INTERIM REPORT FINANCIAL YEAR 2018 Television New Zealand Limited
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F.20 INTERIM REPORT FINANCIAL YEAR 2018 Television New Zealand Limited Consolidated Interim Financial Statements for the six months ended 31 December 2017 (Unaudited) 3 Chief Executive’s Overview 4 Consolidated Income Statement 5 Consolidated Statement of Comprehensive Income 5 Consolidated Statement of Changes in Equity 6 Consolidated Statement of Financial Position 7 Consolidated Statement of Cash Flows 8 Notes to the Consolidated Interim Financial Statements TVNZ INTERIM REPORT · PAGE 2 Chief Executive’s Overview TVNZ has made a positive start live streaming of all TVNZ channels, a significant expansion of the content offering, and extended accessibility to to the fiscal year. We’ve achieved Chromecast, Apple TV and Vodafone TV. As a result of these initiatives TVNZ OnDemand video streams increased to 42.2 strong TV and OnDemand million, up 5.9 million (16%) on the same period last year. audience reach and improved Re:, TVNZ’s alternative social media news voice, has operational earnings through surpassed expectations. Re: is distributed via Facebook, Instagram and SnapChat and has achieved over 15 million modest revenue growth and video streams since launching in July. tightly managed costs. Original content is TVNZ’s strategic focus and competitive advantage. It’s our sustainable point of difference in a market increasingly contested by global scale international Increased advertising revenue and lower operational expenses players. lifted TVNZ’s earnings performance for the six months ended December – with the company reporting EBITDAF of $30.2 Over time TVNZ will tilt its content investment more million, up $4.5 million (17.4%) on the same period last year. towards local content. Viewers are already seeing our enhanced news presentation on screen with the recent 2018 Growth in both TV and online advertising income contributed relaunch of 1 NEWS at Six, Breakfast and Seven Sharp. Our to total revenue of $170.4 million, up $1.6 million (1.0%) year investment in immersive graphics and market leading studio on year. technology will continue to enhance the presentation of our flagship local news content in 2018. Operational expenses decreased $2.8 million to $140.1 million (2.0%), realising benefits from organisational restructuring in Major content investments in the months ahead include the previous financial year. our extensive multiscreen coverage the Gold Coast 2018 Commonwealth Games, and new local event commissions TVNZ posted an interim after tax net profit of $17.2 million, up Project Runway NZ, Heartbreak Island, My Kitchen Rules NZ $4.3 million (33.7%) on the previous year. and the second series of Survivor NZ. Given the strong first half performance and after reviewing Co-productions with international partners will enable TVNZ potential future funding requirements, the TVNZ Board has to tell New Zealand stories on a global stage. In the works declared a dividend of $9,016,000 for the previous are Scandi-New Zealand crime drama Straight Forward with financial year. Screentime NZ, Mastiff Denmark and Viaplay; fantasy drama The New Legends of Monkey with ABC Australia and Netflix; In recent years TVNZ has focused on growing digital revenue and competitive reality format Spartan and drama 800 to offset TV revenue declines. Against this back drop, it’s Words with Seven Australia. encouraging for the business to achieve year on year growth in both TV and digital advertising revenue for the half year. We’re set to launch new children’s platform HEIHEI in May. A collaboration between NZ on Air and TVNZ, HEIHEI will be The pulling power of TVNZ content is the primary driver of a safe, interactive ad-free space for New Zealand primary business performance and our local and international content school aged children to explore and enjoy local media line up continues to resonate strongly with New Zealanders – content online. reaching more than 2 million people every day across TVNZ 1, 2, DUKE, OnDemand and 1 NEWS NOW. Competition from global players is expected to increase in 2018. In addition to growing share of TV and accelerating TVNZ’s TV audience share strengthened to a five year high growth of OnDemand, TVNZ will actively explore adjacent and it screened 18 of the 20 most watched programmes market growth opportunities. in the six months to 31 December, with the 1 NEWS Vote 2017 Leaders Debate being the country’s most watched TVNZ is commmitted to sharing the moments that matter programme. to New Zealand viewers and is on track to exceed its full year targets set out in its Statement of Performance September’s General Election was a big moment for New Expectations. Zealand and for TVNZ. 1 NEWS’ comprehensive political coverage reached over 1.5 million viewers, and for the first time included captioning and sign language viewing options for deaf and hard-of-hearing viewers. TVNZ OnDemand cemented its status as the country’s most popular free to view video on demand destination. Kevin Kenrick Developments in the last six months include the launch of Chief Executive Network share source: Nielsen TAM, All People 5+. TVNZ network share is up in Peak and All Day. Top 20 programmes: Nielsen TAM, average audience All People 5+ (includes one off programmes). The 1 NEWS Vote 2017 Election Night Special reached 1,508,300 All People 5+ on TVNZ 1 and TVNZ 1 +1, source: Nielsen TAM TVNZ INTERIM REPORT · PAGE 3 Consolidated Income Statement FOR THE SIX MONTHS ENDED 31 DECEMBER 2017 (UNAUDITED) CONSOLIDATED 6 MONTHS ENDED 6 MONTHS ENDED YEAR ENDED 31/12/17 31/12/16 30/06/17 NOTES $000 $000 $000 Operating revenue 3 170,371 168,741 316,523 Expenses Programming 4 (89,018) (90,424) (191,650) Employee benefits (22,527) (24,303) (48,022) Transmission, technology and telecommunications (9,379) (9,351) (18,830) Premises and occupancy (1,749) (2,354) (4,590) Marketing (4,836) (3,821) (9,624) Other 5 (12,620) (12,731) (26,429) (140,129) (142,984) (299,145) Earnings before depreciation and amortisation, interest, financial 30,242 25,757 17,378 instruments, joint venture and tax (EBITDAF) Depreciation and amortisation (9,062) (8,336) (16,353) Interest income 402 331 765 Interest expense (69) (74) (99) Financial instruments/foreign currency gains/(losses) 2,391 127 239 Share of results of joint venture 0 9 16 Profit for the period before tax 23,904 17,814 1,946 Income tax expense (6,720) (4,963) (554) Profit for the period 17,184 12,851 1,392 The accompanying notes form part of these financial statements. TVNZ INTERIM REPORT · PAGE 4 Consolidated Statement of Comprehensive Income FOR THE SIX MONTHS ENDED 31 DECEMBER 2017 (UNAUDITED) CONSOLIDATED 6 MONTHS ENDED 6 MONTHS ENDED YEAR ENDED 31/12/17 31/12/16 30/06/17 $000 $000 $000 Profit for the period 17,184 12,851 1,392 Other comprehensive income reclassifiable to profit or loss in subsequent periods Net changes in the fair value land and buildings 0 0 30,000 Other comprehensive income for the period net of income tax 0 0 30,000 Total comprehensive income for the period 17,184 12,851 31,392 Consolidated Statement of Changes in Equity FOR THE SIX MONTHS ENDED 31 DECEMBER 2017 (UNAUDITED) CONSOLIDATED REVALUATION RETAINED SHARE CAPITAL TOTAL RESERVE EARNINGS $000 $000 $000 $000 At 1 July 2017 140,000 30,000 56,714 226,714 Total comprehensive income 0 0 17,184 17,184 Equity transactions Dividend paid in the period 0 0 0 0 At 31 December 2017 140,000 30,000 73,898 243,898 At 1 July 2016 140,000 0 68,692 208,692 Total comprehensive income 0 0 12,851 12,851 Equity transactions Dividend paid in the period 0 0 (13,370) (13,370) At 31 December 2016 140,000 0 68,173 208,173 At 1 July 2016 140,000 0 68,692 208,692 Total comprehensive income 0 30,000 1,392 31,392 Equity transactions Dividend paid in the period 0 0 (13,370) (13,370) At 30 June 2017 140,000 30,000 56,714 226,714 The accompanying notes form part of these financial statements. TVNZ INTERIM REPORT · PAGE 5 Consolidated Statement of Financial Position AS AT 31 DECEMBER 2017 (UNAUDITED) CONSOLIDATED AS AT 31/12/17 AS AT 30/06/17 NOTES $000 $000 ASSETS Current Assets Cash and cash equivalents 62,182 42,971 Trade and other receivables 51,100 49,435 Programme rights 4 37,168 37,997 Derivatives 8 1,694 166 Total current assets 152,144 130,569 Non-current Assets Property, plant and equipment 137,131 141,477 Other intangible assets 19,481 18,976 Deferred tax asset 4,761 4,339 Derivatives 8 679 186 Investment in joint venture 128 128 Total non-current assets 162,180 165,106 Total assets 314,324 295,675 LIABILITIES Current Liabilities Bank overdraft 0 45 Trade and other payables 55,618 49,904 Employee entitlements 4,089 4,580 Deferred income 1,390 2,938 Income tax payable 6,748 1,190 Derivatives 8 230 989 Provisions 7 683 2,997 Total current liabilities 68,758 62,643 Non-current liabilities Employee entitlements 909 1,202 Provisions 7 759 5,116 Total non-current liabilities 1,668 6,318 Equity Contributed equity 140,000 140,000 Revaluation reserves 30,000 30,000 Retained earnings 73,898 56,714 Total Equity 243,898 226,714 Total equity and liabilities 314,324 295,675 The accompanying notes form part of these financial statements. TVNZ INTERIM REPORT · PAGE 6 Consolidated Statement of Cash Flows FOR THE SIX MONTHS ENDED 31 DECEMBER 2017 (UNAUDITED) CONSOLIDATED 6 MONTHS ENDED 6 MONTHS ENDED YEAR ENDED 31/12/17 31/12/16 30/06/17 NOTES $000 $000 $000 Cash flows from/(used in) operating activities Receipts from customers 173,086 170,801 308,876 Receipt of programme funding 2,098 2,075 5,153 Interest received 379 423 833 Payments to suppliers and employees