Shareholder Executive

Ordnance Survey

Purpose

Ordnance Survey exists to collect, portray and distribute the definitive record of Great Britain's natural, built and planned environment.

Legal Status and Ownership details

Ordnance Survey is a Government Department and Executive Agency in its own right with trading fund status, responsible to the Secretary of State for Communities and Local Government.

Objectives

Ordnance Survey's objective is to deliver its Public Task. This can be summarised as to:

• collect and maintain uniform geographic datasets with national coverage, and provide nationally-consistent mapping
• maintain a definitive three-dimensional satellite-based geodetic reference framework to enable correct positioning of mapping and other data against the National Grid
• ensure that its data is capable of supporting the principles underlying the Digital National Framework, to allow integration and association with other geospatial information
• make the content of its datasets widely available in forms that are accessible to all customers for wider benefit, and charge its customers for the licensing and use of its products
• conduct its activities efficiently and effectively to maximise the broader economic value of its data, while complying with trading fund requirements and creating long-term shareholder value.

Financial Performance*

£m	2004	2006	2005
Turnover	116	118	115
Operating Profit	7	8	9
Profit/(Loss) for the year	7	8	10
Net Cash flow	(0)	(0)	0
Net Operating Assets (valuation Basis)	56	57	51
RONA	11.8%	13.7%	18.5%
ROCE	10.5%	13.9%	18.6%
Shareholders' Funds	55	52	46
Dividends	5	3	1

Commentary

Although Ordnance Survey's headline results showed a slight decline from 2005-06, this was as a result of a number of one-off impacts. The underlying operating performance of the business remained strong, showing steady improvement across the board.

Turnover was down 1.8% to £116.2m. This was due to the termination of the National Interest Mapping Services Agreement (NIMSA) in the year (£1.0m of revenue in 2006-07 compared with £9.9m in 2005-06). This was offset by increased revenues from most other business segments, although consumer sales did fall £0.9m or 6%, continuing the long-term trend of declining sales of paper map products. Operating costs decreased marginally to £109.7m. However, this was after an £11.3m exceptional operating charge in relation to an impairment of the carrying value of Ordnance Survey's new database management system, currently under construction. Following a review of the technical architecture of the proposed system, an alternative solution is now being pursued.

Overall, Ordnance Survey's profit for the year fell 16.3% to £6.7m. It paid a £4.6m dividend to the Department for Communities and Local Government. Ordnance Survey also significantly exceeded its financial objective, recording a 14.6% average return on capital employed in the three years to March 2007 against a target 5.5%.

Ordnance Survey made good progress in the year with its head office relocation project. A development contract was signed with Kier Property Developments Ltd in March 2007. Subject to planning permission, this will enable Ordnance Survey to occupy its new purpose-built accommodation in 2009.

Looking forward, Ordnance Survey continues to monitor the ongoing debates about the role of public sector information in the economy. After the year end, the Government published responses to both the OFT's Commercial Use of Public Information report and the independent 'Power of Information' review. In the responses the Government undertook to investigate further the impact of any changes to the definitions or charging policy for public information and work has commenced on this analysis.

On the governance front, Judith Anthony and Sir Michael Bett stood down as non-executive directors in July 2006. Katherine Innes Ker and Brian Hadfield were appointed in their places. Ed Parsons, Chief Technology Officer, resigned in February 2007. Duncan Shiell retired as Strategy Director and Alastair Matthews resigned as Finance Director after the year-end.