The BBC has declared a record income of £5.33 billion ($6.4 billion) for the 2021/2022 period, up from £5.06 billion last year, and a surplus of £206 billion.

In the corporation’s annual report, which was published on Tuesday, it was revealed that the bulk of the income was from the license fee paid for by the public, which accounted for £3.8 billion, £50 million up from last year. The licence fee has been frozen for two years as revealed earlier this year. BBC chair Richard Sharp termed this as “disappointing.”

“The working assumption is that this will open up an income gap, which is modelled to be at least £285 million a year by 2027-2028. Clearly, this is disappointing,” Sharp told a media briefing. “However, the BBC recognises that the licence fee is a privilege, and that the funding settlement offers certainty against which we can plan.”

Addressing the future funding model of the BBC, Sharp said, “The government is planning to launch a review into the BBC’s funding model. And from the board’s point of view, we welcome an informed debate. We believe all options should be looked at, and nothing should be off the table. We’ll also make our own contribution of course, by setting out the key principles against which we believe options for future funding models should be assessed in order to support the BBC, as a national and as a global asset.”

Operating costs have increased from last year but the BBC attributes this to a strong year of content delivery and commercial growth. BBC Studios, the commercial arm of the corporation drove growth, with profits up 50% year-on-year to £226 million and sales up 30% to £1.63 billion. The past financial year marks the first time the business has topped £200 million in profits.

The BBC’s investment in the creative sector is supporting economic growth and 53,000 jobs across the U.K. “Every £1 of the BBC’s economic activity now generates a total of £2.63 for the wider economy,” the BBC said.

Elsewhere, the BBC is meeting several of its stated ambitions. On the corporation’s 50:20:12 staffing targets, staff make-up is now 49.5% women, 16.4% Black and minority ethnic and 9.3% disabled — all up on last year. The BBC also introduced a new socio-economic diversity target of 25% this year.

And the ambition to diversify production outside London is on track, with 54% of content being produced outside the capital and in the nations and regions of the U.K.

The annual report also highlights that the BBC continues to reach 90% of U.K. adults on average each week. However, there are some audience shortfalls. Youth-oriented BBC Three, which returned from being an online channel to broadcast this year, now reaches just 6% of 16-35 year olds, compared to 21.6% in 2020, the report reveals.

Addressing the issue, BBC director Tim Davie said at the media briefing: “We know that linear audiences are extremely under pressure. But overall, the logic of having a shop window for our youth channel is actually the right thing to do. We’ll continue to use to judge our success both on the linear and the i-Player, adding it together. But I think having the two working together is the right answer for us.”

“I think we’ve got a very strong case with young audiences, what we need to do is make sure we’re giving the right content in the right format,” Davie added.

Regarding former BBC DJ Tim Westwood, the subject of alleged bullying and sexual misconduct complaints, Davie said that the corporation is undertaking a “full deep dive” into the matter and the results of that would be published in two weeks.