Interim Report 2009
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TVNZ Interim Report FY2009 CONTENTS CHAIRMAN’S INTRODUCTION........................................................3 CHIEF EXECUTIVE’S OVERVIEW........................................................4 INTERIM FINANCIAL STATEMENTS...................................................6 DIRECT GOVERNMENT FUNDING.................................................14 CHARTER PERFORMANCE MEASUREMENT ...................................16 TVNZ BOARD AND MANAGEMENT DIRECTORY..........................23 2 TVNZ Interim Report FY2009 CHAIRMAN’S INTRODUCTION TVNZ has achieved a satisfactory result for the first six months of the 2009 financial year, reporting earnings (before interest, tax and financial instruments) of $27.7 million compared to $32.3 million in the same period the previous year. The after tax profit of $18.2 million for the period compares with $20.6 million for the prior period. While this is a pleasing result in the circumstances the impact of the global economic downturn is already apparent and, like all other businesses in 2009, TVNZ will face significant constraints due to worsening conditions. We expect the remainder of the fiscal year to be tough, and are prepared for this to continue into the 2010 year. Sir John Anderson Chairman 3 TVNZ Interim Report FY2009 CHIEF EXECUTIVE’S OVERVIEW Two years ago TVNZ began the hard work of turning the organisation into a contemporary, streamlined and efficient digital media company with a long term future – rather than a simple television broadcaster. The result of this effort became visible at the end of the last financial year, when the company worked its way back into the black, with a return on shareholders equity that was better than most SOEs and Crown-owned Companies as well as many publicly listed companies. The current half-year result is a validation of that approach. We began this financial year well placed to continue our three-year turnaround plan, and were optimistic that even better results were achievable. Core television revenues for the first six months of the current year have remained at the same levels as the prior period, with some additional operating revenues coming from Emerging Business operations. Total expenses for the period were $196.5 million and included the one-off costs associated with the broadcast and multi-feed service of the Beijing Olympics, and operational costs associated with expanding elements of our Emerging Business division. It also records expenses (offset against revenue) for both of the two fully Government-funded digital channels, TVNZ 6 and 7. (TVNZ 6 was operational for only part of the comparative period, and TVNZ 7 was not launched until March 2008.) During the course of this half year, however, the world’s financial situation has changed, and along with other media companies in New Zealand and overseas we face difficult times ahead. Despite the unavoidable impact of the recession, the work done by the company to produce a satisfactory half-year result must be acknowledged. In particular, the coverage of both the Beijing Olympic Games and New Zealand’s General Election were outstanding. The Olympic Games coverage was TVNZ’s most ambitious to date. It exceeded all expectations and was a success on every front. It reached more than 90% of the available audience, with overseas research showing New Zealand’s rate of viewership was more than double the international average. 4 TVNZ Interim Report FY2009 The online performance of the Olympic Games website was spectacular, with unique browsers tripling, page impressions doubling, and 360,000 hours of video live-streamed in just two weeks. TVNZ’s satellite, production and technical teams produced outstanding coverage for delivery across all TVNZ platforms, with multi-feeds to 105 international territories in Asia, Africa, the Middle East and the Pacific. TVNZ’s election programming was highly successful, with more than 1.5 million individual New Zealanders tuning in. The ONE News YouTube Leaders’ Debate was the first time in the world where the two contestants for the Prime Ministership were asked questions live via the YouTube platform. The site, the ratings and the share performed beyond expectations, and the same format was then carried into the second Major Parties Debate through our own network’s website tvnz.co.nz. This was an excellent example of the television and online divisions working together to drive audience engagement across a number of TVNZ screens. The 2008 calendar year closed with a particularly gratifying performance at this year’s Qantas Film and Television Awards. TVNZ won eight of the 11 News and Current Affairs awards including the coveted Best News, Best Presenter, Best Current Affairs Series and Investigation of the Year. While there has been significant and sustained effort put in across the company to achieve the highly creditable progress to date, more will be needed. Like other companies we must be prudent, we must prioritise our activities, and we must operate within budgetary constraints to get through the upcoming period. For the remainder of the fiscal year we must focus intently on those of our initiatives that best support our financial and strategic priorities. It will not be easy, but we intend to face the challenges with focus, energy and determination. Rick Ellis Chief Executive 5 TVNZ Interim Report FY2009 Television New Zealand Limited Interim Financial Statements For the six months ended 31 December 2008 (Unaudited) Contents Page Income Statement 7 Balance Sheet 8 Statement of Changes in Equity 9 Cash Flow Statement 10 Notes to the Financial Statements 11 6 TVNZ Interim Report FY2009 Television New Zealand Limited Income Statement For the six months ended 31 December 2008 (Unaudited) Consolidated Six Months Six Months Year Ended Ended Ended 31/12/08 31/12/07 30/06/08 $000 $000 $000 Income Operating revenue 193,535 182,715 339,834 Government funding 30,468 25,938 51,380 (MCH, NZ On Air, Te Mangai Paho) Interest income 199 494 997 Other income 8 115 106 224,210 209,262 392,317 Expenses Programme amortisation (122,008) (110,425) (222,423) Employee benefits (33,808) (30,539) (62,025) Depreciation and amortisation (8,218) (7,644) (15,905) Transmission (11,227) (10,981) (21,760) Marketing (6,284) (6,387) (15,978) Other (14,970) (11,014) (27,173) (196,515) (176,990) (365,264) Earnings before interest, tax and financial instruments 27,695 32,272 27,053 Interest expense (1,501) (2,112) (3,729) Financial instruments/foreign currency gains 60 1,244 7,033 Profit before income tax 26,254 31,404 30,357 Income tax expense (7,966) (10,760) (10,931) Profit for the period 18,288 20,644 19,426 The accompanying notes form part of these financial statements. 7 TVNZ Interim Report FY2009 Television New Zealand Limited Balance Sheet As at 31 December 2008 (Unaudited) Consolidated As at As at As at 31/12/08 31/12/07 30/06/08 $000 $000 $000 ASSETS Current Assets Cash and cash equivalents 4,216 11,474 5,341 Receivables and prepayments 48,117 50,820 66,264 Programme rights - intangible assets 68,809 70,445 73,514 Inventories 258 296 255 Property, plant and equipment held for sale 0 1,620 0 Derivative financial instruments 3,381 322 5,028 Total current assets 124,781 134,977 150,402 Non-current assets Property, plant and equipment 110,351 107,460 110,312 Programme rights - intangible assets 24,109 28,422 22,654 Other intangibles 16,106 15,620 13,970 Deferred tax asset 11,906 14,799 12,323 Derivative financial instruments 1,663 0 2,489 Other investments 42 42 42 Total non-current assets 164,177 166,343 161,790 Total assets 288,958 301,320 312,192 LIABILITIES Current Liabilities Loans and borrowings 170 0 567 Trade and other payables 42,723 40,377 46,857 Deferred income 26,765 32,696 39,917 Income tax payable 4,414 4,002 0 Derivative financial instruments 277 3,184 1,317 Provisions 221 1,590 11,017 Total current liabilities 74,570 81,849 99,675 Non-current liabilities Employee entitlements 2,139 1,947 2,034 Derivative financial instruments 146 5 94 Borrowings 11,250 23,300 27,700 Total non-current liabilities 13,535 25,252 29,828 Equity Contributed equity 140,000 140,000 140,000 Reserves (141) (6) (17) Retained earnings 60,994 54,225 42,706 Total equity 200,853 194,219 182,689 Total equity and liabilities 288,958 301,320 312,192 The accompanying notes form part of these financial statements. 8 TVNZ Interim Report FY2009 Television New Zealand Limited Statement of Changes in Equity For the six months ended 31 December 2008 (Unaudited) Consolidated Cash flow Share hedge Retained Capital reserve earnings Total $000 $000 $000 $000 At 1 July 2008 140,000 (17) 42,706 182,689 Effective portion of changes in fair value of cash flow hedges, net of tax 0 (124) 0 (124) Income and expense recognised directly in equity 0 (124) 0 (124) Profit for the period 0 0 18,288 18,288 Total recognised income and expense 0 (124) 18,288 18,164 At 31 December 2008 140,000 (141) 60,994 200,853 At 1 July 2007 140,000 96 33,581 173,677 Effective portion of changes in fair value of cash flow hedges, net of tax 0 (102) 0 (102) Income and expense recognised directly in equity 0 (102) 0 (102) Profit for the period 0 0 20,644 20,644 Total recognised income and expense 0 (102) 20,644 20,542 At 31 December 2007 140,000 (6) 54,225 194,219 At 1 July 2007 140,000 96 33,581 173,677 Effective portion of changes in fair value of cash flow hedges, net of tax 0 (113) 0 (113) Income and expense recognised directly in equity 0 (113) 0 (113) Profit for the period 0 0 19,426 19,426 Total recognised income and expense 0 (113) 19,426 19,313 Dividends declared in the year 0 0 (10,301) (10,301) At 30 June 2008 140,000 (17) 42,706 182,689 The accompanying notes form part of these financial statements.