessment can make to the personalised learning agenda. Schools In 2003-04 we consolidated existing advisory services to establish Becta as a national source of advice for teachers on learning, teaching, management and administration with ICT. We worked in strategic partnership with the Subject Associations to provide subject specific advice and support services to the sector. Participation in our advice and support networks for the schools sector continues to grow. The rate of views of the ICT Advice site grew steadily and there are now over 28,000 individual subscribers to our newsletter services. Inclusion is an underlying principle of all our work. The inclusion web site was overhauled during the year and has now catalogued over 1,700 resources. We continued to run 25 online discussion groups which form communities of support across a wide range of inclusive educational areas. Several of these groups now produce digests of their discussions which are regularly quoted in academic research. We worked with NIACE on a series of six highly successful national conferences on technology and community education, and continued to hold regular online conferences on the inclusion site with ten expert themes each year. Themes have included educational technologies, challenging behaviour, autism, and deafness. With the six CAP Centres, the Communication Aids Project (CAP) has supplied communication aids to over 3,000 pupils since its inception in April 2002, and has provided training and assessment services throughout England. We have developed new facilities for the CAP website, which will include an online discussion forum for pupils who use communication aids and their friends. The project will continue until 2006 with a further £10 million of funding.

Jake, aged 5, has a closed-circuit television (CCTV) at home, courtesy of CAP. When he started school, his LEA provided a CCTV in the classroom and the teacher of visually impaired pupils who supports Jake suggested they apply for extra equipment for home use. This has made a tremendous difference to his reading progress. “We’ve made the study a place for reading in our house,” says his Dad. “Jake enjoys the Oxford Reading Tree scheme they use at school and he has large-print versions of the readers but obviously he wants to read other books as well. We use the CCTV for bedtime stories and family time reading which he loves”

Jake is totally at home with his CCTV: “I’m very pleased with my CCTV because I don’t have to use my magnifier any more. The one at home is a bit different from the one at school because it has a screen that turns round and round. The children at school think the CCTV is a computer and my teacher lets them use it to make stuff bigger.” In fact, the school has been very sensitive to the fact that the CCTV might mark Jake out as being ‘different’, so they have adapted teaching methods to incorporate the CCTV in class work. Now all the children know what it is and what it does so it is not ‘special’ any more.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004

Awards play a key role in underpinning Becta’s work, identifying and exemplifying best practice across the UK in sectors ranging from early years to adult and community education. The fourth year of the ICT in Practice Awards, which culminated in the presentation ceremony at BETT 2004, proved to be highly successful. Over 230 entries were received for the awards in 2004, the highest ever number, and new categories for learning assistance and new to teaching were added to established awards for teaching, leadership, inclusion, advice and support, and innovation and change. As media sponsors, the TES continued to provide excellent high profile coverage of the awards and the fifth year of the awards was launched in March 2004, with lead sponsorship from Ramesys and associate sponsorship from Adobe, Capita and Toshiba.

Steve Ungi won the Teaching Secondary category at the Becta 2004 ICT in Practice Awards. Steve was appointed Head of Design Technology at Harrow Way Community School at the beginning of the summer term 2001. Due to limited technical support he spent his first summer holiday installing hardware and software and creating a new state-of-the-art CadCam suite. Steve introduced software for 3D computer-aided design, 2D design, virtual manufacturing, 3D design and manufacturing, printed circuit-board design, mathematical modelling and a virtual wind tunnel. He also produced a series of CD-ROMs that are used in class to support design technology lessons. According to head teacher Chris Overton, these innovations have had “an enormous impact on pupils’ practices and taken an outdated department to the forefront of mainstream secondary school design”. Outstanding progress has been made in design technology. Between 2001 and 2002, Harrow Ways’ design and technology results improved from 32% to 79% for grades A to C at GCSE and it is now the most successful option subject in the school. In a monitoring report earlier this year, the County Inspector for Design Technology wrote: “The curriculum provision for design technology has been revolutionised. The quality of development of CAD/CAM within the school is very high. The range and quality of the pupils’ work is exceptional.” Harrow Way is now a National Support Centre for CAD/CAM.

The second year of the Digital Video Awards was also very successful. We received over 130 entries from groups of students ranging in age from 7 to 18, and there was an increasing emphasis on DV use across a range of curriculum subjects. Winning entries have been extensively showcased by Becta and for 2004 the scope of these Awards has been extended under the title Creativity in Digital Media Awards. We also completed a second year as associate partners to BESA and EMAP in the BETT Awards which focus on the link between high quality ICT products and effective educational practice. Learning and skills sector Isolation is a big problem in the FE sector. Practitioners often have very few opportunities to meet face to face to share good practice and hear of new developments in ICT and e-learning. To meet this need, the fifth annual Ferl Conference was held in London at the end of November 2003. Feedback from the event was extremely positive. To promote debate, we also hosted an online conference on Virtual Learning Environments (VLEs) from 28 January to 4 February 2004. This was the biggest event of its kind ever held in the UK.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004

David Hargreaves, Becta’s Chairman, speaking at the 2003 Ferl conference

The Ferl Practitioners' Programme (FPP) was launched in June 2003. It is an innovative staff development programme for the Further Education and Lifelong Learning communities across England, Wales, Scotland and Northern Ireland, designed to equip the teaching, learning resources, learning support and technical staff with the skills essential for harnessing the potential of Information Learning Technology (ILT) and e-learning. Take up has risen to 69% of all UK colleges (314 licences) and a further 290 licenses have been purchased for specialist colleges and the ACL community. We are also liaising with the Centre of Excellence in Leadership with a view to extending the Ferl Practitioners Programme to include modules for strategic leadership of ICT and e-learning.

“The FPP was a gift from the gods. It was simple to implement, had excellent examples and could be delivered in as many different ways to suit everyone. More importantly the whole package could be encapsulated on one CD ROM and kept to revisit and seek guidance." A Director of Quality

Strand 6 of the Ferl Practitioners’ Programme, Demonstrating Transformation is a comprehensive, step by step guide to e-learning, inspection and self assessment for colleges and providers of adult education and training. It was distributed free to all colleges, RSCs and main ACL providers in England in Spring 2004 and inspection copies were also sent to the funding councils of Scotland, Wales and Northern Ireland. 23 regionally-based subject mentors, employed by their home institutions but seconded to the LSC, currently offer guidance on how to embed e-learning materials into learning and teaching. Between April 2003 and April 2004 the mentor team visited 272 Colleges, worked with all National Learning Network partner organisations, and had dealings with over 11,000 FE colleagues across the spectrum of teaching and management. 11 Crafting the Content events were held in 2003-04 to show tutors how to use National Learning Network Materials in their own Virtual Learning Environments, with 143 people attending these events which were received very positively. Overall, both the materials and the initiative as a whole have been seen as providing a powerful stimulus for change and supporting the transition to a blended approach to learning, with many examples of materials being used in innovative ways.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004

“There are things in my discipline – to do with movement for example – that can be covered more quickly and more clearly using computers. With some of the NLN materials we have been trialling you can explain a topic more fully in ten or twenty minutes than I usually do over two whole lectures.” Sport and Leisure Lecturer, Henley College Coventry “They’re very interactive and the best we’ve got at the moment. I want to demonstrate them to tutors because I think they’ll be impressed.” Librarian, Stroud College

As successive rounds of new materials have been made available, initial technical difficulties have gradually been overcome and more and more staff have been able to make creative use of e-learning.

Becta has developed the Community Learning Resource as the website to take the National Learning Network into the Adult and Community Learning Sector. The website was developed jointly with the other National Learning Network partners which include NIACE, UKERNA and JISC. The site went live at the Ferl Conference on 24 November 2003.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004 Evidence Teaching and Learning with Digital Video Assets was a unique project which sought to extend the boundaries of using content in the form of digital media assets in teaching and learning. The project involved creating digital video assets by filming and digital video editing and downloading ‘ready-made’ digital media assets using an online portal. These two distinct types of assets could be used either discretely or in combination as resources for learning and teaching. The project achieved its aims of highlighting the issues that need to be taken into account for the future development and use of digital media assets at local, regional and national levels. Many of the participants felt that their involvement has made a substantial and lasting impact on their schools. Outputs have included the final evaluation report available on the research area of the Becta website and Digital Alchemy, a CD-ROM providing advice and tools for schools to use as they embed the use of digital media into subject lessons.

“The most noticeable impact is how this initiative enables children to take charge of their own learning and how mature, responsible and motivated they become when handling the equipment”. Primary school, Cornwall LEA on Teaching and Learning with Digital Video Assets

Becta’s research website, which contains information on our ICT Research Network, research resources, reports and publications, remains one of most visited parts of the Becta corporate site and Becta research is quoted increasingly in the education sector.

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In 2003-04 the What the Research Says series increased to 19 titles, with new topics including using ICT in English and ICT and whole-school improvement. These reports offer concise introductions to key issues aimed at a general audience, and we have received very positive feedback, including extensive positive coverage of the series and the research website as a whole in NFER’s publication 50 Websites for School Improvement, and a range of external websites link to the series. Other additions to the research site included large-scale literature reviews complementing the ImpaCT2 project on two related topics: the impact of ICT on attainment in primary and secondary schools; and the impact of ICT pedagogy on attainment in primary and secondary schools. The reports revealed evidence of positive effects of specific uses of ICT on pupils' attainment in almost all National Curriculum subjects, notably in the core subjects of English, mathematics and science. Summary reports were published as part of the DfES ICT in Schools Research and Evaluation series. We also published the latest in the SAND series of reports which set out to determine the relationship between the use of ICT in schools, and standards of educational achievement using data from Ofsted and QCA. It was found that schools which made better use of ICT tended to achieve higher test and exam results than other schools with similar characteristics.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004

Becta’s ICT Research Network, which now brings together 1,700 researchers, policy makers, teachers and funders, continued to engage practitioners and make research on the use and impact of ICT in learning and teaching more accessible. We held a very successful conference on 'Proving Effective Practice with ICT' in June 2003. 230 delegates attended, 95% of whom rated the conference either excellent or good. The Becta ICT Research Bursaries continued to support a number of independent research activities. A compendium report summarising the 2002-3 Bursary projects was completed for BETT 2004 and published in the Research and Evaluation series. All 13 projects for the 2003-4 schemes were agreed in autumn 2003 and final reports will be published prior to BETT 2005.

Achievements: Institutional development Government We have maintained our links with Government and agencies/bodies through collaborative working, policy reviews and support for initiatives. Supporting the embedding ICT in primary schools initiative in partnership with the Primary National Strategy (PNS), DfES and NCSL saw the emergence of a common language and a single model, which will lead to the co-development of 5 LEA conferences and a leadership toolkit in Summer 2004. Work on the SLICT programme has informed leadership policy, identified gaps in provision and led to the creation of a proposal for briefing national strategy and related consultants to support schools with a coherent message about the role of school leaders and effective institutions. Our work in 2003-04 led to the development of four high profile conferences linking policy, practice and research. We also began ongoing activity on a programme of symposia, papers and dialogue on a range of policy issues including a focus on the personalisation agenda and its impact on institutional effectiveness. Schools Online support services for leaders and LEAs, linked to support materials such as the matrix self-review and action-planning tools, provide an essential information service on ICT management and leadership issues. These services have continued to grow. The LEA portal on Becta’s corporate website offers leaders and LEAs an effective channel to guidance materials for leaders. For example, the Building the Grid site holds information that has been developed specifically for Chief Education Officers, and a range of materials to help local education authorities (LEAs) and strategic school managers in England. Currently we have over 2,000 subscribers to the ICT Support Network’s weekly e-newsletters. Over the last two years, Becta has developed a range of self-evaluation and action planning tools for schools and LEAs in collaboration with NCSL. This is the first time self-assessment tools like this, which are designed to allow organisations to review their progress critically and plan future developments, have been made available, underpinning the importance of critical self-review and supported action planning. Existing matrices include Naacemark for schools, which was developed in association with Naace and is currently being used by over 900 organisations.

“During the summer of 2003 we contacted our LEA primary ICT adviser who encouraged us to apply for the Naacemark. Our first port of call was the BECTA website. We worked through the 10 criteria required to gain the Naacemark using the online grid to see whether we were on course and what work would be involved. The planning grid helped us to identify areas needing more work.” Primary school, Hertfordshire

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004 We have developed further matrices covering a range of topics including ICT Assessment and Record Keeping; Technical Support Assessment (linked to Becta’s FITS framework); and self-review for LEAs. Partners on these initiatives have included Ofsted, DfES, Confed and NAACE. Developing these materials and approaches in partnership provides a range of tools to meet school and LEA determined needs. The growth in adoption and level of use in the 12 month period since March 2003 demonstrates the value of these matrices:

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We will continue to review current tools and develop new matrices in the schools sector with the aim of repurposing them to create similar resources for learning and skills providers. Becta has established a partnership programme with NCSL where Becta supports the national rollout of the Strategic Leadership of ICT Programme (SLICT) by contributing material to the overall programme direction and providing support and management for the 488 schools currently acting as hosts. The programme has received considerable support at school, LEA and national level, with links being made between this programme and other DfES ICT initiatives such as the new Hands on Support programme. 1,800 headteachers had taken part in the programme by 31 March 2004 and our target is to exceed 3,000 by 31 March 2005. Full responsibility for the ICT Test Bed initiative was transferred from DfES to Becta during 2003-04, although Becta has managed the implementation of the project since its inception in October 2002. The project involves 28 schools and 3 colleges in three LEA-focused clusters. The project takes a holistic approach to ICT implementation where the institutions not only have access to high levels of ICT, but also are given funding towards the support they need to make the most effective use of this investment. The main aims of the project are to determine how ICT use can raise standards in schools and colleges and to gather and disseminate evidence about how ICT can bring about significant improvements in all aspects of education.

A multilingual information kiosk is playing a central role in Ripple Junior’s strategy to improve communications with its pupils’ parents. This is a major issue as the school, which is part of the Barking and Dagenham Test Bed cluster, has parents who use 33 different languages. The school’s solution has been to introduce an information kiosk with a touch-sensitive screen. Featuring the six main languages of the school population – English, Hindi, Urdu, Yoruba, Swahili and Punjabi – the kiosk currently provides access to general school information, such as the prospectus, attendance information, the curriculum and the home/school agreement. It is planned that the system will also be used to display students’ work. Along with the new cybercafé, the kiosk also plays a role in the school’s wider Home Community Links strategy by offering parents internet access.. “Both initiatives are proving increasingly popular as the children encourage their parents to come in to use the new equipment,” comments Ripple Junior Head, Gordon Sanders. “The issue of sustainability is another important consideration so we are now looking at allowing outside agencies to use the facilities for adult training in the hope that the resulting income will assure the future of the project.”

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004 2004 saw progress being made in all institutions involved in the Test Bed project in embedding the technologies they implemented in the first phase of the project into their organisational practices. Support from the LEAs and Becta continued to be significant, and collaborative working has been a key theme, along with the Accelerating Change programme delivered in partnership with the National Remodelling Team. Across all clusters and phases there have been a number of school inspections, and feedback has been positive on both the project and the role of ICT is playing in the schools. Learning and skills sector The 14-19 reform agenda is still relatively new and school, college and work-based learning sectors require advice and guidance on how ICT and e-learning can support its implementation. Last year we worked with DfES ICT in Schools to look at the availability of e-learning resources suitable for use with the Applied GCSEs. We will build on this throughout 2004-05 by looking to provide advice and guidance to support vocational provision across the phase, including Modern Apprenticeships. Relationships with the Sector Skills Councils and the Sector Skills Development agency are being developed to support this work. Recognising the importance of e-assessment to the successful implementation of 14-19 reform and to personalised learning across all age groups, we have set up an e-assessment project board under the auspices of the National Learning Network. This cross-sector, cross-agency group is working on identifying and prioritising barriers and enablers through research and gap analysis and is moving forward on areas for collaborative action. Underpinning all of our advice and guidance has been the collection and dissemination of evidence of good practice in the use of ICT and e-learning, particularly in the field of cross-sector or cross-institutional collaboration. Regional Development Agencies have been tasked with setting up a Framework for Regional Skills Action (FRESA) in their regions to address ways in which partners can work in collaboration to counter skills shortages. To reflect this, the Ferl Outreach Advisor team has been strengthened to support the regional agenda. Ferl Development Advisors have taken on a more strategic role and are now working with the RDAs and the newly formed regional LSC offices to examine how Becta can support this initiative. We have modified the Becta total cost of ownership (TCO) model for schools to apply it to Further Education. We have collected sufficient data from our web-based trial with two groups of nine UK colleges to enable us to make a reasonable comparison between individual colleges and the overall total annual cost of ICT. Evidence 256 colleges, representing 64% of the sector, responded to the 2003 ILT monitoring survey which aims to assess progress in the provision of ILT in the Further Education sector. The survey suggested that the large investment in colleges’ technology infrastructure since 1999 has been slow to have a widespread impact on learning and teaching. While staff training is an important element in achieving the integration of ILT into teaching and learning, the survey identified sustainability as the key issue which underpins ILT use and development as large numbers of computers bought in 2000 and 2001 reach the end of their useful lives. The ICT Test Bed project evaluation by a team from Manchester Metropolitan and Nottingham Trent Universities has produced the first working drafts of maturity models to assess the impact and readiness for ICT embedding and use, which are starting to be used as data collection tools. Secondary data analysis based on material collected by the implementation team was commissioned to supplement what is being undertaken by evaluators, and to add value to the project. The first report is due in June 2004 and work is already underway on widely disseminating outcomes from the evaluation, alongside lessons from the project itself.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004 Achievements: Content Government Chaired by Becta’s Chief Executive, the Content Advisory Board was established in September 2003 to advise the Secretary of State for Education and Skills on the performance of Curriculum Online in delivering a comprehensive range of online digital learning resources for schools. The initial task of the Content Advisory Board is to develop a strategy to deliver the vision of a comprehensive, coherent and consistent set of curriculum resources for teachers and pupils. A system of regular consultation with the private sector has been set up and research has been commissioned to inform the Board’s thinking and decision-making. Reports to the Board have included customers’ views on Curriculum Online, research on curriculum coverage and the impact of e-Learning Credits (eLCs). The following chart, taken from a content survey at BETT 2004, shows teachers’ and other key users’ priorities in choosing content:

Content Priorities

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% Becta has also been tasked by Government with examining the BBC’s commissioning plans in relation to their proposals for a Digital Curriculum. Schools Since July 2002 Becta has been running a registration service, on behalf of the DfES, for content providers and retailers seeking to make their digital learning resources available to teachers via Curriculum Online. We are also responsible for compliance monitoring, to ensure suppliers only make eligible products available. We have supported the Curriculum Online technical standards programme by authoring and publishing metadata vocabularies for a range of subjects not currently covered by the portal. We also oversaw the development of a new taxonomy and information structure for the redesign of Curriculum Online which has given users a more intuitive navigation structure. By the end of March 2004 there were 597 registered content Providers and 631 registered retailers on Curriculum Online. At the end of January 2004 there were 12,717 resources on the Curriculum Online website. Despite the very high number of registered products and suppliers, spend is concentrated on a relatively small number of suppliers – 61% of spend goes on 2% of registered suppliers of priced product. These suppliers provide only 12% of the registered products. Content Advisory Board data Mar 2004

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004 One of the largest portals of educational content in the world, the National Grid for Learning (NGfL) is the gateway to educational resources on the internet for all sectors. It provides a network of selected links to websites that offer high quality content and information. Last year, the NGfL continued to build its year-on-year growth in visitors (see chart).

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New features on the NGfL portal included a personalisation service, enabling users to register a profile and save favourite pages for future reference, the launch of an e-mail newsletter including news, events and the latest additions to the site, plus the design of new categories for user groups such as librarians. Contributions to the Teachers Resource Exchange (TRE), the UK’s only public service allowing the direct exchange of resources and good practice between teachers, continued to increase. The TRE also supported Curriculum Online, providing all its free, teacher-generated content. Learning and skills sector One obstacle to the success of e-learning identified in the DfES-LSC Success for All report was the limited availability of high quality content. To address this issue, Becta has been contracted by the Learning Skills Council to commission e-learning materials for the National Learning Network since 1999. We manage the procurement process, project support for contracted suppliers, and the delivery of e-learning materials to the end user. Over 500 hours of online learning materials had been made available by summer 2003, with a further 300 hours due to be released during 2004. They have been delivered free to colleges in England, Scotland and Northern Ireland. Paving the way to excellence in e-learning was published in January 2004 to share the procedures we use to ensure the high quality of e-learning materials we commission and the National Learning Network materials website offers further support and information.

Detail from National Learning Network Materials site

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004 We have delivered innovative work to support teaching staff in developing and customising learning content. Benefits of this approach include increased engagement with ICT, improved ICT skills and increased ownership of materials. This results in content that is tailored to the learner and embedded in the teaching process. We have been at the forefront of promoting the repurposing of existing materials to meet the needs of learners. Work has started on the next round of National Learning Network materials which will be developed for ACL. We have also created content creation toolkits for ACL users, hosted online, starting with Webquests. Content suppliers We published a data model focusing on technical standards currently supported by existing learning platform products. Available since December 2003, the model asks suppliers to specify the standards and specifications with which their products are compatible. This data is being used to inform a review of the Learning Platform Conformance Regime. We continued to meet with content providers and provide information and advice, both individually and through contributing to meetings, conferences and other events. Advice on quality issues has been published and promoted in print and on our websites. A new booklet for contributors to the NGfL was also published, with tips on creating educational content and advice on how to ensure their websites meet technical and content standards. Achievements: Infrastructure Government

We were charged by the Secretary of State in our new remit 'to continue to develop its high level strategic relationships with national and international organisations'. We aim to maintain dialogue with the private sector to ensure that best value for money is achieved in the procurement of quality equipment and services as supplied to the education system. On behalf of and at the request of the Secretary of State, we signed a Memorandum of Understanding (MoU) with Microsoft in relation to their licensing framework for schools in December 2003. Taking effect from 1 January 2004, it establishes significant savings to schools in England choosing to license Microsoft software. The agreement also extends to schools in Northern Ireland, Wales, and Scotland.

Taking account of current spending patterns and the cost of Microsoft products to schools at the start of the current financial year, it is expected that total savings to schools in England will reach £46 million over three years, with a further £2.5-3.5 million anticipated being saved by schools in the devolved administrations over the same period. Depending on the mix of products purchased, schools should be spending between 20% and 37% less than might have been expected in the absence of the MoU. The new agreement does not change schools’ current purchasing procedures and advantages all schools who choose to licence Microsoft software but does not diminish their freedom to choose alternative solutions.

17

BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004

Schools, LEAs and the learning and skills sector Sustainability of ICT infrastructure is an increasingly important question. In this area we have produced a standards methodology and online tool that allows schools to assess the total cost of ownership (TCO) of their ICT infrastructure. This is becoming increasingly important at a time when investment in ICT in the educational sector is rising. We have developed a TCO model and online system which collects data on costs of IT infrastructure and user confidence and perceptions. We have also commissioned research on different models of technical support, including schools using open source software which will be reported on in 2004-05. We are developing the system to make it available to all schools in England and are working with Wales on developing a system for Welsh schools over the next two years.

Total Annual Cost of ICT

Hardware20%

Software18%

Network6%Consumables

5%

Formal Support29%

User self-support20%

User training2%

The Government has identified interactive whiteboards as a key tool in the use of ICT to raise standards and revolutionise learning and teaching. In support of this, Becta undertook a procurement competition, setting national standards for the specification of the equipment and services and established a framework contract in January 2003. Since the framework contract and catalogue went live, the average costs for the bundled package have dropped by approximately 9%. We estimate the £25m interactive whiteboards project will provide over 8,000 interactive whiteboards for schools and at BETT in January 2004 a further £25m of funding was announced for 2004-05. During 2003, also Becta took on full responsibility for the Laptops for Teachers initiative which had £60 million of funding. The average cost of laptops has fallen by 18% when comparing average prices paid between years 1 to year 2 whilst also supporting a higher specification of equipment. As a result, over 14,000 extra teachers will now receive a laptop.

“I have been hugely impressed myself by the use of electronic whiteboard technology. […] I believe that interactive whiteboards are a tool which can assist teachers in delivering exciting and engaging lessons to children of all ages and ability. They are now teaching whole classes in an entirely exciting and exhilarating way which gets benefits from the interactions of the children with each other and with the teacher, and with the whiteboard, in whatever context it might happen to be.”

Charles Clarke, Speech at BETT 2004

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004 _________________________________________________________________________ Over £376 million was spent across the Becta ICT Service Suppliers and analysis of this spend (see graph below) will inform our future strategy development. Work is also well underway on a continuation of the Becta Accredited Internet Service Providers via a rolling accreditation process. DfES also commissioned Becta to run a procurement to support the 2004 Fast Track Teachers initiative which covers 400-700 laptops, printers and digital camera packages.

Accredited ICT Service Suppliers Sales per product type

April 03 to March 04

Desktops32%

Internet Services3%

Laptops22%

Hardware Warranty Contracts

3%

Licensing10%

Servers4%

Managed Services

3%

Other10%

Other Hardware13%

Beginning in 2001, Becta’s Independent (ICT) Procurement Advisory Service (Ipas) was commissioned by the DfES to support schools in the procurement of effective and sustainable ICT equipment and services. Since then, the Ipas team has developed a portfolio of generic advice, guidance and information on ICT procurement and related issues. From the outset the intention was to learn lessons and gather information that would inform the development of services that could be delivered to schools and LEAs on a national and ongoing basis. Targeted at a range of people from head teachers and technicians to LEA representatives and suppliers, free advice and guidance have been made available through four channels: a website, CD-ROM, national seminars and workshops and a telephone/email support service for schools with particular procurement queries. In addition, we have offered consultancy and advice to seven LEAs and have delivered a national programme of seminars on ICT procurement and related topics. Over 1,500 people attended seminars between April 2003 and the end of March 2004.

Becta is leading the strategic development to formalise standards across all aspects of network management in schools and have been working with UKERNA, the Regional Broadband Consortia and DfES to ensure that the services schools will require can be delivered over a national schools' network. This will be a secure network, available from anywhere, which will allow a coherent system for safe information and service access across education. It will enable the wide area network to become a true extension of local area networks and allow easy access to a wide range of high quality online applications. Becta has also led on the strategic development of the proposed National Management Authority, working with stakeholders to establish standards that will allow coherent connectivity and greater interoperability over the national education network. The Technical Support Advisory Service (TSAS) aims to equip schools with the knowledge and expertise to manage their ICT infrastructure effectively and to commission technical support services to meet their needs. The service has developed the Framework for ICT Technical Support (FITS) to provide advice and checklists for schools. FITS changes the focus of technical support away from fire-fighting to being more proactive and minimising the occurrence of ICT incidents. OFSTED have used FITS to assess current practice in schools and released a report to the DfES recommending that a national framework should be developed building on FITS. In 2003, TSAS also launched an online survey to gain an understanding of current technical support practice in schools.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004 _________________________________________________________________________ Industry We recognise that the commercial sector is a key strategic partner in helping educational organisations to realise the benefits that ICT can bring to learning, teaching and organisational management. Industry provides valuable insight into future developments and current trends, supporting innovation and the development of new approaches. On 3 March 2004 we held the first meeting with industry partners. The objective was to ensure that the commercial sector is fully aware and up-to-date on the current educational agenda, and to discuss collaboration with Becta on agreeing a shared vision and ways to deliver it. Discussions encompassing education, content and infrastructure issues took place with MDs and CEOs of around 100 infrastructure, content and consultancy companies, many of whom have not worked collaboratively with Becta before.

Evidence

We have carried out a number of technical surveys in 2003-4. We were commissioned in 2003 by the DfES to carry out a detailed survey of local area network (LAN) infrastructure and ICT equipment in schools. Published in February 2004, the report is the first of its kind in that the data on workstations, servers, networking equipment, and network topologies was collected from schools by technically qualified engineers. The results give a picture of unprecedented clarity of the present status of ICT infrastructure and equipment within schools, and a valuable insight into the diversity of provision within and between schools. The report will provide a substantial step forward in allowing us to advise government in future investment decisions and priorities.

• 99% of secondary, 77% of primary and 78% of SEN/PRU

networks pass the minimum 100Mbps requirement as recommended by Becta for both desktop and LAN infrastructure speeds.

• 36% of primary and 24% SEN/PRU schools have technical support provided by teachers.

• Over 88% of secondary, 66% of primary and 68% of SEN/PRU schools use interactive whiteboards.

Becta LANs in Schools survey (2003)

During Autumn 2003 Becta contracted BMRB International to conduct the Performance IndICaTor, a survey of 2,510 schools in England investigating their satisfaction with their ICT products, services and suppliers. Key findings include evidence that, in general, secondary schools tend to be more satisfied with their ICT equipment and services than primary schools. This is true across almost all of the areas included in the survey. There is also considerable variation in the ratings given for different computer manufacturers, suppliers and Internet service providers, suggesting that schools do notice differences both in the equipment supplied and the service received. We developed our expert technology seminars that draw together policy-makers, analysts, leading practitioners and experts from the IT industry. Topics included broadband technologies and home, school, and community links. We also continued to publish a collection of technical briefing papers aimed at practitioners on topics ranging from web hosting and personal area networks to datalogging and open source software.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004 Achievements: Becta as an organisation Accountability Our new remit letter indicates that Becta is directly accountable through our Board to the Secretary of State for Becta’s strategic direction and successful delivery. In response to this, we have put into place a new accountability framework to allow the Board to support and challenge the Executive. This includes a revised risk management system and a performance measurement framework to gauge our impact on the education system. To support the Board we have revised the structure of the Board committees which will advise on key areas of our activity. We also worked to develop clear and effective ways of working with the DfES and the other UK Education Departments, as expressed in new memoranda of understanding. People & corporate systems Our greatest challenge in this area in 2003-04 was to restructure the organisation to deliver our new remit and reflect our new funding regime, in which our core grant was substantially increased to allow us greater flexibility over the delivery of our work. We worked with PricewaterhouseCoopers on a new organisational design which was finalised by December 2003. Recruitment initially concentrated on senior posts and specialist advisers and the whole organisation had moved to the new structure by 1 April 2004. To support our strategic aims we have developed our evidence and evaluation capacity, providing all staff and programmes of work with appropriate research support. We continued to develop our corporate systems in line with the reorganisation. This included the establishment of a Programme Office to oversee programme and project management; and a new corporate procurement board to define procurement policy and ensure compliance with OGC guidance and EU legislation. Communications Over the past 12 months we have been moving towards a more cohesive client-focused approach. This has resulted in a series of audience-focused publications promoting the specific resources available to our client groups and a redefined web portal which has also been designed to channel information through to our different audience sectors. This year too, Becta has commenced regular holistic ICT advice columns for key trade magazines across the education and industry sectors. Further highlights have been a supplement in The Independent published in September 2003 outlining the changes in Becta’s remit, and the programme of activity targeting all our client groups delivered at BETT 2004. Investment policy The trustees’ aim in investing the company’s funds is to maximise the return on bank and treasury deposits pending their application for charitable purposes. The trustees adopt a risk averse position with regard to investment. Reserves policy The charity’s reserves policy is based on a realistic assessment of its need for reserves and has been formally agreed with the trustees. Reserve levels are reviewed annually. This review encompasses the nature of the income and expenditure streams, the need to match income with commitments, the nature of the reserves and the specific accounting rules with which Becta must comply. Becta’s working capital for its core activities is restricted to a maximum of 2% of its annual grant in aid entitlement (currently £240,000). Earmarked projects funded by the department do not include a working capital balance and funds cannot be drawn down in advance of need. Funding for other projects includes a working capital balance. Becta is also allowed to retain £400,000 annually for reinvestment, from surpluses generated through its trading account. The charity has a number of other designated and restricted funds, which are represented by fixed and current assets. The purpose of these funds is detailed in notes 10 and 11 in the financial statements.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY TRUSTEES’ ANNUAL REPORT (continued) 31 March 2004 Restricted fund deficit The balance sheet at 31 March 2004 shows net assets of £409,754. This reflects the inclusion of defined benefit pension scheme liabilities falling due in future years which, to the extent that they are not to be met from the Becta’s other sources of income, may only be met by future grants or grants-in-aid from the Becta’s sponsoring department, the Department of Education and Skills. This is because, under the normal conventions applying to parliamentary control over income and expenditure, such grants may not be issued in advance of need. Grant-in-aid for 2004-05, taking into account the amounts required to meet the Becta’s liabilities falling due in that year, has already been included in the department’s Estimates for that year, which have been approved by Parliament, and there is no reason to believe that the department’s future sponsorship and future parliamentary approval will not be forthcoming. It has accordingly been considered appropriate to adopt a going concern basis for the preparation of these financial statements. Risk management The trustees have examined the major strategic, business and operational risks which the charity faces and confirm that systems have been established to enable regular reports to be produced so that the necessary steps can be taken to lessen these risks. Auditors Baker Tilly have agreed to offer themselves for re-appointment as auditors of the company.

On behalf of the board

DAVID HARGREAVES

Chairman Milburn Hill Road Science Park Coventry CV4 7JJ [Date]

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY STATEMENT OF RESPONSIBILITIES OF THE BOARD OF MANAGEMENT AND THE DESIGNATED ACCOUNTING OFFICER 31 March 2004 Company law requires the directors to prepare accounts for each financial year which give a true and fair view of the state of affairs of the charitable company and of the surplus or deficit of the charitable company for that period. In preparing those financial statements, the board of management and the designated accounting officer are required to:

a. selelect suitable accounting policies and apply them consistently; b. make judgements and estimates that are reasonable and prudent; c. state whether applicable accounting standards have been followed, and give details of any departures; d. prepare the accounts on a going concern basis unless it is inappropriate to presume that the charitable

company will continue in business. The board of management and the designated accounting officer are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the charitable company and to enable them to ensure that the accounts comply with the requirements of the Companies Act 1985. They are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In addition they are responsible for complying with the Financial Memorandum: Conditions Attaching To Grant Issued By The Secretaries of State.

23

BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY STATEMENT ON THE SYSTEM OF INTERNAL CONTROL 31 March 2004 1. Scope of responsibility As Accounting Officer and Trustees we have joint responsibility for maintaining a sound system of internal control that supports the achievement of British Educational Communications and Technology’s policies, aims and objectives, whilst safeguarding the public funds and assets for which the Accounting Officer is personally responsible in accordance with the responsibilities assigned in Government Accounting. 2. The purpose of the system of internal control The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of departmental policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place at British Educational Communications and Technology Agency for the year ended 31 March 2004 and up to the date of approval of the annual report and accounts, and accords with Treasury guidance. 3. Capacity to handle risk The Board has a fundamental role to play in the management of risk, which includes setting the tone and influencing the culture of risk management within the organisation. Each year the Board reviews the organisation’s approach to risk management and approves changes and improvements to key elements of its policy, processes and procedures. The responsibility for implementing British Educational Communications and Technology Agency risk management strategy is delegated to the Chief Executive, however, the responsibility for identifying and managing risk rests with all staff and the Executives. 4. The risk and control framework

The Audit committee monitors the adequacy and effectiveness of the risk management framework. Its role includes setting and monitoring risk management key performance indicators (KPIs). These KPIs reflects the risk management framework in principle, and its operation in practice. The Board regularly receives a summary of the KPI’s including the most significant risk exposures facing the Organisation. In carrying out this role, the Audit committee seeks to ensure that risk management activity is integral to the overall performance and management of British Educational Communications and Technology Agency, and that the consideration of risk is embedded as a key management activity.

5. Review of effectiveness

As Accounting Officer, I have responsibility for reviewing the effectiveness of the system of internal control. My review of the effectiveness of the system of internal control is informed by the work of the internal auditors and the executive managers within the Agency who have responsibility for the development and maintenance of the internal control framework, and comments made by the external auditors in their management letter and other reports. I have been advised on the implications of the result of my review of the effectiveness of the system of internal control by the Board, the Audit Committee and a plan to address weaknesses and ensure continuous improvement of the system is in place.

24

BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY STATEMENT ON THE SYSTEM OF INTERNAL CONTROL 31 March 2004 The organisation has established the following internal control processes:

• A management board, which meets quarterly to consider the plans and the strategic direction of the organisation;

• An audit committee, which meets quarterly and reports to the management board on the effectiveness of the organisations’ internal controls and on the most significant exposures facing the organisation;

• A risk management group meets quarterly to raise awareness, organise appropriate training, oversee the effectiveness of the risk management strategy and update the organisational profile and submit a quarterly report to the Senior Management Team;

• Regular reports by internal audit, to standards defined in the Government Internal Audit Standards, which include the Internal Auditors’ independent opinion on the adequacy and effectiveness of the organisation’s system of internal control together with recommendations for improvement, reviewed by the audit committee.

• Review and approval by the Board / Audit Committee / SMT of key policies that underpin internal control systems (e.g. code of conduct / fraud policy / whistle blowing etc)

• Any quality systems in operation or external quality accreditation

British Educational Communications and Technology Agency employs an independent firm of internal auditors, who operate to standards defined in the Government Internal Audit Standards. Internal audit plans are endorsed by the company’s audit committee and approved by me. At least annually, the firm of internal auditors provides me with a report on the internal audit activity in the company. The report for this year notes the fact that the limitations on the scope of internal audit work resulted in their inability to given an opinion of the overall adequacy and effectiveness of the organisation’s risk management, control and governance. Opinions were given on the work performed and management have responded appropriately. The internal auditors commented on progress had been made in relation to risk management, including the development of a new risk management policy. 6. Significant internal control problems My review of the effectiveness of the system of internal control has not highlighted any significant weaknesses. …………………………………………….. O Lynch - Designated Accounting Officer …………………………………………….. D Hargreaves – Chairman [Date]

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY AUDITORS’ REPORT ON THE STATEMENT ON THE SYSTEM OF INTERNAL CONTROL 31 March 2004 In addition to our audit of the accounts, we have reviewed the Accounting Officer’s statement on the system of internal control set out on page 23. The objective of our review is to draw attention to non-compliance with HM Treasury’s guidance, ‘Corporate governance: statement on the system of internal control’ (DAO(GEN) 09/03). Basis of Opinion We carried out our review in accordance with Bulletin 5/99 The Combined Code: Requirement of auditors under the Listing Rules of the London Stock Exchange issued by the Auditing Practice Board insofar as they relate to statements on internal control and tailored as appropriate for a central government context. The guidance does not require us to perform the additional work necessary to, and we do not, express any opinion on the effectiveness of the company’s system of internal financial control. Opinion With respect to the Accounting Officer’s statement on the system of internal control set out on page 23 in our opinion the Accounting Officer has provided the disclosures required by HM Treasury’s guidance:- ‘Corporate governance: statement on the system of internal control’ and the statement is not inconsistent with the information of which we are aware from our audit work on the accounts. Chartered Accountants Park House Station Square Coventry CV1 2NS [Date]

26

BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY REPORT OF THE AUDITORS Independent auditors’ report to the members of British Educational Communications and Technology Agency We have audited the financial statements of British Educational Communications and Technology Agency for the year ended 31 March 2004 which comprise the Balance Sheet, the Statement of Financial Activities, the Cash Flow Statement and the related notes. These financial statements have been prepared under the historical cost convention and the accounting policies set out therein. This report is made solely to the company’s members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of the board of management, the accounting officer and auditors The directors (who also act as trustees and the company's board of management for the charitable activities of British Educational Communications and Technology Agency) are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards as set out in the Statement of Responsibilities of the Board of Management. The company's accounting officer is also responsible for the regularity and propriety of the public finances. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985 and in accordance with our instructions on the regularity of the financial transactions included in them and report our opinion to you. We also report to you, if, in our opinion, the Trustees' Report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and transactions with the company is not disclosed. We are not required to consider whether the statement in the Trustees' (Directors') Report concerning the major risks to which the charity is exposed covers all existing risks and controls, or to form an opinion on the effectiveness of the charity's risk management and control procedures. We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. This other information comprises only the Trustees' Report. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Basis of opinion We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Board in the preparation of the financial statements, and of whether the accounting policies are appropriate to the charitable company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error and that, in all material respects, the income and expenditure have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY REPORT OF THE AUDITORS Independent auditors’ report to the members of British Educational Communications and Technology Agency (continued) Opinion In our opinion the financial statements give a true and fair view of the state of the charitable company's affairs as at 31 March 2004 and of its incoming resources and application of resources, including its income and expenditure for the year then ended and have been properly prepared in accordance with the Companies Act 1985, and in all material respects the income and expenditure have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. Chartered Accountants Park House Station Square Coventry CV1 2NS [Date]

28

BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY STATEMENT OF FINANCIAL ACTIVITIES for the year ended 31 March 2004 As restated Unrestricted Restricted Total Total funds funds 2004 2003 Income and Expenditure Note £ £ £ £ Incoming resources DfES Grant in aid - 12,001,546 12,001,546 4,843,000 DfES and other government grants - 14,517,954 14,517,954 19,081,322 Other grants and miscellaneous income 499,760 6,605,955 7,105,715 5,628,917 Investment income 4 40,576 - 40,576 42,636 Total incoming resources 540,336 33,125,455 33,665,791 29,595,875 Resources expended Charitable expenditure: Cost of activities in furtherance of the charity's activities:

Educational projects 427,261 27,751,915 28,179,176 25,937,131 Grants payable to institutions - 1,400,182 1,400,182 1,300,244 Support costs 35,270 2,952,538 2,987,808 2,318,268 Management and administration - 92,726 92,726 68,556 Total resources expended 2 462,531 32,197,361 32,659,892 29,624,199 Pension finance income 2.5 - 136,000 136,000 52,000 Notional cost of capital - (16,387) (16,387) (7,649) Total resources expended including notional costs

462,531 32,316,974 32,779,505 29,668,550

Net incoming/(outgoing) resources for the year including notional costs 77,805 808,481 886,286 (72,675) Actuarial gains/(losses) on defined benefit pension scheme 2.5 - 886,000 886,000 (2,357,000) Reverse notional cost of capital - (16,387) (16,387) (7,649) Net incoming/(outgoing) resources for the year 77,805 1,678,094 1,755,899 (2,437,324) Fund balances brought forward at 1 April 2003 as originally stated 894,930 1,015,925 1,910,855 1,900,179 Prior year adjustment 5 - (3,257,000) (3,257,000) (809,000) Fund balances brought forward as restated 894,930 (2,241,075) (1,346,145) 1,091,179 Fund balances carried forward at 31 March 2004 972,735 (562,981) 409,754 (1,346,145) The statement of financial activities includes all gains and losses recognised in the year. All activities derive from continuing operations.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY BALANCE SHEET at 31 March 2004 As restated 2004 2003 Note £ £ £ £ Fixed assets Tangible assets 6 1,217,803 971,756 Current assets Debtors 7 766,478 2,686,480 Cash at bank and in hand 2,937,655 2,335,193 3,704,133 5,021,673 Creditors: amounts falling due within one year

8 (1,705,182)

(4,082,574)

Net current assets 1,998,951 939,099 Net assets excluding pension scheme liability

3,216,754

1,910,855

Defined benefit pension scheme liability

(2,807,000)

(3,257,000)

Net assets including pension scheme liability

409,754

(1,346,145)

Funds: Restricted funds: - excluding pension 10 2,244,019 1,015,925 - defined benefit pension 10 (2,807,000) (3,257,000) (562,981) (2,241,075) Unrestricted funds: - Designated funds 11 748,769 670,964 - Other charitable funds 223,966 223,966 409,754 (1,346,145) The accounts on pages 28 to 41 were approved by the board of management on [Date] and signed on its behalf by DAVID HARGREAVES - Chairman ……………………………………………………………… The accounts were also approved by OWEN LYNCH - Chief Executive ………………………………………………………..

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY CASH FLOW STATEMENT for the year ended 31 March 2004

As restated 2004 2003 Note £ £ Net cash inflow from operating activities (i) 1,178,867 2,154,304 Returns on investment and servicing of finance Bank deposit interest 40,576 42,636 Capital expenditure and financial investment Payments to acquire tangible fixed assets (616,981) (514,909) Increase in cash (ii) 602,462 1,682,031 Notes to cash flow statement (i) Reconciliation of changes in resources to net cash inflow from operating activities Changes in resources (per SOFA) 1,755,899 (2,437,324) Interest adjustment (40,576) (42,636) Depreciation 370,934 388,182 Loss on disposal of fixed assets - 4,615 Decrease/(increase) in debtors 1,920,002 (460,895) (Decrease)/increase in creditors (2,377,392) 2,254,362 (Decrease)/increase in defined benefit pension scheme deficit (450,000) 2,448,000 Net cash inflow from activities 1,178,867 2,154,304

(ii) Reconciliation of net cash flow to movement

in net funds

Increase in cash in the year 602,462 1,682,031 Net funds at 1 April 2003 2,335,193 653,162

Net funds at 31 March 2004, being cash at bank and in hand 2,937,655 2,335,193

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY ACCOUNTING POLICIES 31 March 2004 Basis of accounting

The accounts have been prepared in accordance with applicable accounting standards, and in accordance with the provisions of the Charities SORP currently in effect. Fund accounting General funds are unrestricted funds which are available for use at the discretion of the trustees in furtherance of the general objectives of the charity and which have not been designated for other purposes. Designated funds comprise unrestricted funds that have been set aside by the trustees for particular purposes. The aim and use of each designated fund is set out in the notes to the financial statements. Restricted funds are funds that are to be used in accordance with specific restrictions imposed by donors or which have been raised by the charity for particular purposes. The cost of raising and administering such funds are charged against the specific fund. The aim and use of each restricted funds is set out in the notes to the financial statements. Tangible fixed assets The full cost of the asset is included in fixed assets, with the grant received being accounted for immediately as restricted funds. The restricted fund will be reduced by transfers of amounts equivalent to any depreciation over the expected useful life of the asset concerned. The minimum level for capitalisation of a tangible fixed asset is £1,000. In the case of computer equipment and furniture all items recorded as capital expenditure are capitalised and if they fall below the £1,000 threshold they are bulked together and recorded as bulk assets. Depreciation is provided to write off the cost of the assets over their expected useful lives which are as follows: Leasehold buildings 25 years straight line Furniture 10 years straight line Equipment 3 years straight line Stocks No value is placed on stocks of publications and other educational materials, or other items (including office stationery and supplies) which have been funded by DfES grants since such items are deemed to have been acquired at no cost to the company. Incoming resources

Income from grants and miscellaneous income, including capital grants, is included in incoming resources when these are receivable, except as follows:

• When donors specify that grants or other income given to the charity must be used in future accounting

periods, the income is deferred until those periods.

• When donors impose conditions which have to be fulfilled before the charity becomes entitled to use such income, the income is deferred and not included in incoming resources until the pre-conditions for use have been met.

When donors specify that grants or other income including capital grants, are for particular restricted purposes, which do not amount to pre-conditions regarding entitlement, this income is included in incoming resources of restricted funds when receivable.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY ACCOUNTING POLICIES (continued) 31 March 2004 Pension schemes

The company contributes to two defined benefit pension schemes.

The Teachers’ Pension Scheme is a multi- employer pension scheme and advantage has been taken of the exemption in FRS17 and has accounted for its contribution to the scheme as if it were a defined contribution scheme i.e. premiums being charged to the Statement of Financial Activities as they become due for payment.

For defined benefit schemes the amount charged to the Statement of Financial Activities in respect of pension costs and other post retirement benefits is the estimated regular cost of providing the benefits accrued in the year, adjusted to reflect variations from that cost. The interest cost and expected return on assets are included within other finance costs. Actuarial gains and losses arising from new valuations and from updating valuations to the balance sheet date are recognised in the Statement of Financial Activities.

Defined benefit schemes are funded, with the assets held separately from the group in separate trustee administered funds. Full actuarial valuations, by a professionally qualified actuary, are obtained at least every three years, and updated to reflect current conditions at each balance sheet date. The pension scheme assets are measured at fair value. The pension scheme liabilities are measured using the projected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency. A pension scheme asset is recognised on the balance sheet only to the extent that the surplus may be recovered by reduced future contributions or to the extent that the trustees have agreed a refund from the scheme at the balance sheet date. A pension scheme liability is recognised to the extent that the charity has a legal or constructive obligation to settle the liability. For defined contribution schemes the amount charged to the Statement of Financial Activities in respect of pension costs and other post retirement benefits is the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet. Support costs and administration costs Support costs and administration costs are allocated according to the direct costs of the department plus attributable overheads. Lease and hire purchase contracts Rentals paid under operating leases and charged to income as incurred. Financial instruments The charity has foreign currency exposure in the form of Euro transactions and balances but does not hedge against it because the risk is considered minimal. Foreign currencies Assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the statement of financial activities. Notional cost of capital This represents the opportunity cost to the Exchequer of assets used by the charitable company.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY NOTES ON ACCOUNTS 31 March 2004 1 Members The company is limited by guarantee not having a share capital. The liability of each member is limited

to a sum not exceeding one pound. The company is prohibited under the terms of its Memorandum and Articles of Association from

distributing any reserves. 2 Analysis of total resources expended Staff cost Depreciation Other costs Total £ £ £ £ Educational projects 8,689,037 311,214 19,178,925 28,179,176 Grants to institutions - - 1,400,182 1,400,182 Support costs 1,667,408 59,720 1,260,680 2,987,808 Management and administration - - 92,726 92,726 Total 10,356,445 370,934 21,932,513 32,659,892 Other costs comprise:- i) Education projects - Earmarked funded projects and other programme costs ii) Grants to institutions - See 2.6 iii) Support costs - Corporate overheads iv) Management and administration - Costs of governance 2004 2003 2.1 Staff costs £ £ Wages and salaries 6,118,059 5,059,342 Social security costs 531,492 394,350 Agency, temporary and contract staff 2,745,252 1,597,901 Current service pension costs 361,000 271,000 Past service pension costs 272,000 - Other pension costs 328,642 125,912 10,356,445 7,448,505 2.2 Average number of employees Number Number The average number of persons employed by the company (excluding members of the board of management and agency, temporary and contract staff) was: Professional staff 115 97 Administrative and technical support staff 103 97 218 194 2.3 Board of management No member of the board of management received remuneration from the company.

Expenses of £6,695(2003 - £7,755) were reimbursed to 6 (2003 – 7) members of the board during the year in respect of travel and other business costs.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY NOTES ON ACCOUNTS (continued) 31 March 2004 2004 2003 £ £ 2 Analysis of total resources expended (continued) 2.4 Chief Executive and higher paid employees The remuneration contributions of the Chief Executive, who is not a member of the board of management, were: Salary 124,496 119,312 Employers pension contributions 13,365 8,114 137,861 127,426 The Chief Executive is an ordinary member of the Teachers Pension Scheme (note 2.5 below) The following numbers of higher paid employees received remuneration (excluding pension contributions) within the ranges shown Number Number £50,000 - £59,999 3 1 £60,000 - £69,999 2 2 £70,000 - £79,999 2 2 £110,000 - £119,999 - 1 £120,000 – £129,999 1 - The salary and pension entitlement of senior management included above is as follows: Age

at 31/3/04 Salary including benefits in bands

Real increase in pension (£K)

£’000 £’000 P Hunt 59 55-60 0-2.5 P Avis 54 65-70 0-2.5 S Lucey 45 70-75 0-2.5 C Vincent 44 75-80 0-2.5 N McLean 48 80-85 0-2.5 F Daly – consent withheld under the Data Protection Act 1998.

N Newman – consent withheld under the Data Protection Act 1998. 2.5 Pensions The Company's pension schemes provide defined retirement benefits for eligible employees

based on final remuneration together with life assurance cover until normal retirement date. Contributions to the schemes totalled £658,642 during the year and were based on the following rates:

Employers Employees London Pension Funds Authority 9.3% 6.0% Teachers Pensions Scheme 13.5% 6.0%

The two principal pension schemes for the charitable company's staff are the London Pension Funds Authority and the Teachers Pension Scheme. The London Pension Funds Authority is a funded scheme with assets held in separate trustee administered funds. The latest formal valuation of this scheme for funding purposes was as at 31 March 2001.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY NOTES ON ACCOUNTS (continued) 31 March 2004 2.5 Pensions (continued)

The main financial assumptions used in the actuarial valuation were as follows: 31 March 2004 31 March 2003

Price increases 2.9% 2.5% Salary increases 4.4% 4.0% Pension increases 2.9% 2.5% Discount rate 6.5% 6.1%

The assets of the whole of scheme and the expected rates of return were:

Long term

expected return Fund value at

31 March 2004 £'000

Equities 7.7% 1,137,200 Bonds 5.1% 173,400 Property 6.5% 52,000 Cash 4.0% 21,900 1,384,500 Net pension liability of company 31 March 2004 31 March 2003 £'000 £'000 Estimated employer assets 6,869 5,329 Present value of scheme liabilities 9,211 8,250 Present value of unfunded liabilities 465 336 Total value of liabilities 9,676 8,586 Net pension liability of company 2,807 3,257

Becta has fully implemented the pension disclosures under FRS17 and full provision has been made by the company for the company's share of the deficit in the scheme.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY NOTES ON ACCOUNTS (continued) 31 March 2004 2.5 Pensions (continued)

Revenue account costs

Analysis of amount charged to statement of financial activities 31 March 2004 31 March 2004 £'000 % of payroll Service cost 361 10.8 Past service cost 272 8.1 633 18.9 Projected amount credited to other finance income Expected return on employer assets 405 12.1 Interest on pension scheme liabilities (541) (16.2) Net return (136) (4.1) Net revenue account cost 769 23.0

Analysis of amount recognised in statement of financial activities (SOFA) 31 March 2004 31 March 2003

£'000 £'000 Actual return less expected return on pension scheme assets 875 (2,271) Experience gains and losses arising on the scheme liabilities 11 (86) Changes in financial assumptions underlying the present value of the

scheme liabilities - - Actuarial gain/(loss) in pension plan 886 (2,357) Movement in irrecoverable surplus from membership fall and other

factors - - Actuarial gain/(loss) recognised in the SOFA 886 (2,357)

Movement in surplus/deficit during the year Deficit at beginning of the year (3,257) (809) Current service cost (361) (271) Employer contributions 304 232 Contribution in respect of unfunded benefits 29 - Past service costs (272) - Net return on assets (136) (52) Actuarial gains/(losses) 886 (2,357) Deficit at year end (2,807) (3,257)

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY NOTES ON ACCOUNTS (continued) 31 March 2004 2.5 Pensions (continued)

History of experience gains and losses

31 March 2004 31 March 2003 £'000 £'000 Difference between the expected and actual return on assets 875 (2,271) Value of assets 6,869 5,329 Percentage of assets 12.7% (42.6%) Experience gains/(losses) on liabilities 11 (86) Present value of liabilities 9,675 8,586 Percentage of the present value of liabilities 0.1% (1.0%) Actuarial gains/(losses) recognised in SOFA 886 (2,357) Present value of liabilities 9,675 8,586 Percentage of the present value of liabilities 9.2% (27.5%)

The Teachers' Pension Scheme is an unfunded scheme. Contributions on a "pay-as-you-go" basis are credited to the exchequer under arrangements governed by the Superannuation Act 1972. Actuarial valuations are carried out on a notional set of investments. Under the definitions set out in the Financial Reporting Standard 17 Retirement Benefits, the Teachers' Pension Scheme is a multi-employer pension scheme. The company is unable to identify its share of the underlying (notional) assets and liabilities of the scheme. Accordingly advantage has been taken of the exemption in FRS17 and has accounted for its contribution to the scheme as if it were a defined contribution scheme.

2.6 Grants to institutions 2004 2003 £ £ Ability Net South East 275,146 153,800 Ace Centre Advisory Trust 461,850 380,392 Ace Centre North 296,738 403,895 Deafax Trust 181,448 182,155 Scope 185,000 180,002 1,400,182 1,300,244

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY NOTES ON ACCOUNTS (continued) 31 March 2004 3 Other costs 2004 2003 £ £ Other costs include: Auditors' remuneration for - Audit 14,300 13,900 - Other services 2,525 2,450 Operating leases - rent payable 629,335 563,540 - motor vehicle - 2,065 Foreign exchange gains (447) (8,746) 2004 2003 4 Investment income £ £ Bank deposit interest receivable 40,576 42,636 5 Prior year adjustment The prior year adjustment has arisen due to a change in accounting policy during the year regarding

retirement benefits. The company has fully implemented the requirements of Financial Reporting Standard FRS17 -

retirement benefits. 6 Tangible fixed assets Projects Publications Short General department department leasehold furniture & furniture & furniture & buildings equipment equipment equipment Total £ £ £ £ £ Cost 31 March 2003 268,262 2,344,217 146,152 9,761 2,768,392 Additions - 532,064 84,917 - 616,981 Disposals - (29,756) (3,778) - (33,534) 31 March 2004 268,262 2,846,525 227,291 9,761 3,351,839 Depreciation 31 March 2003 107,300 1,589,254 90,321 9,761 1,796,636 Charge for the year 10,730 329,460 30,744 - 370,934 Disposals - (29,756) (3,778) - (33,534) 31 March 2004 118,030 1,888,958 117,287 9,761 2,134,036 Net book value 31 March 2004 150,232 957,567 110,004 - 1,217,803

31 March 2003 160,962 754,963 55,831 - 971,756

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY NOTES ON ACCOUNTS (continued) 31 March 2004 2004 2003 7 Debtors £ £ Due within one year Trade debtors 344,751 194,039 Prepayments 263,517 104,022 Accrued income 158,210 2,298,822 Other debtors - 89,597 766,478 2,686,480 8 Creditors: amounts falling due within one year Trade creditors 1,251,434 1,552,746 Accruals 14,300 13,900 Deferred income (note 9) 207,581 2,294,844 Other taxation 231,867 166,088 Other creditors - 54,996 1,705,182 4,082,574 9 Deferred income Balance at 1 April 2003 2,294,844 1,722,947 Amount released to incoming resources (2,294,844) (1,722,947) Amount deferred in the year 207,581 2,294,844 Balance at 31 March 2004 207,581 2,294,844

Deferred income comprises income in advance for projects where the charity may not have entitlement to these resources until the goods or services are provided.

10 Restricted funds Movement in funds Balance Expenditure Balance 31 March Incoming gains, losses 31 March 2003 resources & transfers 2004 £ £ £ £ DfES capital funds 100,000 - - 100,000 Capital expenditure 915,925 532,064 (340,190) 1,107,799 Grant in aid and other revenue grants - 25,987,436 (25,987,436) - Becta NLN managing agency funds - 6,356,055 (5,360,430) 995,625 Total cost of ownership fund - 249,900 (209,305) 40,595 Deficit on defined benefit pension (3,257,000) - 450,000 (2,807,000) (2,241,075) 33,125,455 (31,447,361) (562,981)

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY NOTES ON ACCOUNTS (continued) 31 March 2004 10 Restricted funds (continued) DfES capital fund was provided to finance working capital. Capital expenditure fund is represented by the leasehold building and general furniture and equipment. Becta NLN managing agency funds represent funds given by the Learning and Skills Council and the

Scottish FEFC for specific activities. Total cost of ownership fund was given for implementing the proposal relating to the further education

sector. Deficit on defined benefit pension relates to the year end actuarial valuation of the company’s share of

the deficit in the scheme for staff that are funded from government grants. The opening deficit is as restated following the prior year adjustments referred to in note 5.

The balance sheet at 31 March 2004 shows net assets of £409,754. This reflects the inclusion of

defined benefit pension scheme liabilities falling due in future years which, to the extent that they are not to be met from the Becta’s other sources of income, may only be met by future grants or grants-in-aid from the Becta’s sponsoring department, the Department of Education and Skills. This is because, under the normal conventions applying to parliamentary control over income and expenditure, such grants may not be issued in advance of need.

Grant-in-aid for 2003-04, taking into account the amounts required to meet the Becta’s liabilities falling due in that year, has already been included in the department’s Estimates for that year, which have been approved by Parliament, and there is no reason to believe that the department’s future sponsorship and future parliamentary approval will not be forthcoming. It has accordingly been considered appropriate to adopt a going concern basis for the preparation of these financial statements.

11 Designated funds The income funds of the charity include the following designated funds which have been set aside out of

unrestricted funds by the trustees for specific future purposes. Balance Balance 31 March New Utilised/ 31 March 2003 designation released 2004 £ £ £ £ Publications - revenue 278,938 20,902 (55,353) 244,487 Company projects - revenue 336,195 434,517 (376,434) 394,278 - capital 55,831 84,917 (30,744) 110,004 670,964 540,336 (462,531) 748,769 Publications revenue fund is the amount carried forward in respect of the publication activities in

accordance with the financial memorandum. The maximum amount allowed to be carried forward is £400,000.

Company projects revenue fund has been set aside to meet company projects which are considered to be

integral to the achievement of corporate plan objectives where no other funding is available. Company projects capital fund is represented by the projects department furniture and equipment.

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BRITISH EDUCATIONAL COMMUNICATIONS AND TECHNOLOGY AGENCY NOTES ON ACCOUNTS (continued) 31 March 2004 12 Analysis of net assets between funds Unrestricted Restricted Total funds funds funds Fund balances at 31 March 2004 are £ £ £ Represented by: Tangible fixed assets 110,004 1,107,799 1,217,803 Current assets 862,731 2,841,402 3,704,133 Current liabilities - (1,705,182) (1,705,182) Pension liabilities - (2,807,000) (2,807,000) Total net assets 972,735 (562,981) 409,754 13 Financial commitments The company occupies office premises under a twenty-five year lease expiring 26 August 2018 at an annual rental

of £377,675 exclusive of rates and service charges. The lease is subject to rent reviews every fifth year and may be terminated at the company's option on 26 August 2008 on payment of an additional six months rental.

The company also occupies office premises under a twenty-one year lease expiring 31 August 2020 at an annual

rent of £63,065 exclusive of rates and service charges. The lease is subject to rent reviews every third year. The company also occupies office premises under a twenty-one year lease expiring 30 November 2024 at an

annual rent of £65,326 exclusive of rates and service charges. The lease is subject to rent reviews every third year. The company has a pension commitment for three persons who have taken early retirement and belonged to the

Teachers’ Pension Scheme. The current annual charge is £11,244.