Inspiring New Zealanders on Every Screen

4 Chairman’s Introduction 6 Chief Executive’s Overview 10 Financial Performance 11 TVNZ in Society 13 General Charter Measures 14 Charter Performance Measurements 30 Financial Statements 78 Corporate Governance 80 Director’s Profiles 82 Management Structure 83 Main Locations 04 / TVNZ ANNUAL REPORT FY2009

Chairman’s Introduction

“TVNZ responded to the change in market conditions swiftly...” 05 / TVNZ ANNUAL REPORT FY2009

TVNZ has concluded the year in profit E Tātaringa a te Manukura despite the most challenging market conditions in the industry’s history. Kua oti pai te tau a TVNZ me te whai hua anō ahakoa nga uauatanga pakihi For the first half of the year ki nga maharatanga o te tangata. TVNZ’s revenues were tracking ahead of the prior year. He tino pai te āhua o te tahua putu mo te wāhanga tuatahi o te tau, i But like other advertising-reliant runga noa atu i to te tau i mua. media in New Zealand, TVNZ suffered heavy year on year revenue Engari ko te tino rerekētanga ki etahi declines from the beginning of 2009 atu pakihi pāpāho o te motu, he kaha as the impact of the recession on te hekenga mai i nga tau i o mua tata i our clients’ businesses took hold. te pokiatanga mai o te whakahekenga o nga rawa a o matou kaihoko rato. TVNZ responded to the change in market conditions swiftly with He tere te whakautu a tenei cost reduction initiatives. rōpu mahi ki te hekenga, i kitea wawe nei te whakamāmā i nga Much of the credit for the company’s taumahatanga o nga utu ki a mātou. quick and effective response to the recession must go to TVNZ E tika āna kia rere nga whakapai ki te management and staff. tere me te hāngai o taua whakautu ki te Runanga Urungi me te hunga mahi. The company finished the year with an EBIT of $10.1 million, and a net I te mutunga o te tau, i mua i te whai profit after tax of $2.1 million. The takunga, $10.1 miriona te tahua i kohia Board has approved a shareholder a, i muri mai, $2.1 miriona. Kua whakae dividend of $1.47 million. te Runanga Urungi kia $1.47 miriona te hua hei whakarato ki te kawanatanga. The changes occurring in the media industry are accelerating. As a Kei te tere te huri o nga tikanga result the Board has endorsed a pāpāho. Na kōnei i whakaetia ai e taua revised strategy developed by the Rūnanga i runga anō i te whakaaro Executive to transform the company nuka a te Hunga Whakahaere kia from a Television Broadcaster to whakaumutia nga mahi whakaata, New Zealand’s leading Television ki te kōkiri atu ki te taumata o nga and Digital Media company. whare pakihi Pāpāho Māmati.

The vision of “Inspiring New Ko te tūtoru anga whakamua hei “Te Zealanders on every screen” Whakaaratanga o Aotearoa ki nga remains, but with an even stronger Rīanga Whakaata Katoa” ka tū tonu, focus on providing viewers, consumers engari kia hāngai ki nga tikanga e and customers with the content hiahiatia āna e ēra kei te mātaki, kei te and services they want and expect hoko i nga rawa, me erā kei te hangā from the nation’s leading Television rānei i nga hōtaka, kia tū motuhake ai and Digital Media company. hei kōkiri i nga tauira pāpāho māmati.

Sir John Anderson - Chairman 06 / TVNZ ANNUAL REPORT FY2009

Chief Executive’s Overview

“Despite predictions to the contrary, television audiences are at their highest levels in nearly 10 years” 07 / TVNZ ANNUAL REPORT FY2009

The impact of the recession has Over 17 days the Olympics was 2. Advertising revenue growth and brought mixed results for TVNZ. watched by more New Zealanders sales ‘go to market’ transformation than any other television event. This year TVNZ’s sales team In the first six months the company embarked on a watershed enjoyed steady progress, building More than a million people watched transformation of the relationship on a remarkable number of initiatives the groundbreaking ONE News with clients, which shifts the focus supporting our strategy of “inspiring YouTube Election Debate, which from a product-driven offering to New Zealanders on every screen” and marked the first time a head of a tailored, customer solution. returning profitability to the company. a national government and the challenger for the top job had In order to align TVNZ’s sales process Then in the second half of the appeared in a live televised debate to to the evolution of TVNZ as a year the impact of the global answer questions posted via YouTube. business, TVNZ Sales has become a and domestic recession took business-focused partner for strategic hold with advertisers, leading to Election night coverage itself agencies and clients. This evolution a sharp downturn in revenue. reached 1.9 million viewers has filled a void in the market, during the course of the night. As a result, the priorities we set in with advertisers wanting greater our Statement of Intent have taken By January, ONE News had achieved integration with media partners. on a form somewhat different to a run of 13 consecutive months of year TVNZ Sales has undertaken to fully that envisaged at the start of the on year growth, with the News content understand the business issues year, and the company has had to expanded and enhanced online via of its clients, to become a trusted demonstrate a new level of agility and tvnz.co.nz and, from August, msn’s business consultant rather than just adaptability to bring us to the close local news and entertainment website. an implementer of a media idea. A of the year as a profitable entity. As part of the implementation of the number of advertisers have embraced The Company’s progress against its Maori programme strategy, Te Karere this new approach to develop and business priorities is set out below: doubled in length, its production costs execute innovative new advertising topped up with commercial revenue; scenarios. Notable examples are 1. TV ONE and TV2 channel its reach has increased substantially, the Ford Fiesta “This is Music” turnaround and content from 735,400 viewers in June 2008 vignette series which used TVNZ strategies implementation to 1,045,000 viewers in June 2009. programme production resources Despite predictions to the contrary, to create a series of 8 programme- television audiences are at their TV2 has performed exceptionally well, like vignettes playing across TVNZ highest levels in nearly 10 years. with June ratings up 33% on the prior on-air and digital media channels; year. It has enjoyed a strong rebound the fully interactive Noel Leeming TV ONE has concluded the year with from the impact of the US writers’ partnership with Wheel of Fortune; strong prime time ratings, particularly strike, and a very pleasing public and the on-air sponsorship and in- in the critical 8.30-9.30pm time zone. response to local productions such as store promotional activity by Tip Top Go Girls and Illegal New Zealand. in partnership with Stars in Their Eyes. TV ONE has successfully launched a number of new local programmes For the first six months of 2009, TV2’s 3. Fiscal turnaround momentum including The Politically Incorrect average audience in peak time [6pm The impact of global recession on Parenting Show, The Missing and a – 10.30pm] was up 10% on the same our advertisers was sharply felt at second series of The Investigator as time in 2008, and the highest since the start of the March quarter, with well as some acclaimed international 2006. Daytime audience levels in the a further deterioration in the June dramas such as Packed to the 5+ demographic were the highest quarter. From a position of 1.1% Rafters and Eleventh Hour. Other since 2004. In the commercially growth over the 2007 calendar year, core local shows such as Fair Go, important demographic of Household the company moved to a defensive Country Calendar and Sunday have Shoppers with Kids aged 0-14, June position, taking rapid action in a all performed strongly through the 2009 was the highest rating month programme to remove $25 million of last quarter of the financial year. since June 1996 – a 13 year high. cost from the business before the end of the financial year. Regrettably, this TVNZ’s multiplatform coverage of the The channel is well positioned to included more than 80 redundancies. Beijing Olympic Games – one of the continue this performance into 2010 most ambitious single projects in our with compelling new international history – has been our most successful. dramas The Mentalist and Fringe and two new local dramas The Cult and This is Not My Life. 8 / TVNZ ANNUAL REPORT FY2009

Chief Executive’s Overview (continued)

The combined impact of the The value to television viewership of online every month. This is as well cost-cutting measures has enabled the tvnz.co.nz ondemand catchup as growth in standard television TVNZ to stay profitable. service was amply demonstrated viewing, not instead of it. through research into consumer This stringent focus on behaviours, which proved that a viewer The company has also delivered reducing cost will continue. who could catch up on a missed on its strategic objective of programme online was 13% more responding to consumer demand We are cautiously optimistic about likely to return to the programme for video content and services in the 2010-2011 financial year. At the on television the next week. the broadband environment. It has time of writing the advertising market negotiated a one third shareholding has not yet bottomed out, but we With the predicted growth of interest in the Australian Seven are hopeful that it will have turned media consumption on screens Media Group subsidiary, Hybrid the corner by the middle of 2010. (TV, computers, mobile devices Television Services (ANZ) Pty Ltd. etc) the company believes it is well Hybrid holds the Australasian 4. Government funding of positioned to capitalise on this shift licence for the US market leading local content on TVNZ in media consumption patterns. Personal Video Recorder – TiVo. With a change of Government, direct funding for local content 6. Organisation cultural The launch of the company’s two was transferred to NZ On Air in transformation and digital channels – TVNZ 6 and a contestable framework, with leadership development TVNZ 7 – on the SKY platform effect from July 1, 2009. In 2008 the company invested in a represented a significant advance programme of business leadership in public accessibility, also a During the year the company training for 50 senior staff members, in key strategic objective. attracted some outstanding proposals conjunction with Auckland University’s from writers and producers which 8. Broadcast Services Business School. During FY2009 this enabled success in securing a operational review programme continued and has very pleasing level of funding from NZ successfully strengthened leadership With production budgets under on Air’s existing funding pool. and management capability, pressure, TVNZ is examining its processes and activities to The allocation from NZ on Air’s and has significantly increased lower costs and better meet the Innovation Fund for the ‘virtual’ collaboration across the company. needs of content producers. coverage of the Louis Vuitton It has been an important factor in series was particularly pleasing. the positive way the company has TVNZ was the first in the market with HD equipment, and has completed Funding for Maori programming been able to respond to and manage construction of a fully HD post has been successfully negotiated the impact of the recession. production facility which is well used with Te Mangai Paho. Linked with the process of business and has attracted new clients. A longer formatted Te Karere was transformation, a new performance A new public website has been approved, with additional funding management framework has been launched, assisting content producers from TVNZ; and Marae and Waka implemented to foster a culture of to assess available facilities. Huia were both funded for the 2010 accountability and excellence. financial year at the level requested. 7. Emerging Business growth 9. Digital infrastructure and business transformation 5. Consumer insight and plan implementation competitive trends The company exceeded its Business TVNZ has begun transforming the fundamental technical structure of Understanding consumer needs Plan targets for Emerging Business its operation from analogue to fully and behaviour has become a (renamed Digital Media in May). digital media management. The primary focus of the business. Advertisers responded well to project was initially cast as a technical As television audiences fragment the redesign of the tvnz.co.nz upgrade but in the last year has in response to greater choice and website, with a new News site been revised in scope to include the control, it becomes essential to launched in December and a new redesign of workflows in all areas of business success to generate strategic Entertainment site in May. the business that intersect with the insights into viewer behaviours. current tape-based workflow. Analysis Growth in viewing of TVNZ online and design are almost complete, and television has been exceptional, installation and implementation is with 230,000 hours watched scheduled for completion in July 2010. 9 / TVNZ ANNUAL REPORT FY2009

10. Sales system implementation 15.9% of the market. This is almost TVNZ is in the process of replacing double the projected uptake. its sales system in order to more Despite the economic climate effectively and efficiently transact with I am tremendously positive advertising partners. Implementation about the health of TVNZ. of the new system, which is underway, will enable TVNZ to maximise the A recession tends to focus the revenue potential from its commercial mind sharply and out of this focus inventory. This priority supports the has come a year of increased company’s desire to improve in line agility, a leaner operation and a with international best practice. determination to place ourselves in a position of maximum advantage 11. Analogue Switch Off (ASO) once the recession lifts. TVNZ is committed to encouraging and supporting the establishment of Our TVNZ people have responded an early switch off of the analogue well to the challenge. I have transmission network, in favour been impressed at the level of of a purely Digital system. understanding and commitment that I have seen as I moved around A date for ASO, or Digital Switch On the company this year, and I offer (DSO) as it is increasingly known, is my warmest thanks to all. yet to be set by the Government. TVNZ is a member and full participant We are not out of the financial in the Digital Switchover Steering woods yet, but I have every Group (DSOSG), a body of industry confidence that we are well and Government representatives equipped to deal with a new, post- established to oversee and advise the recession era that will inevitably Government on successful transition. bring big change to our industry.

The role of the DSOSG is to monitor the take-up of digital television, to recommend dates for the transition and to develop and implement a public education programme.

Freeview, the consortium of Free to Air broadcasters offering Digital Rick Ellis - Chief Executive Officer channels, of which TVNZ is a leading member, has been a great success in terms of its uptake to date.

At the close of the financial year Freeview was in 255,048 New Zealand households, representing 10 / TVNZ ANNUAL REPORT FY2009

Financial Performance

TVNZ has reported total revenue the provision of transmission services Operating earnings were of $384.8m and operating to international broadcasters in $10.1m, a decline of $16.9m earnings of $10.1m for the year. association with the Beijing Olympics. on prior year. This decline can be attributed to the decline in Total revenue was $7.5m (1.9%) Income recognised from Government advertising revenue of $17.1m. down on prior year, a relatively funding is unchanged from prior small decline given the challenging year. Funding is predominantly for TVNZ has reported an after tax economic and trading conditions programming costs and is recognised profit of $2.1m for the year. faced in the current year. as income as the programme cost is recognised as an expense. TVNZ has expensed $3.7m of Advertising revenue was $298.4m, reorganisation costs and $1m a $17.1m (5.4%) decline on the prior Operating expenses increased $9.4m share of losses from associated year. This decline is significantly over the prior year to $374.6m. This companies. Fair value revaluations lower than other Australasian media increase is predominantly due to the of financial instruments and foreign companies and reflects the gains rights and production costs associated currency gains, which have created made in the first half of the fiscal with the Beijing Olympics. FY2009 also significant gains and losses in prior year from the screening of the includes a full year’s operating costs years, have had little net effect Beijing Olympics on TV ONE. of the digital channel TVNZ 6, while on this year’s after tax profit. FY2008 only had three months costs During the year, TVNZ increased (the channel launched in April 2008). TVNZ declared a final dividend its advertising revenue share from of $1.47m to be paid at the 58.9% to 60.9%, with the 2.0% share Initiatives to reduce operating end of September 2009. growth coming from both competing expenses, including restructuring, national television networks. TVNZ were undertaken during the year. The is focused on growing share of costs savings were partially reflected revenue from competing television in the FY2009 results and will be networks and other media. fully reflected in FY2010. Savings of $13.1m were made in FY2009 against The decline in advertising revenues budgeted costs (refer note 28). was offset in part by an $8.9m increase in other trading revenues. This included service fees generated from

FINANCIAL MEASURES

FY2009 FY2008

Measurement Actual Target Actual

Profitability Return on average equity* 1.0% 9.0% 8.3% EBITDRA/Core television revenue 9.1% 13.4% 13.6%

Gearing Net interest bearing debt/Net interest bearing debt plus equity 16.4% Less than 40% 13.2%

Financial Stability Total equity/Total assets 60.7% More than 40% 58.5%

Interest Cover EBITDRA and Financial Instruments/Interest expense 12.5 times More than 4 times 11.5 times

EBITRA - earnings before interest, tax, depreciation, amortisation, reorganisation costs and revaluation of financial instruments. * excludes net tax effect of financial instruments/foreign currency gains/(losses) 11 / TVNZ ANNUAL REPORT FY2009

TVNZ in Society

As a Crown entity, TVNZ is (b) Air travel In June, TVNZ chose four new expected to be a good employer The nature of TVNZ’s business is charitable organisations as the and to demonstrate social and such that air travel is essential. successful recipients of free on-air environmental responsibility. In However the current restrictions advertising for the next two years. FY2009 a number of initiatives and in place for financial reasons have • The Prostate Cancer programmes were implemented. helped reduce the greenhouse gas Foundation of New Zealand emissions applicable to air travel. Environmental Sustainability • Special Olympics New Zealand As a responsible corporate citizen, (c) Vehicle Fleet Fuel Usage TVNZ has recognised that our business Work is ongoing to investigate • BNZ Save the Kiwi Trust activities do have an impact on the alternatives to the current vehicle environment through the emission of fleet that are more cost efficient • LandSAR (New Zealand Greenhouse Gases (primarily CO2). and/or are a better alternative from Land Search and Rescue) a fuel efficiency perspective. Last year TVNZ commissioned TVNZ is committed to helping a study from Landcare Research (d) General Waste to Landfill build stronger communities, in which identified specifically the the tradition of New Zealanders For a number of years TVNZ has had effects our business was having helping each other out. a waste recycling system in place. The on the environment. The study objective is to reduce the amount determined that the main sources The newly-chosen charities are all of waste that gets taken to landfill. of greenhouse gas emissions organisations reflecting important Until now the emphasis has been on attributable to TVNZ came from: aspects of kiwi life and the wellbeing recycling paper, cans, glass, plastic of New Zealand’s people. (a) Electricity usage by TVNZ and tapes. Further opportunities to improve this are under investigation. The outgoing charities who have (b) Air travel – International received sponsored air time for the and domestic (e) Electricity used by past two years are Surf Lifesaving New Transmission Network Zealand, National Heart Foundation (c) Vehicle fleet fuel usage The network is managed by Kordia New Zealand, the SPCA and Refugee and TVNZ pays for the electricity used Services Aotearoa – New Zealand. (d) General waste that was by the transmitters. As the network transferred to landfill infrastructure migrates from analogue TVNZ has provided charitable organisations with more than (e) Electricity used by the to digital the number of transmitters $30 million in free advertising transmission network required will be reduced and those time on its channels over a managed by Kordia. remaining in place will operate far more efficiently. This will mean a period of more than 20 years. Since receiving the results of reduction in the amount of greenhouse Capability the Landcare Research report a gas emissions applicable to TVNZ. team has been looking at ways to TVNZ continued in FY2009 on a reduce TVNZ’s carbon footprint. A volunteer programme has begun journey to transform the business. with TVNZ people who have a (a) Electricity Used by TVNZ commitment to environmental The formal part of a very successful leadership programme held with Initiatives that have been taken to sustainability and who can assist the University of Auckland was reduce our electricity usage include with ideas around the recycling completed in December 2008 turning off lights, PCs, printers and programme as well as the overall plan and the development programme other equipment overnight and on to reduce TVNZ’s carbon footprint. has continued internally. weekends. Where possible the number Community Support of hours the office air conditioning Foundation Research on the alignment of our system operates has also been The TVNZ Community Support culture to deliver on the strategy was reduced. Since the campaign to save completed and this will be integrated electricity was introduced, savings Foundation provides charities with free air time worth up to $50,000 a into the TVNZ brand internally have been achieved of more than and externally later in the year. 3 percent compared to last year. month, which allows the recipients to promote their services and A new performance framework drive fundraising activities. was introduced and a focus has been on talent management. 12 / TVNZ ANNUAL REPORT FY2009

The Advertising Sales team has Staff events continue on special developed world class competencies occasions and a popular new for their go-to-market strategy through monthly company-wide networking a robust development programme. opportunity has been set up.

A group of level 4 leaders in the As a response to the impact of Broadcast Services business have the recession, TVNZ underwent commenced a four month business some restructuring this year. skills training programme. At the TVNZ supported this process completion participants will receive with confidential counselling a National Certificate in Business and outplacement support. (Level 4) – the programme includes completion of a work based project There continued to be support with measurable business outcomes. for wellness initiatives such as on- site yoga classes, subsidies for Good employer gym membership, blood checks TVNZ has continued with activities and mole checks. Employees to enhance the experience of also enjoy a subsidised cafeteria being part of the TVNZ team. with healthy options and an on-site crèche, Educare. Employees are kept well informed through various communication channels, including strategy and Company update sessions with the CEO and a self publishing online magazine where employees can share their stories. 13 / TVNZ ANNUAL REPORT FY2009

General Charter Measures

These measures highlight national and international FY2009 programming across all genres that entertains, Total People informs and educates New Zealand audiences. Channel Ave Aud ratings 1 Fair Go Ad Awards 2008 TV ONE 741,860 18.8 General output measures 2 Border Security TV ONE 674,010 17.0 Number of hours per genre across TVNZ analogue services* 3 Wild Vets TV ONE 647,240 16.3 Local Content Hours 4 Dancing With The Stars TV ONE 643,470 16.2 FY2009 5 Fair Go TV ONE 610,770 15.5 6am - Midnight 6 Rapid Response TV ONE 603,360 15.2 7 Stars In Their Eyes (NZ) TV ONE 598,090 15.1 1st Run repeat Total 8 ONE News TV ONE 595,870 15.1 Entertainment 354.9 358.3 713.2 9 Medical Emergency TV ONE 580,710 14.7 10 Animal Rescue TV ONE 567,050 14.3 Factual and Arts 1,056.8 341.7 1,398.5 11 Sensing Murder TV2 564,240 14.3 Kids 249.0 256.5 505.5 12 National Bank Country Calender TV ONE 563,370 14.2 Maori 157.3 47.6 204.9 13 Coastwatch TV ONE 558,820 14.1 Lifestyle 28.0 78.5 106.5 14 Motorway Patrol TV2 550,380 13.9 15 Border Patrol TV ONE 525,840 13.3 News and Current Affairs 1,680.7 86.0 1,766.7 16 Who Wants To Be Sport 500.7 - 500.7 A Millionaire TV ONE 525,720 13.4 4,027.4 1,168.6 5,196.0 17 Coronation Street TV ONE 520,340 13.2 Local Content Totals 18 Sunday (PM) TV ONE 518,290 13.1 19 One News You Tube TV ONE TV2 TVNZ Election Debate TV ONE 514,360 13.1 Total Hours 3983.4 1212.6 5196.0 20 One News Special % Schedule 60.6% 18.5% 39.5% Election Night TV ONE 508,060 12.9

*Genres by % of schedule for both digital channels are reported FY2009 on in the Statement of Service Performance on page 67 AP 18-39 Channel Ave Aud ratings General Reach Measures 1 Sweet Home Alabama TV2 208,130 16.4 • Average monthly cumulative audience 2 Two and a Half Men TV2 207,650 16.6 (5+) of TVNZ channels: 3 Desperate Housewives TV2 204,980 16.4 4 Motorway Patrol TV2 201,720 16.2 3,775,884 people aged 5+ tuned to a 5 Britney: For the Record TV2 197,250 15.5 TVNZ channel in an average month, which 6 Shortland Street TV2 193,410 15.4 represents 95.5% of all the 5+ population 7 Charlie and the • Number of TVNZ programmes within the yearly Chocolate Factory TV2 191,550 15.3 Top 20 Programme lists in the demographics 8 The Pacifier TV2 189,790 15.0 of 5+ and 18-39 (see tables, right). 9 My House My Castle TV2 189,350 15.2 10 Sensing Murder TV2 187,540 14.8 11 Cadbury Crunchie Comedy Gala TV2 184,810 14.8 Online Measures 12 Hell’s Kitchen TV2 177,430 14.2 • The average monthly number of unique 13 Scrubs TV2 176,200 14.1 individuals consuming TVNZ ondemand 14 Grey’s Anatomy TV2 175,160 14.0 streams across FY2009 was 166,129. 15 The Princess Diaries 2 TV2 169,460 13.7 • The average monthly number of unique visitors 16 Outrageous Fortune TV3 168,680 13.5 to tvnz.co.nz for the year was 1,141,929 17 Mitre 10 Dream Home TV2 164,450 13.1 18 The Big Bang Theory TV2 163,190 12.9 19 Pirates of the Caribbean 2 TV2 161,840 12.8 20 NCIS TV3 161,400 12.8 14 / TVNZ ANNUAL REPORT FY2009

Charter Performance Measurements

FY2009 is the second year in which has been introduced. This asks QUALITY a full performance measurement respondents to rank programmes Appreciation/Importance Survey. framework has been used to from the point of view of both An independent research company assess TVNZ’s non-financial a viewer and a citizen. While an conducted online quantitative performance as New Zealand’s individual may not like a particular research using a representative national television broadcaster. programme personally they may national sample of 1005 viewers appreciate, as a citizen, the fact that aged 18 and over in June 2009. The approach taken is to summarise the national television broadcaster the Charter objectives into seven makes it available for those who do. The survey results show a small broad themes for measurement but steady improvement in TVNZ’s – an informed society, national This survey demonstrates the delivery of almost all categories identity/citizenship, Maori, commercial and public value of compared with last year’s survey. diversity, high standards, innovation TVNZ programmes and identifies and New Zealand talent. areas where the company needs to improve its performance. TVNZ programmes are then assessed against each theme Reach is a measure of usage. Impact is through a combination of quality, a measure of external effects such as reach, impact and output measures. awards and industry/peer recognition of achievement. Output is the number As a way of gauging quality, a unique of hours of content delivered. ‘appreciation/importance survey’

PERFORMANCE IMPROVEMENT IN MOST AREAS 2008 Performance (Excellent, Very Good) TVNZ Performance – Themes (2008 vs. 2009) 2009 Performance (Excellent, Very Good)

40 Quality Consistently high quality programmes 45

58 Information and Independent news 57 Education 68 Events of national importance 70 65 Analysis of issues of the day 64 63 Events of international importance 67 34 Educational for young people 39 39 Events of importance to your region 42 35 Different perspectives 42 42 Discussion on current issues 48

41 National Identity NZ’s history, heritage, natural environment 42 43 Inspiring NZers 45 43 Reflects and reinforces our NZ identity 48

50 NZ Talent Mix of local and overseas programmes 54 37 Supports local talent 43 34 Good quality local drama 39

32 Diversity Appeal to smaller and wider audiences 35 29 Reflects interests/tastes not covered 34 34 Reflects NZ‘s many cultures 41 32 Understanding different cultures 37 28 Deals with minority interests 31

36 Maori Maori history, culture, current issues 38 36 Promotes Maori language and culture 42 39 Voice to Maori perpectives 42 0 20 40 60 80 100 Percent 15 / TVNZ ANNUAL REPORT FY2009

This improvement was markedly higher among Maori viewers, who also showed a higher level of engagement with TVNZ and higher levels of expectation regarding performance.

TVNZ PERFORMANCE MORE POSITIVE WITH MAORI Total Performance (Excellent, Very Good) Especially Diversity and Maori Issues Maori Performance (Excellent, Very Good)

45 Quality Consistently high quality programmes 56

57 Information and Independent news 71 Education 70 Events of national importance 72 64 Analysis of issues of the day 75 67 Events of international importance 77 39 Educational for young people 52 42 Events of importance to your region 44 42 Different perspectives 54 48 Discussion on current issues 56

42 National Identity NZ’s history, heritage, natural environment 53 45 Inspiring NZers 52 48 Reflects and reinforces our NZ identity 57

54 NZ Talent Mix of local and overseas programmes 67 43 Supports local talent 48 39 Good quality local drama 52

35 Diversity Appeal to smaller and wider audiences 50 34 Reflects interests/tastes not covered 48 41 Reflects NZ‘s many cultures 58 37 Understanding different cultures 50 31 Deals with minority interests 43

39 Maori Maori history, culture, current issues 50 42 Promotes Maori language and culture 54 42 Voice to Maori perpectives 56 0 20 40 60 80 100 Percent 16 / TVNZ ANNUAL REPORT FY2009

As in last year’s survey, expectations This is in line with similar levels The proportion of viewers regarding it around the public value or importance of expectation for other public as extremely or very important to have of TVNZ programming greatly exceed broadcasters around the world; it is a New Zealand-owned TV Network has perceptions of TVNZ performance, unlikely that performance would ever risen slightly, and again, this was an especially in the categories relating match expectation and by international issue that was particularly important to ‘an informed society” (Information standards TVNZ is performing well. to Maori, with 92% regarding it and Education) and ‘national identity as extremely or very important. and citizenship” (Who We Are). TVNZ was seen to over-deliver in Maori programming.

TVNZ CONTINUE TO DELIVER IN INFORMATION Importance (Extremely, Very) High Performance in Maori Performance (Excellent, Very Good)

87 Quality Consistently high quality programmes 45

85 Information and Independent news 57 Education 85 Events of national importance 70 83 Analysis of issues of the day 64 83 Events of international importance 67 78 Educational for young people 39 69 Events of importance to your region 42 67 Different perspectives 42 65 Discussion on current issues 48

68 National Identity NZ’s history, heritage, natural environment 42 64 Inspiring NZers 45 Reflects and reinforces our NZ identity 63 48

NZ Talent Mix of local and overseas programmes 72 54 56 Supports local talent 43 55 Good quality local drama 39

53 Diversity Appeal to smaller and wider audiences 35 51 Reflects interests/tastes not covered 34 Reflects NZ‘s many cultures 51 41 49 Understanding different cultures 37 35 Deals with minority interests 31

38 Maori Maori history, culture, current issues 39 33 Promotes Maori language and culture 42 32 Voice to Maori perpectives 42 0 20 40 60 80 100 Percent 17 / TVNZ ANNUAL REPORT FY2009

Programme quality is consistent had lower ratings when it came to In summary, TVNZ is established overall since the last survey, although personal interest, although ONE News as ‘our’ network, with most older viewers are slightly more and the Beijing Olympic Games stood people seeing this as important, negative, and Maori, TV2 viewers out as both popular and important. and TVNZ largely delivering. and younger viewers are more positive than the total population. Dancing with the Stars on Across the Charter themes, in Quality the other hand rated more and Standards TVNZ is seen as Many programmes that viewers rated popular than important. improving but still below expectations. highly in terms of public importance

TVNZ PARTICULARlY IMPORTANT TO MAORI (Extremely, Very Important)

100 (94) (80) (85) (92) (83) (90) (80) (82) (80) (82) (90)

80 Also more important to TVONE preferrers and older viewers 60

94 94 91 Total 88

Percent 87 86 85 86 82 82 86 Importance by Demographic 40

Total NZ Maori 55+ years Aucklanders 18-34 years35-54 years TV2 Preferrers Non-Aucklanders Other Ethnicities TV ONE Preferres

Particularly Competiitor Channel Preferres important to Maori 18 / TVNZ ANNUAL REPORT FY2009

In Information and Education, In New Zealand talent and diversity, must be first made in writing to the TVNZ is performing well although performance is well-regarded and, in Broadcaster (with the exception of there are seen to be gaps in the Maori, delivery exceeds expectations. allegations of privacy). Complainants provision of educational material may refer their complaint to the for young people and the provision Compliance with BSA if they are not satisfied with the of different perspectives. Standards and Codes outcome of the TVNZ process. Formal Complaints In National Identity, the provision In the period under review, TVNZ The Broadcasting Standards of events of national importance received 584 complaints. Authority (BSA) is responsible is felt to be at a high level, but under the Broadcasting Act 1989 there is a comparative lack of • 93 more than in the previous year. for administering standards in material on New Zealand history. • Of these 584 complaints, programming and presentation of 78 were upheld by the TVNZ programming. All formal complaints Complaints Committee.

Importance (Extremely, Very) Public Importance versus Personal Interest - Programmes FY2009 Interest (Appointment Viewing)

88 ONE News 56 66 Beijing Olympics 53 65 TV ONE Anzac Day Coverage 21 64 Fair Go 35 52 Sunday 25 51 Country Calender 31 48 Netball (National and International) 21 32 Waitangi 09: He Maramatanga 3 31 Westpac Halberg Awards 11 30 What Now? 2 27 Rural Delivery 5 27 Te Karere 2 24 Attitude 3 23 Q & A 4 23 To Sir With Love (Howard Morrison) 13 23 Tagata Pasifika 2 23 Korero Mai: Speak to Me 2 23 Dancing With The Stars 30 22 Asia Down Under 5 21 Waka Huia 2 20 Shortland Street 19 20 David Daugherty - Until Proven Innocent 8 16 Stars in Their Eyes 17 18 How the Other Half Lives 11 15 Victoria’s Empire 7 15 Praise Be 5 14 Go Girls 10 14 Beyond the Darklands 11 11 Westfield Style Pasifika 2 11 Tiger: Spy in the Jungle 3 11 The Investigator 4 9 Diplomatic Immunity 5 8 My God 1 7 Piece of My Heart 1 5 The Erin Simpson Show 1 0 20 40 60 80 100 Percent 19 / TVNZ ANNUAL REPORT FY2009

• 61 more complaints were history or wildlife documentaries, upheld than in FY2008. where the emphasis was judged to Awards and Recognition • The larger number of upholds be as much on entertainment as on was because on one or two Qantas Television Awards information, would not be included. issues there were an unusually In the Qantas Television Awards for Definitions large number of formal complaints. FY2009, TVNZ won eight of the eleven News and Current Affairs awards, An Informed Society 2007 346 complaints, 35 upheld including Best News, Best Presenter Providing impartial and comprehensive 2008 491 complaints, 17 upheld (Mark Sainsbury), Best Current Affairs information and national and 2009 584 complaints, 78 upheld Series (Sunday), and Investigation of international programming that is the Year and TV journalist of the year essential to having an informed In FY2009 the BSA handled 64 (Mike Valintine and Hunter Wells). and educated society. referrals by viewers who were National Identity/Citizenship dissatisfied by TVNZ’s decisions In the General Television and Craft Award categories, TVNZ Providing entertaining and informative on their complaints – an increase programming that reflects the diverse of 23 referrals on the previous programmes and people picked up another 13 awards. range of cultures and interests that year. Of these 5 were upheld contribute to an overall sense of - 6 fewer than in FY2008. The full list of awards can be found who we are as New Zealanders. online at tvnz.co.nz/view/page/2074076 2007 57 complaints, 16 upheld* Maori 2008 41 complaints, 11 upheld* In other industry awards, TVNZ’s Sales Providing entertaining and 2009 69complaints, 7 upheld* division took Media Brand of the Year informative programming that at the 2009 CAANZ Media Awards. reflects Maori interests, culture, *20 referrals have yet to be and language and conveys these decided by the BSA. In the Promax Awards held in Sydney interests to a wider NZ audience. in September 2008, TVNZ’s Creative The 7 referrals upheld were: Diversity Services staff won one silver award and Providing entertaining national one gold for Best Drama promotion, a • A promo for Fanny Hill that and international programmes that silver for Best Sports Campaign, and screened during G time. service the interests and needs of a silver for Best Sponsors Promotion. • Another for a news flash screened different audiences, including cultures, during the Olympics that would Staff from Programme lifestyles, age and regions, and particularly those that may not be be upsetting to children. Partnerships won two silvers, for provided for in a purely commercial • A One News item on the National Best Sales Promotion and Best broadcasting environment. and Labour Party policies for Innovative Idea respectively. people who lost their jobs, which Innovation was found to be inaccurate. In the Nexus Awards 2008 Promoting innovation, • A Breakfast interview with TVNZ won a gold and a bronze risk-taking and creativity. Garth McVicar, which was award for the Olympics website found to be unbalanced. campaign, and a further bronze New Zealand Talent award for the launch of TVNZ 7. Supporting and promoting • A Shortland Street episode where the talents and the creative a man was hit in the head with a Output and Reach resources of New Zealanders. rock and put into the boot of a car, Charter themes which was found to be in breach High Standards The assessment of which Charter of good taste and unsuitable Promoting high programming themes were reflected in each for children. standards and editorial integrity. programme broadcast in the 12 • A Shortland Street episode where months under review was carried Note: the description of the output measure for a woman hit a gang leader with out using two guiding principles: programmes exhibiting High Standards is: hours of local shows/films TVNZ has funded, co-funded, a hammer, which was upheld under or commissioned. Because this category includes Programme Classification • Preference would be given titles that are yet to be screened, and are therefore & Violence. to selection of New Zealand still commercially sensitive, only the total for programming, on the assumption the period is given. The total count for the full • A Shortland Street episode played financial year across all channels is 1,751.2 hours. that it would have an impact a re-cap where a woman hit a intrinsically greater than that gang member with a hammer. This of overseas programming. was also upheld under Programme Classification and Violence. • International programmes such as the large number of natural 20 / TVNZ ANNUAL REPORT FY2009

Charter Performance Measurement FOR THE YEAR ENDED 30 JUNE 2009

FIRST REPEAT TOTAL HOURS OF 5+ REACH 5+ REACH IN Informed National Identity/ PROGRAMME TITLE CHANNEL GENRE RUN HOURS HOURS CAPTIONING IN UNITS PERCENTAGE Society Citizenship Maori Diversity NZ Talent Innovation

A Mad Business TV ONE Factual 5.0 - 5.0 5.0 1,390,700 35.0% ✓ A Thousand Words TV ONE Doco - 0.5 0.5 - 105,570 2.7% ✓ ✓ Activate TV2 Children’s 8.5 - 8.5 8.5 826,970 20.8% ✓ Adventures of Massey Ferguson TV2 Pre School - 2.3 2.3 - 546,360 13.8% ✓ Agenda TV ONE NCA 22.0 - 22.0 - 955,370 24.3% ✓ Agenda TVNZ 7 NCA 36.7 - n/a n/a ✓ Amazing Extraordinary Friends TV2 Ch Drama 6.5 13.0 19.5 19.5 1,386,130 35.0% ✓ ✓ Animal Academy TVNZ 6 Factual 12.1 - n/a n/a ✓ Anzac Day Dawn Service TV ONE SI 1.0 - 1.0 - 72,890 1.8% ✓ ✓ Anzac Day Wreathlaying TV ONE SI 1.5 - 1.5 1.5 273,790 6.9% ✓ ✓ Anzac Day Wreathlaying TVNZ 7 SI 1.5 - n/a n/a ✓ ✓ Apron Strings TV ONE Drama 1.8 - 1.8 1.8 754,200 19.0% ✓ ✓ Artsville TV ONE Arts 8.5 16.0 24.5 13.8 1,494,290 37.8% ✓ ✓ ✓ Asia Downunder TV ONE SI 23.0 4.0 27.0 27.0 1,093,740 27.7% ✓ ✓ Asia Downunder TVNZ 7 SI 69.3 69.3 n/a n/a ✓ ✓ Attitude TV ONE SI 21.0 4.5 25.5 25.5 1,212,150 30.7% ✓ Attitude TVNZ 7 SI 68.7 68.7 n/a n/a ✓ Attitude Docos TV ONE Doco 1.0 - 1.0 - 244,250 6.2% ✓ Baby Looney Toons TV2 Pre School 6.5 6.5 13.0 13.0 366,950 9.3% ✓ Back Benches TVNZ 7 NCA 61.5 - n/a n/a ✓ Back Benches in Recess TVNZ 7 NCA 25.7 - n/a n/a ✓ Back Benches Job Summit Special TVNZ 7 NCA 1.9 - n/a n/a ✓ Beach Volleyball TV2 Sport 9.0 - 9.0 - 664,740 16.7% ✓ ✓ Beat Squad TV ONE Factual 4.0 - 4.0 4.0 1,866,860 47.3% ✓ Beijing Paralympic Games TV ONE SI 14.0 - 14.0 - 1,161,690 29.5% ✓ ✓ Beijing Paralympic Games TVNZ 7 SI 10.0 - n/a n/a ✓ ✓ Best of Border Patrol TV ONE Factual 2.5 - 2.5 2.5 1,453,890 36.6% ✓ Best of Breakfast TV ONE NCA - 23.5 23.5 - 808,840 20.5% ✓ Best of Breakfast TVNZ 7 NCA 455.8 - n/a n/a ✓ Best of Business & Breakfast TVNZ 7 NCA 455.8 - n/a n/a ✓ Beyond The Darklands TV ONE Doco 5.0 1.0 6.0 5.0 1,590,100 40.1% ✓ Black Sheep TV2 Drama 2.0 - 2.0 2.0 948,810 23.9% ✓ ✓ Border Patrol TV ONE Factual 5.0 6.3 11.3 11.3 2,060,550 52.2% ✓ Border Patrol TVNZ 6 Factual 8.3 - n/a n/a ✓ Brain Power TV ONE Doco - 4.0 4.0 4.0 354,950 8.9% ✓ ✓ Breakfast TV ONE NCA 604.0 - 604.0 - 2,722,700 68.9% ✓ Burying Brian TV ONE Drama 6.0 5.9 11.9 11.9 1,803,600 45.6% ✓ ✓ Business TV ONE NCA 117.5 - 117.5 - 1,122,350 28.4% ✓ Business Weekend TV ONE NCA - 22.5 22.5 - 524,510 13.3% ✓ Business Weekend TVNZ 7 NCA 77.9 - n/a n/a ✓ Buzzy Bee & Friends TV2 Pre School 1.5 1.1 2.6 - 507,890 12.8% ✓ Cadbury Crunchie Comedy Gala TV2 Comedy 4.0 - 4.0 - 1,516,420 38.2% ✓ Children of the Migration TV ONE Doco - 0.4 0.4 0.4 91,950 2.3% ✓ ✓ Chuggington TV2 Pre School 11.5 - 11.5 - 916,310 23.1% ✓ Cinderella TV ONE Arts 1.5 - 1.5 - 77,280 2.0% ✓ ✓ ✓ Clifford Puppy Days TV2 Pre School 14.0 14.0 - 367,910 9.3% ✓ Close Up TV ONE NCA 118.0 - 118.0 118.0 3,427,040 86.7% ✓ Close Up TVNZ 7 NCA 97.9 - n/a n/a ✓ Close Up Weekend TVNZ 7 NCA 45.8 - n/a n/a ✓ 21 / TVNZ ANNUAL REPORT FY2009

Coastwatch TV ONE Factual 5.0 - 5.0 5.0 2,000,100 50.4% ✓ Colin McCahon TV ONE Doco - 0.7 0.7 0.7 67,930 1.7% ✓ ✓ Comedy Christmas Gala TV2 Comedy 1.5 - 1.5 1.5 923,390 23.5% ✓ Coming Home Te Hokianga Mai TV ONE SI 1.3 - 1.3 1.3 155,060 3.9% ✓ ✓ ✓ Coming Home Te Hokianga Mai TVNZ 6 SI 5.8 - n/a n/a ✓ ✓ ✓ Coming Home Te Hokianga Mai Highlights TVNZ 7 SI 1.7 - n/a n/a ✓ ✓ ✓ Confederations Cup Soccer TV ONE Sport 3.7 - 3.7 - 459,400 11.6% ✓ ✓ Cool Kids Cooking TV2 Children’s - 4.5 4.5 4.5 1,026,300 25.9% ✓ Country Calendar TVNZ 6 Factual 149.2 53.5 n/a n/a ✓ ✓ Custom Made TV ONE Doco - 0.5 0.5 - 49,280 1.2% ✓ ✓ Cycling TV ONE Sport 1.0 - 1.0 - 118,100 3.0% ✓ ✓ Dancing with the Stars TV ONE Ent 12.5 26.5 39.0 12.5 2,729,990 69.0% ✓ Daughters of the Pacific TV ONE Doco - 0.4 0.4 0.4 92,020 2.3% ✓ ✓ Death on the Beach TV ONE Doco - 1.0 1.0 - 103,920 2.6% ✓ Diplomatic Immunity TV ONE Comedy 6.5 - 6.5 6.5 1,969,860 49.6% ✓ ✓ Eating Media Lunch TV2 Comedy 3.0 - 3.0 3.0 1,151,350 29.3% ✓ ✓ Election 08 ONE News Specials TVNZ 7 NCA 7.5 - n/a n/a ✓ Election 08: Leaders on 7 TVNZ 7 NCA 12.5 - n/a n/a ✓ Election 08: Swing Seats TVNZ 7 NCA 5.0 - n/a n/a ✓ Ends of the Earth TV ONE Doco - 3.0 3.0 3.0 256,440 6.5% ✓ ✓ Equestrian TV ONE Sport 5.5 - 5.5 - 470,000 11.9% ✓ ✓ Erin Simpson Show TV2 Children’s 23.5 - 23.5 - 1,625,140 40.9% ✓ Explorers TV ONE Doco - 4.0 4.0 4.0 360,900 9.1% ✓ ✓ ✓ Eye To Eye TV ONE NCA 13.0 - 13.0 - 592,280 15.0% ✓ ✓ ✓ Eye To Eye TVNZ 7 NCA 69.7 - n/a n/a ✓ ✓ ✓ FA Cup Soccer TV ONE Sport 2.0 - 2.0 - 430,710 10.9% ✓ ✓ Fair Go TV ONE Factual 19.0 8.0 27.0 27.0 2,753,920 69.7% ✓ Fair Go TVNZ 7 Factual 11.4 11.4 n/a n/a ✓ Firehouse Tales TV2 Pre School 3.0 3.0 3.0 88,630 2.3% ✓ Franklin TV2 Pre School 74.0 74.0 74.0 1,217,100 30.8% ✓ Gardens of the World TV ONE Factual - 9.0 9.0 - 592,510 15.0% ✓ ✓ Giggles TVNZ 6 Pre School 0.8 - n/a n/a ✓ Go Girls TV2 Drama 13.0 - 13.0 13.0 2,478,630 62.5% ✓ ✓ Go Show TV2 Pre School - 177.7 177.7 177.7 2,005,860 50.7% ✓ Great Gallagher TV ONE Sport 1.0 - 1.0 - 134,120 3.4% ✓ ✓ Ground Rules TV ONE Factual - - - - n/a n/a ✓ ✓ Handy Manny TV2 Pre School 6.0 - 6.0 6.0 273,050 6.9% ✓ Heart of the North TV ONE Doco - 0.5 0.5 - 100,420 2.6% ✓ ✓ ✓ Here to Stay 2 TV ONE Doco 3.0 - 3.0 3.0 1,132,370 28.5% ✓ ✓ Hi-5 TV2 Pre School 22.5 106.0 128.5 128.5 1,142,380 28.9% ✓ Hockey TV ONE Sport 4.0 - 4.0 - 388,070 9.8% ✓ ✓ Homefront Extra TV ONE Factual - 6.8 6.8 - 779,710 19.7% ✓ ✓ Homegrown TV ONE Factual 3.5 - 3.5 3.5 1,605,010 40.8% ✓ Homesick Extra TVNZ 6 Factual 8.4 - n/a n/a ✓ House and Garden Extra TV ONE Factual - 4.3 4.3 - 650,820 16.4% ✓ ✓ How The Other Half Lives TV ONE Doco 4.0 - 4.0 4.0 1,834,680 46.2% ✓ ✓ Hunger for the Wild TV ONE Factual 5.0 2.5 7.5 7.5 1,866,420 47.2% ✓ ✓ ✓ I Am TV TV2 SI 36.0 - 36.0 - 1,151,560 29.2% ✓ ✓ ✓ I Am TV Presents The Outlook for Someday TV2 SI 1.0 - 1.0 - 175,810 4.4% ✓ ✓ ✓ Ice TV ONE Factual - 2.5 2.5 2.5 292,410 7.4% ✓ In the Night Garden TV2 Pre School 109.0 109.0 - 1,481,740 37.5% ✓ InBeTween TVNZ 6 Children’s 33.4 - n/a n/a ✓ ✓ Indo/Pacific Trampolining TV ONE Sport 1.0 - 1.0 - 196,190 5.0% ✓ ✓ Intrepid Journeys TV ONE Factual - 17.8 17.8 17.8 856,310 21.6% ✓ Is It Safe To Eat TV ONE Factual - 3.0 3.0 - 259,380 6.5% ✓ Jamie’s Eat to Save Your Life TV ONE Factual 1.5 - 1.5 1.5 855,740 21.6% ✓ 23 / TVNZ ANNUAL REPORT FY2009

Job Summit Addresses TVNZ 7 NCA 4.6 - n/a n/a ✓ Just the Job TV2 Children’s 7.0 5.0 12.0 - 954,670 24.2% ✓ Karaoke High TV2 Ch Drama - 7.5 7.5 7.5 633,860 16.0% ✓ ✓ Ken Douglas TV ONE Doco - 0.3 0.3 0.3 111,720 2.8% ✓ ✓ Khaki All Blacks TV ONE Doco - 1.0 1.0 1.0 171,190 4.3% ✓ ✓ Kia Kaha TV ONE Doco - 0.5 0.5 - 120,930 3.1% ✓ ✓ ✓ ✓ Kidzone TVNZ 6 Pre School 608.4 - n/a n/a ✓ Killian Curse TV2 Ch Drama - 7.0 7.0 7.0 886,090 22.3% ✓ ✓ King of Tonga Ceremony Highlights TV ONE SI 1.0 - 1.0 - 222,670 5.7% ✓ ✓ Kiwi Kitchen TV ONE Factual - 12.0 12.0 12.0 796,440 20.2% ✓ Kiwis At War TV ONE Doco - 3.0 3.0 3.0 352,390 8.9% ✓ ✓ Korero Mai TV2 SI 23.3 11.0 34.3 - 1,107,650 28.1% ✓ ✓ ✓ Korero Mai TVNZ 6 SI 34.3 - n/a n/a Leo’s Pride TV ONE Doco - 0.7 0.7 0.7 93,650 2.4% ✓ ✓ ✓ Let’s Get Inventin’ TV2 Children’s 6.5 4.5 11.0 11.0 1,499,070 38.1% ✓ Let’s Get Inventin’ TVNZ 6 Children’s 12.1 12.1 n/a n/a ✓ Little Bear TV2 Pre School 105.5 105.5 - 1,869,860 47.4% ✓ Little Einsteins TV2 Pre School 10.0 10.0 10.0 352,640 8.9% ✓ Lost in Libya TV ONE Doco 1.5 - 1.5 1.5 285,630 7.2% ✓ ✓ Louis Vuitton Pacific Series tvnz.co.nz Sport 4.4 - 4.4 - n/a n/a ✓ ✓ ✓ Marae TV ONE SI 20.0 5.5 25.5 - 878,050 22.2% ✓ ✓ ✓ Marae TVNZ 7 SI 72.6 - n/a n/a ✓ ✓ ✓ Master Raindrop TV2 Pre School 12.5 0.5 13.0 13.0 999,820 25.2% ✓ Media 7 TVNZ 7 NCA 135.0 - n/a n/a ✓ Meet the Locals TVNZ 6 Factual 217.1 - n/a n/a ✓ ✓ Mercury Falling TV ONE Doco - 1.0 1.0 1.0 160,640 4.1% ✓ Mickey Mouse Clubhouse TV2 Pre School 19.5 6.5 26.0 16.5 692,900 17.5% ✓ Midday TV ONE NCA 118.8 - 118.8 118.8 2,225,730 56.3% ✓ Montana World of Wearable Art TV ONE Arts 1.0 1.0 2.0 - 311,620 7.9% ✓ ✓ ✓ Montana World of Wearable Art TVNZ 6 Arts 0.8 - n/a n/a ✓ ✓ ✓ Moon TV TV2 Comedy 1.0 - 1.0 - 310,680 7.9% ✓ Motorcycles and Mountaineers Legs TV ONE Doco - 0.5 0.5 - 68,440 1.7% ✓ ✓ Mucking In TV ONE Factual 2.5 31.5 34.0 34.0 1,722,160 43.5% ✓ Multisport TV ONE Sport 0.5 - 0.5 - 69,940 1.8% ✓ ✓ Murder on the Blade TV ONE Doco - 2.0 2.0 2.0 71,220 1.8% ✓ My God TV ONE SI 5.0 - 5.0 - 472,740 12.0% ✓ ✓ My God TVNZ 7 SI 11.0 - n/a n/a ✓ ✓ National Bank Country Calendar TV ONE Factual 15.0 25.5 40.5 40.5 2,771,890 70.1% ✓ ✓ National Bank Young Farmer TV ONE Factual 1.0 - 1.0 - 2,480,460 62.7% ✓ ✓ Netball TV ONE Sport 41.7 - 41.7 - 1,190,200 30.2% ✓ ✓ Netball TV2 Sport 4.0 - 4.0 - n/a n/a ✓ ✓ New Artland TVNZ 6 Arts 33.5 - 50,390 1.3% ✓ ✓ ✓ ✓ New Breed Old Creed TV ONE Doco - 0.5 0.5 1.0 91,730 2.3% ✓ ✓ ✓ New Oceania TV ONE Doco - 1.0 1.0 - 205,040 5.2% ✓ ✓ Nine Lessons & Carols TV ONE SI 1.5 1.5 3.0 1.0 184,380 4.6% ✓ ✓ ✓ Nobody’s Heroes TV ONE Doco - 1.0 1.0 29.5 n/a n/a ✓ ✓ NZ Children’s Drama - various TVNZ 6 Ch Drama 80.2 - n/a n/a ✓ ✓ NZ Directs TVNZ 6 Ent 125.9 12.0 n/a n/a ✓ ✓ NZ Documentaries - Various TVNZ 6 Doco 40.1 407.0 n/a n/a ✓ ✓ ✓ NZ Documentaries - Various TVNZ 7 Doco 765.8 369.3 n/a n/a ✓ ✓ ✓ NZ Drama - various TVNZ 6 Drama 604.4 78.0 n/a n/a ✓ ✓ NZ Entertainment (incl. Comedy) - various TVNZ 6 Ent / Comedy 369.3 - 347,260 8.7% ✓ ✓ NZ Exposed TV ONE Doco - 3.0 3.0 - 222,630 5.6% ✓ ✓ NZ House and Garden TV ONE Factual - 1.0 1.0 - n/a n/a ✓ NZ Pre School - various TVNZ 6 Pre School 1,313.9 - 366,190 9.2% ✓ Ocean Swim TV ONE Sport 2.5 - 2.5 6.5 2,120,500 53.9% ✓ ✓ 25 / TVNZ ANNUAL REPORT FY2009

Off The Radar TV ONE Factual 6.5 - 6.5 2.5 295,160 7.4% ✓ ✓ Off The Rails TV ONE Factual - 2.5 2.5 - 3,557,970 90.4% ✓ Olympics TV ONE Sport 171.2 - 171.2 365.0 3,709,920 93.9% ✓ ✓ One Network News TV ONE NCA 365.0 - 365.0 - 2,428,870 61.5% ✓ One Network News - 4.30pm TV ONE NCA 113.0 - 113.0 18.0 2,437,120 61.7% ✓ One Network News - Specials TV ONE NCA 21.1 - 21.1 - n/a n/a ✓ Open Door TVNZ 7 Factual 1.3 15.5 1,446,610 36.4% ✓ ✓ Orange Roughies TV ONE Drama 0.1 15.4 15.5 0.4 200,510 5.1% ✓ ✓ Our Heritage TV ONE Doco - 0.4 0.4 2.0 366,970 9.2% ✓ ✓ ✓ Perfect Strangers TV ONE Drama - 2.0 2.0 0.2 102,360 2.6% ✓ ✓ Pianoman TV ONE Doco - 0.2 0.2 - 928,480 23.4% ✓ Piece of my Heart TV ONE Drama 1.5 - 1.5 9.0 2,159,020 54.7% ✓ ✓ Piha Rescue TV ONE Factual 5.0 4.0 9.0 1.9 595,360 15.1% ✓ Pocoyo TV2 Pre School 1.9 1.9 - 469,230 11.8% ✓ Polyfest TV2 SI 2.5 - 2.5 - 111,890 2.8% ✓ ✓ Power of Attitude - Meet The Olympians TV ONE Doco 0.5 - 0.5 - 2,820,000 71.3% ✓ ✓ Powerbuilt Motorsport TV ONE Sport 72.7 - 72.7 - 923,120 23.3% ✓ ✓ Praise Be TV ONE SI 19.0 2.5 21.5 - n/a n/a ✓ ✓ Praise Be TVNZ 7 SI 50.3 1.0 161,520 4.1% ✓ ✓ Private Lives of Gifted Children TV ONE Doco - 1.0 1.0 - 533,680 13.4% ✓ ✓ Puzzle Inc TV2 Pre School - 2.2 2.2 - 831,920 21.0% ✓ Q & A TV ONE NCA 15.0 - 15.0 - n/a n/a ✓ Q & A TVNZ 7 NCA 25.8 1.3 269,420 6.8% ✓ Reluctant Hero TV ONE Doco - 1.3 1.3 3.0 1,070,560 27.2% ✓ ✓ ✓ Rick & Steve: The Happiest Gay Couple… TV2 Comedy 3.0 - 3.0 - 590,640 14.9% ✓ ✓ Roary the Racy Car TV2 Pre School 7.8 - 7.8 - 2,074,720 52.3% ✓ Rugby TV ONE Sport 36.7 - 36.7 - 846,810 21.5% ✓ ✓ Rural Delivery TV ONE SI 19.5 - 19.5 - n/a n/a ✓ ✓ Rural Delivery TVNZ 7 SI 67.9 1.0 205,340 5.2% ✓ ✓ Saving Face TV ONE Doco 1.0 - 1.0 3.0 1,084,790 27.3% ✓ ✓ ✓ School of Success TV ONE Factual 3.0 - 3.0 1.0 203,390 5.1% ✓ ✓ Seven Worlds Collide TV ONE Arts 1.0 - 1.0 26.5 706,540 17.9% ✓ ✓ ✓ Shapies TV2 Pre School 26.5 26.5 403.0 3,508,510 88.8% ✓ Shortland Street TV2 Drama 125.5 245.5 371.0 105.0 n/a n/a ✓ ✓ Shortland Street TVNZ 6 Drama 105.0 2.0 964,150 24.3% ✓ ✓ Show of Hands TV ONE Drama 2.0 - 2.0 - 734,840 18.5% ✓ ✓ Small Blacks TV TV2 Children’s 9.5 - 9.5 - 141,900 3.6% ✓ Snowcross TV ONE Sport 1.0 - 1.0 7.3 856,160 21.6% ✓ ✓ Special Investigators TV ONE Doco 0.5 6.8 7.3 10.8 526,690 13.4% ✓ ✓ Stains Down Drains TV2 Children’s - 10.8 10.8 - 2,363,310 59.8% ✓ Stars in Their Eyes TV ONE Ent 10.5 10.5 21.0 - 1,992,780 50.5% ✓ Studio 2 TV2 Children’s 75.0 - 75.0 - 207,840 5.3% ✓ Style Pasifika TV ONE Arts 1.0 1.0 2.0 - n/a n/a ✓ ✓ ✓ Style Pasifika TVNZ 6 Arts 0.8 80.0 3,070,440 77.7% ✓ ✓ ✓ Sunday TV ONE NCA 40.0 40.0 80.0 65.0 n/a n/a ✓ Sunday TVNZ 7 NCA 65.0 - 519,490 13.1% ✓ Surf Club TV2 Sport 4.0 - 4.0 - 1,976,440 50.0% ✓ ✓ Tagata Pasifika TV ONE SI 24.0 25.5 49.5 - n/a n/a ✓ ✓ Tagata Pasifika TVNZ 7 SI 70.6 - n/a n/a ✓ ✓ Talk Talk TVNZ 6 Arts 39.0 4.0 436,220 11.0% ✓ ✓ ✓ Taste New Zealand TV ONE Factual - 4.0 4.0 3.0 395,620 10.0% ✓ Taste Takes Off TV ONE Factual - 3.0 3.0 15.3 2,258,210 57.1% ✓ Te Karere TV ONE SI 96.3 15.3 111.5 1.0 n/a n/a ✓ ✓ ✓ ✓ Te Karere TVNZ 7 SI 95.5 - 43,430 1.1% ✓ ✓ ✓ ✓ Te Moko TV ONE Doco - 0.5 0.5 - n/a n/a ✓ ✓ ✓ Te Wiki O Te Karere TVNZ 7 NCA 38.4 - 1,870,080 47.1% ✓ ✓ ✓ ✓ 27 / TVNZ ANNUAL REPORT FY2009

Tennis TV ONE Sport 92.4 - 92.4 2.4 442,910 11.2% ✓ ✓ The Big Picture TV ONE Arts - 2.4 2.4 - n/a n/a ✓ ✓ ✓ ✓ The Big Picture TVNZ 6 Arts 4.2 1.0 577,500 14.7% ✓ ✓ ✓ ✓ The Girl Who Didn’t Grow TV ONE Doco 1.0 - 1.0 - n/a n/a ✓ The Good Word TVNZ 6 Arts 16.0 - n/a n/a ✓ ✓ ✓ The Gravy TVNZ 6 Arts 45.0 2.0 1,111,540 28.0.% ✓ ✓ ✓ The Investigator TV ONE Doco 2.0 - 2.0 1.8 416,090 10.6% ✓ ✓ ✓ The Man Who Lost His Head TV ONE Drama - 1.8 1.8 - 91,530 2.3% ✓ ✓ ✓ The Native’s School TV ONE Doco - 0.5 0.5 3.0 972,440 24.5% ✓ ✓ ✓ The Outsiders TV ONE Doco 3.0 - 3.0 4.0 1,371,330 34.8% ✓ ✓ The Pretender TV ONE Comedy 4.0 - 4.0 - 466,940 11.8% ✓ ✓ ✓ The Road To Ellerslie TV ONE Factual 0.5 6.0 6.5 2.0 1,446,150 36.4% ✓ The Singing Bee TV2 Ent 2.0 - 2.0 - n/a n/a ✓ The Sitting TVNZ 6 Arts 44.6 1.5 1,117,320 28.4% ✓ ✓ ✓ This Is Your Life TV ONE Ent 1.5 1.0 2.5 3.0 1,229,720 31.2% ✓ ✓ Tiger: Spy in the Jungle TV ONE Doco 3.0 - 3.0 - 913,520 23.0% ✓ Time Trackers TV2 Children’s 6.5 - 6.5 4.0 1,237,810 31.3% ✓ To Sir With Love TV ONE Ent 2.0 2.0 4.0 1.4 n/a n/a ✓ To Sir With Love TVNZ 6 Ent 1.4 122.9 3,327,700 84.2% ✓ Tonight TV ONE NCA 123.4 - 123.4 8.0 2,095,270 52.8% ✓ Top Town TV2 Ent 8.0 - 8.0 - 954,210 24.0% ✓ ✓ Tri TV TV ONE Sport 9.0 - 9.0 - 374,640 9.5% ✓ ✓ Triathlon TV ONE Sport 4.5 - 4.5 - n/a n/a ✓ ✓ TVNZ News at 8 TVNZ 7 NCA 364.0 - n/a n/a ✓ TVNZ News Now TVNZ 7 NCA 1,666.2 4.0 983,600 25.0% ✓ Unauthorised History TV ONE Comedy 4.0 - 4.0 4.0 205,350 5.2% ✓ ✓ Under Investigation TV ONE Doco - 4.0 4.0 6.7 n/a n/a ✓ Under Investigation TVNZ 7 Doco 6.7 1.8 792,040 20.0% ✓ Until Proven Innocent TV ONE Drama 1.8 - 1.8 3.0 1,259,560 31.7% ✓ ✓ ✓ Victoria Wood: Victoria’s Empire TV ONE Doco 3.0 3.0 - 674,120 17.0% ✓ Vodafone One Tribe TV TV2 Sport 7.0 - 7.0 - 351,810 8.9% ✓ ✓ Waitangi 09 TV ONE SI 3.0 0.5 3.5 - n/a n/a ✓ ✓ ✓ ✓ Waitangi 09 TVNZ 7 SI 2.5 52.0 1,309,920 33.1% ✓ ✓ ✓ ✓ Waka Huia TV ONE SI 41.0 11.0 52.0 78.0 n/a n/a ✓ ✓ ✓ Waka Huia TVNZ 7 SI 85.8 - n/a n/a ✓ ✓ ✓ Waka Huia: He Hokinga Mai TVNZ 7 SI 217.5 - 77,230 2.0% ✓ ✓ ✓ Wayne Anderson TV2 Factual - 0.3 0.3 1.5 796,760 20.1% ✓ Westpac Halberg Awards TV ONE Sport 1.5 - 1.5 1.7 487,520 12.4% ✓ ✓ ✓ Whale Rider TV ONE Drama - 1.7 1.7 15.9 1,347,110 34.2% ✓ ✓ Whanau TV ONE SI - 15.9 15.9 26.1 n/a n/a ✓ ✓ ✓ ✓ Whanau TVNZ 6 SI 26.1 - 1,792,780 45.4% ✓ ✓ ✓ ✓ What Now Sundays TV2 Children’s 82.0 - 82.0 3.0 277,380 7.0% ✓ Why We Buy TV ONE Factual - 3.0 3.0 3.5 2,070,960 52.2% ✓ Wild Vets TV ONE Factual 3.5 - 3.5 20.5 469,070 11.9% ✓ Wonder Dogs TV ONE Ent - 20.5 20.5 - 258,350 6.6% ✓ ✓ World Cup Soccer TV ONE Sport 2.8 - 2.8 2.0 354,760 9.0% ✓ ✓ Worlds Fastest Indian TV ONE Drama - 2.0 2.0 12.0 827,100 20.8% ✓ ✓ Wot Wots TV2 Pre School 12.0 - 12.0 0.7 123,450 3.1% ✓ Wrestling with the Angels TV ONE Doco - 0.7 0.7 - 476,300 12.1% ✓ ✓ Yachting TV ONE Sport 11.1 - 11.1 - 1,204,410 30.3% ✓ ✓ Yo Gabba Gabba TV2 Pre School 10.0 13.5 23.5 23.5 969,410 24.4% ✓ Zip & Macs Pad TV2 Pre School - 24.9 24.9 24.9 1,332,270 33.7% ✓ ✓

13,878.1 3,774.6

29 / TVNZ ANNUAL REPORT FY2009

13,878.1 3,774.6

30 / TVNZ ANNUAL REPORT FY2009

Financial Statements

Statement of Responsibility 31 Income Statement 32 Balance Sheet 33 Statement of Changes in Equity 34 Cash Flow Statement 35 Notes to the Financial Statements 36 Statement of Service Performance 60 Report of the Auditor General 72 Five Year Trend Statement 74 Additional Information 75 31 / TVNZ ANNUAL REPORT FY2009

Statement of Responsibility For the year ended 30 June 2009

The Board and management of Television New Zealand Limited are responsible for:

• The preparation of these financial statements and the judgements used in them.

• Establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting.

In the opinion of the Board and management these financial statements fairly reflect the financial position of Television New Zealand Limited as at 30 June 2009 and its financial performance and cash flows for the year ended that date.

The directors have pleasure in presenting the following financial statements for the year ended 30 June 2009.

For and on behalf of the Board of Directors

Sir John Anderson, KBE Sir John Goulter, KNZM, JP Chairman Chairman, Audit and Risk Committee

30 September 2009 32 / TVNZ ANNUAL REPORT FY2009

Income Statement For the year ended 30 June 2009

Group Company 2009 2008 2009 2008 Notes $000 $000 $000 $000

Income Operating revenue 4 333,213 339,834 333,213 339,834 Government funding 18a 51,234 51,380 51,234 51,380 (MCH, NZ On Air, Te Mangai Paho) Interest income 314 997 314 997 Gain on sale of property, plant and equipment 25 106 25 106 384,786 392,317 384,786 392,317

Expenses Programme amortisation 12 (231,589) (222,423) (231,589) (222,423) Employee benefits 5 (64,929) (62,025) (64,929) (62,025) Depreciation and amortisation 5 (16,947) (15,905) (16,947) (15,905) Transmission (21,044) (21,760) (21,044) (21,760) Marketing (13,646) (15,978) (13,646) (15,978) Other (26,490) (27,173) (26,490) (27,147) (374,645) (365,264) (374,645) (365,238)

Earnings before reorganisation cost, interest, 10,141 27,053 10,141 27,079 financial instruments, associate and tax

Reorganisation costs 6 (3,729) 0 (3,729) 0 Interest expense (2,173) (3,729) (2,173) (3,729) Financial instruments/foreign currency gains/(losses) 7 376 7,033 324 7,033 Share of results of associated company 14 (1,011) 0 0 0

Profit before income tax 3,604 30,357 4,563 30,383

Income tax expense 8 (1,502) (10,931) (1,486) (10,916)

Profit for the year 2,102 19,426 3,077 19,467

The accompanying notes form part of these financial statements. 33 / TVNZ ANNUAL REPORT FY2009

Balance Sheet As at 30 June 2009

Group Company 2009 2008 2009 2008 Notes $000 $000 $000 $000

ASSETS Current Assets Cash and cash equivalents 9 2,047 5,341 2,047 5,341 Receivables and prepayments 10 50,460 66,264 50,476 66,264 Programme rights - intangible assets 12 78,555 73,514 78,555 73,514 Inventories 229 255 229 255 Derivative financial instruments 21 3,527 5,028 3,527 5,028 Total current assets 134,818 150,402 134,834 150,402

Non-current assets Property, plant and equipment 11 107,395 110,312 107,395 110,312 Other intangible assets 12 20,983 13,970 20,983 13,970 Programme rights - intangible assets 12 17,718 22,654 17,718 22,654 Deferred tax asset 8 11,233 12,323 11,200 12,245 Derivative financial instruments 21 851 2,489 851 2,489 Investment in subsidiaries 13 0 0 5,210 140 Investment in associate 14 9,151 0 0 0 Loan to associate 2,197 0 2,197 Other investments 42 42 42 42 Total non-current assets 169,570 161,790 165,596 161,852 Total assets 304,388 312,192 300,430 312,254

LIABILITIES Current Liabilities Loans and borrowings 16 36,221 567 36,221 567 Trade and other payables 17 51,960 46,857 46,965 46,857 Deferred income 18 26,939 39,917 26,939 39,917 Derivative financial instruments 21 253 1,317 253 1,317 Provisions 19 1,798 11,017 1,798 11,017 Total current liabilities 117,171 99,675 112,176 99,675

Non-current liabilities Employee entitlements 17 2,047 2,034 2,047 2,034 Derivative financial instruments 21 0 94 0 94 Provisions 19 278 0 278 0 Loans and borrowings 16 0 27,700 0 27,700 Total non-current liabilities 2,325 29,828 2,325 29,828

Equity Share capital 22 140,000 140,000 140,000 140,000 Cash flow hedge reserves 84 (17) 84 (17) Retained earnings 44,808 42,706 45,845 42,768 Total equity 184,892 182,689 185,929 182,751 Total equity and liabilities 304,388 312,192 300,430 312,254

The accompanying notes form part of these financial statements. For and on behalf of the Board, who authorise the issue of these financial statements on 30 September 2009

Sir John Anderson, KBE Sir John Goulter, KNZM, JP Chairman Director 34 / TVNZ ANNUAL REPORT FY2009

Statement of Changes in Equity For the year ended 30 June 2009

Cashflow Share hedge Retained Capital reserve earnings Total Notes $000 $000 $000 $000

Group At 1 July 2008 140,000 (17) 42,706 182,689 Effective portion of changes in fair value 22 0 101 0 101 of cash flow hedges, net of tax Income and expense recognised directly in equity 0 101 0 101

Profit for the period 0 0 2,102 2,102

Total recognised income and expense 0 101 2,102 2,203 Dividends declared in the year 0 0 0 0 At 30 June 2009 140,000 84 44,808 184,892

At 1 July 2007 140,000 96 33,581 173,677 Effective portion of changes in fair value 22 0 (113) 0 (113) of cash flow hedges, net of tax 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

Company At 1 July 2008 140,000 (17) 42,768 182,751 Effective portion of changes in fair value 22 0 101 0 101 of cash flow hedges, net of tax Income and expense recognised directly in equity 0 101 0 101

Profit for the period 0 0 3,077 3,077

Total recognised income and expense 0 101 3,077 3,178 Dividends declared in the year 0 0 0 0 At 30 June 2009 140,000 84 45,845 185,929

At 1 July 2007 140,000 96 33,602 173,698 Effective portion of changes in fair value 22 0 (113) 0 (113) of cash flow hedges, net of tax Income and expense recognised directly in equity 0 (113) 0 (113)

Profit for the period 0 0 19,467 19,467

Total recognised income and expense 0 (113) 19,467 19,354 Dividends declared in the year 0 0 (10,301) (10,301) At 30 June 2008 140,000 (17) 42,768 182,751

The accompanying notes form part of these financial statements. 35 / TVNZ ANNUAL REPORT FY2009

Cash Flow Statement For the year ended 30 June 2009

Group Company 2009 2008 2009 2008 Notes $000 $000 $000 $000

Cash flows from/(used in) operating activities Receipts from customers 334,245 338,980 334,245 339,382 Receipt of government grants 44,239 55,186 44,239 55,186 Interest received 315 1,002 315 1,002 Payments to suppliers and employees (347,408) (363,550) (347,460) (363,948) Interest paid (2,163) (3,740) (2,163) (3,740) Income tax paid (1,850) (2,644) (1,897) (2,704) Net cash flows from/(used in) operating activities 23 27,378 25,234 27,279 25,178

Cash flows from/(used in) investing activities Proceeds from sale of property, plant and equipment 35 557 35 557 Loans repaid by subsidiaries 0 0 45 56 Purchase of property, plant and equipment (11,566) (16,452) (11,566) (16,452) Purchase of intangibles (9,487) (1,910) (9,487) (1,910) Loan to subsidiary 0 0 (4,937) 0 Investment in and advances to associates (7,366) 0 (2,375) 0 Net cash flows from/(used in) investing activities (28,384) (17,805) (28,285) (17,749)

Cash flows from/(used in) financing activities Drawdown of borrowings 8,350 0 8,350 0 Repayment of borrowings 0 (15,050) 0 (15,050) Dividends paid (10,301) 0 (10,301) 0 Net cash flows from/(used in) financing activities (1,951) (15,050) (1,951) (15,050)

Net increase/(decrease) in cash and cash equivalents (2,957) (7,621) (2,957) (7,621) Net foreign exchange differences 59 0 59 0 Cash and cash equivalents at the beginning of the period 4,774 12,395 4,774 12,395 Cash and cash equivalents at the end of the period 9 1,876 4,774 1,876 4,774

The accompanying notes form part of these financial statements. 36 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements For the year ended 30 June 2009

1. Corporate information Television New Zealand Limited (the “Company”) and its subsidiaries (the “Group’) operate in the broadcasting and production of television programmes and channels within New Zealand.

The Company is a limited liability company incorporated in New Zealand under the Companies Act 1993 and is wholly owned by the Crown. The Company is bound by the requirements of the Television New Zealand Act 2003. The Crown does not guarantee the liabilities of Television New Zealand Limited in any way.

These consolidated financial statements were approved for issue by the Board of Directors on 30 September 2009.

2. Summary of significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated. a) Basis of preparation The financial statements have been prepared in accordance with generally accepted accounting practice in New Zealand (NZ GAAP) and the requirements of the Television New Zealand Act 2003, Financial Reporting Act 1993 and the Companies Act 1993. The financial statements have been prepared on a historical cost basis except for derivative financial instruments that have been measured at fair value.

The carrying values of recognised assets and liabilities that are hedged with fair value hedges are adjusted to record changes in the fair values attributable to the risks that are being hedged.

The financial statements are presented in New Zealand dollars ($), which is the Company’s functional currency. All financial information presented in New Zealand dollars has been rounded to the nearest thousand. b) Statement of compliance The financial statements have been prepared in accordance with NZ GAAP. They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS), and other applicable Financial Reporting Standards, as appropriate for profit orientated entities. The financial statements comply with International Financial Reporting Standards (IFRS).

The accounting policies set out below have been applied consistently to all periods presented in these financial statements. c) Basis of consolidation The consolidated financial statements comprise the financial statements of Television New Zealand Limited and its subsidiaries at 30 June.

Subsidiaries are those entities controlled, directly or indirectly, by the Group. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All intercompany transactions, balances and unrealised surpluses and deficits on transactions between Group companies are eliminated on consolidation.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The acquisition of subsidiaries is accounted for using the purchase method of accounting.

Investments in subsidiaries are accounted for at cost, less allowance for impairment, in the separate financial statement of the Company. d) Foreign currency The functional and presentational currency of Television New Zealand Limited and its subsidiaries is the New Zealand dollar ($).

Transactions in foreign currencies are translated to the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rates ruling at balance date.

Foreign currency differences arising on the translation of monetary assets and liabilities in foreign currencies are recognised in the income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. 37 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009 e) Revenue recognition Revenue is stated exclusive of goods and services tax (GST) and consists of sales of goods and services to third parties. Revenue from the sale of goods and services is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Key classes of revenue are recognised on the following basis: i) Rendering of services Revenue from advertising and sponsorship is recognised as income at the time of transmission. ii) Government grants Government grants are recognised initially as deferred income when there is reasonable assurance that they will be received and that the Group will comply with the conditions associated with the grant. Grants that compensate the Group for expenses incurred are recognised as income on a systematic basis in the same periods in which the expenses are recognised. Grants that compensate the Group for the cost of an asset are recognised as income in the income statement on a systematic basis over the useful life of the asset. iii) Other revenue Other revenue is recognised when the product has been delivered or in the accounting period in which the actual service has been provided. iv) Interest Interest revenue is recognised as the interest accrues to the net carrying amount of the financial asset. f) Income tax expense Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for taxation purposes.

Deferred tax assets are recognised where realisation of the asset is probable.

Deferred tax is measured at the tax rates that are expected to apply when the temporary differences reverse, based on tax rates (and tax law) that have been enacted or substantively enacted at the balance sheet date.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. g) Leases Operating lease payments, where the lessors substantially retain all the risks and benefits of ownership of the leased items, are recognised as an expense in the income statement on a straight-line basis over the lease term. h) Dividends Provision is made for the amount of dividend declared on or before balance date but not distributed at balance date. i) Property, plant and equipment Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes the cost to acquire the asset and other directly attributable costs incurred to bring the asset to the location and condition for its intended use. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Depreciation is calculated on a straight-line basis to allocate the cost of assets over their estimated useful lives. Land is not depreciated.

The estimated useful lives for the current and comparable period are:

Buildings 40 years Plant and equipment 3 to 10 years Motor vehicles 5 to 10 years 38 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

Impairment The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit the asset belongs to. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash generating units are written down to their recoverable amount.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.

Where an item of property, plant and equipment is derecognised, the gain or loss (calculated as the difference between the net proceeds and the carrying value of the item) is included in the income statement in the period the item is derecognised. j) Intangible assets Programme Rights Television programmes which are available for use, including those acquired overseas, are recorded at cost less amounts charged to the income statement based on management’s assessment of the useful life, which is regularly reviewed and additional write downs are made as considered necessary. Programmes produced internally for the purpose of broadcast are initially recognised as intangible assets at production cost. Production costs only include direct costs associated with the programme.

Programme rights are amortised on the following basis: (i) Non movie programme rights are amortised on a straight line basis such that all rights are amortised within a period not exceeding one year from the broadcast licence period start date.

(ii) Movie programme rights are amortised on a straight line basis such that all rights are amortised within a period not exceeding three years from the broadcast licence period start date.

Frequency licences Frequency licences are recorded at cost less amortisation and impairment losses. Amortisation is calculated on a diminishing value methodology using the sum of digits over the remaining life of the licence.

Other intangible assets Acquired software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific asset. These costs are amortised on a straight line basis over their estimated useful economic lives of two to five years.

Development costs Development costs on internal projects are only capitalised by the Group when it can be demonstrated that the technical feasibility of completing the intangible asset is valid so that the asset will be available for use. Any development costs capitalised are amortised over the period of the estimated economic life of the asset to which they relate.

Where an intangible asset is derecognised, the gain or loss (calculated as the difference between the net proceeds and the carrying value of the item) is included in the income statement in the period the item is derecognised. k) Cash and cash equivalents Cash and short term deposits in the balance sheet comprise cash at the bank and in hand and short term deposits with an original maturity of three months or less.

For the purposes of the cash flow statement, cash and cash equivalents comprise cash and cash equivalents as defined above, net of outstanding overdrafts. l) Trade and other receivables Trade receivables are recognised and carried at original invoice amount and subsequently measured at amortised cost, less an allowance for impairment.

Collectibility of trade receivables is reviewed on an ongoing basis and debts that are known to be uncollectible are written off immediately. An allowance for doubtful debts is recognised when there is objective evidence that the Group will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 90 days overdue are considered objective evidence of impairment. m) Inventories Inventories comprise technical stores and videotape. All inventories are recorded at the lower of cost or net realisable value. 39 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009 n) Derivative financial instruments The Group uses derivative financial instruments, within predetermined policies and limits, to manage its exposure to foreign currency exchange rate risk and interest rate risk. The Group also enters into programme supply contracts that contain a foreign currency embedded derivative.

Such derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative contract is designed to hedge a specific risk and qualifies for hedge accounting.

Each derivative that is designated as a hedge is classified as either: i) a fair value hedge when they hedge the exposure to changes in the fair value of a recognised asset or liability or a firm commitment; or ii) a cash flow hedge where they hedge exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a forecasted transaction. i) Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. ii) Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity. The gain or loss relating to the ineffective portion is recognised in the income statement. Amounts accumulated are recycled in the income statement in the period when the hedged item affects profit or loss. When the hedged firm commitment results in the recognition of an asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses that had previously being recognised in equity are included in the initial measurement of the acquisition cost or other carrying amount of the asset or liability.

Hedge accounting is discontinued when the hedging instrument expires or is sold, or when the hedge no longer meets the criteria for hedge accounting. At that point any cumulative gain or loss existing in equity remains in equity until the forecast transaction occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss is immediately transferred to the income statement.

For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are recognised immediately in the income statement. The fair value of forward exchange contracts and embedded derivatives are calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of interest rate swap contracts is determined by reference to market values of similar instruments.

In accordance with its treasury policy, the Group does not engage in speculative transactions or hold derivative financial instruments for trading purposes. o) Borrowings and borrowing costs Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost using the effective interest method. Borrowing costs are recognised as an expense when incurred. p) Trade and other payables Trade and other payables are carried at amortised cost and due to their short term nature they are not discounted. Trade and other payables are recognised when the Group becomes obliged to make future payments resulting from the purchases of goods and services. q) Investment in associate The Group’s investment in its associates is accounted for using the equity method of accounting in the consolidated financial statements. Associates are entities over which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group’s share of the income and expenses of the associate from the date that significant influence commenced until the date that significant influence ceases. The Group’s share of its associate post acquisition profits or losses is recognised in the income statement and its share of post acquisition movements in reserves is recognised in reserves. The cumulative post acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate exceeds its interest in the associate, including any unsecured long-term receivables and loans, the Group does not recognise any further losses, unless it has incurred obligations or made payments on behalf of the associate. r) Interest in a jointly controlled entity The interest in a joint venture entity is accounted for in the consolidated financial statements using the equity method of accounting and is carried at cost by the parent entity. Under the equity method, the Group’s share of the results of the joint venture is recognised in the income statement, and the share of movements in reserves is recognised in the balance sheet. 40 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009 s) Employee benefits Provision is made for employee benefits accumulated as a result of employees rendering services up to balance date. The benefits include wages and salaries, incentives, compensated absences and retirement leave which are expensed in the income statement when services are provided or benefits vest with the employee. The provision for employee benefits is stated at the present value of the estimated future cash outflows to be incurred resulting from employees’ services provided up to balance date. t) Provisions Provisions are recognised when the Group has present legal or constructive obligation as a result of a past event that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

If the effect of time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. u) New accounting standards and interpretations Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ending 30 June 2009. These are noted below.

NZ IFRS 8 – Operating Segments Replaces NZ IAS 14 Segment Reporting, the new standard requires a management approach to segment reporting. NZ IFRS 8 is a disclosure standard so will not have a direct impact on the amounts included in the Group’s financial statements. However the amendments may have an impact on the Group’s segment disclosures. The application date for this standard is for accounting periods beginning on or after 1 January 2009, the application date for the Group for this standard is 1 July 2009.

NZ IAS 1 (revised) – Presentation of Financial Statements The revised standard introduces a statement of comprehensive income. Other revisions include changes to the presentation of items in the statement of changes in equity, new presentation requirements for restatements or reclassifications of items in the financial statements, changes in the presentation requirements for dividends and changes to the titles of financial statements. The amendments are expected to only affect the presentation of the Group’s financial statements and will not have a direct impact on the measurement and recognition of amounts under the current NZ IAS 1. The Group has not determined at this stage whether to present the new statement of comprehensive income as a single or two statements. The application date for this standard is for accounting periods beginning on or after 1 January 2009, the application date for the Group for this standard is 1 July 2009.

NZ IFRS 7 (amended) – Financial Instrument: Disclosures The amended NZ IFRS requires fair value measurements to be disclosed by the source of inputs using a three level hierarchy. NZ IFRS 7 is a disclosure standard so will not have a direct impact on the Group’s financial statements. The application date for this standard is for accounting periods beginning on or after 1 January 2009, the application date for the Group for this standard is 1 July 2009.

NZ IAS 23 (revised) – Borrowing Costs The amendments to NZ IAS 23 require that all borrowing costs associated with a qualifying asset must be capitalised. The Group may have qualifying assets which will require borrowing costs to be capitalised. The application date for this standard is for accounting periods beginning on or after 1 January 2009, the application date for the Group for this standard is 1 July 2009.

3) Significant accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Estimates and assumptions are reviewed by management on an ongoing basis. Actual results may differ from these estimates.

Management has identified the following accounting policies for which significant judgements, estimates and assumptions are made:

Estimation of useful lives of property, plant and equipment and finite-lived intangible assets The estimated useful life of a particular asset is based on historical experience, the expected service potential of the assets and technological advances. Adjustments to useful lives are made when considered necessary.

Income taxes and deferred tax The Group’s accounting policy for taxation requires management to make estimates as to, amongst other things, the amount of tax that will be payable, the availability of losses to be carried forward and the recovery of deferred tax assets.

Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences.

Capitalised development costs Development costs are only capitalised by the Group when it can be demonstrated that the technical feasibility of completing the intangible asset is valid so that the asset will be available for use.

Actual results may differ from these estimates as a result of reassessment by management or taxation authorities. 41 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

Group Company 2009 2008 2009 2008 $000 $000 $000 $000

4) Operating revenue

Television advertising revenue 298,404 315,540 298,404 315,540 Commercial production funding 5,462 3,673 5,462 3,673 Satellite sub lease revenue 400 546 400 546 Other trading revenue 28,947 20,075 28,947 20,075 333,213 339,834 333,213 339,834

5) Expenses

Expenses include: Employee benefits expense Wages and salaries and other short term benefits 94,802 89,256 94,802 89,256 Defined contribution superannuation expense 2,718 2,481 2,718 2,481 less employee benefits charged to programmes/capitalised (32,591) (29,712) (32,591) (29,712) 64,929 62,025 64,929 62,025

Depreciation and amortisation Depreciation 13,424 12,444 13,424 12,444 Amortisation - software 2,574 2,324 2,574 2,324 Amortisation - licences 949 1,137 949 1,137 16,947 15,905 16,947 15,905

Auditors' remuneration Audit of financial statements 249 256 249 256 Other assurance related services 60 6 60 6 309 262 309 262

Other assurance related services in the current year primarily relate to technology assurance activities.

Rental and operating lease costs 4,841 4,206 4,841 4,206

6) Reorganisation costs

Reorganisation costs 3,729 0 3,729 0

Costs associated with the reorganisation of the Company have been fully recognised in the current financial year. These costs included redundancy, outplacement, consultancy and sundry other costs associated with the reorganisation. Please refer to note 19 for the details of the provision movement.

7) Financial Instruments and Foreign currency gains/(losses)

Fair value changes of derivative financial instruments (2,125) 12,746 (2,125) 12,746 Foreign currency realised gains/(losses) 1,546 (3,694) 1,494 (3,694) Foreign currency unrealised gains/(losses) 955 (2,019) 955 (2,019) 376 7,033 324 7,033 42 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

Group Company 2009 2008 2009 2008 $000 $000 $000 $000

8) Income tax a) Income tax The major components of income tax expense are: Income Statement Current income tax Current period 477 4,720 506 4,780 Adjustments for prior period (22) 24 (22) 1 455 4,744 484 4,781

Deferred income tax Origination and reversal of temporary differences 1,047 5,578 1,002 5,526 Impact of change in corporate tax rate 0 609 0 609 1,047 6,187 1,002 6,135

Total income tax expense 1,502 10,931 1,486 10,916 b) Income tax recognised directly in equity Net movement on revaluation of cash flow hedges (43) 55 (43) 55 Total income tax recognised directly in equity (43) 55 (43) 55 c) Reconciliation of income tax expense Profit before income tax for the period 3,604 30,357 4,563 30,383 Taxation at 30% (2008 - 33%) 1,081 10,018 1,369 10,026

Adjusted for the tax effect of: Non deductible expenditure 139 280 139 280 Share of results of associated company 304 0 0 0 Income tax (over)/under provided in prior years (22) 24 (22) 1 Impact of change in corporate tax rate 0 609 0 609 Total tax expense 1,502 10,931 1,486 10,916 d) Recognised deferred tax assets

Group Company 2009 2009 Current Deferred Current Deferred Income Tax Income Tax Income Tax Income Tax $000 $000 $000 $000

Opening balance 942 12,323 942 12,245 Charged to income statement (455) (1,047) (484) (1,002) Charged to equity 0 (43) 0 (43) Other payments 1,851 0 1,896 0 Closing balance 2,338 11,233 2,354 11,200

Tax expense in income statement (1,502) (1,486)

Amounts recognised in the balance sheet: Deferred tax asset 11,233 11,200 43 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

8) Income tax (continued)

Group Company 2008 2008 Current Deferred Current Deferred Income Tax Income Tax Income Tax Income Tax $000 $000 $000 $000

Opening balance 3,042 18,455 3,019 18,325 Charged to income statement (4,744) (6,187) (4,781) (6,135) Charged to equity 0 55 0 55 Other payments 2,644 0 2,704 0 Closing balance 942 12,323 942 12,245

Tax expense in income statement (10,931) (10,916)

Amounts recognised in the balance sheet: Deferred tax asset 12,323 12,245

The reduction in corporate tax rate from 33% to 30% from the 2009 tax year was taken into account in calculating the value of deferred tax as at 30 June 2008.

Group Company Balance Sheet Balance Sheet 2009 2008 2009 2008 $000 $000 $000 $000

Deferred income tax at 30 June relates to the following: Deferred tax assets Programme rights 4,191 5,774 4,191 5,774 Employee entitlements 2,964 2,992 2,964 2,992 Property, plant and equipment and software 1,953 1,425 1,953 1,425 Provisions 282 124 282 124 Frequency licences 684 693 650 615 Funding 92 338 92 338 Doubtful debts 34 29 34 29 Other 463 542 464 542 Tax losses 553 0 553 0 Derivative financial instruments 17 406 17 406 11,233 12,323 11,200 12,245

Group and Company 2009 2008 $000 $000 e) Imputation credit account Balance at start of the year 14,751 12,210 Income tax paid/(received) during the year 1,785 2,541 Credits attached to dividends paid during the year (5,073) 0 Balance at end of the year 11,463 14,751

The Company and subsidiaries are part of the same consolidated tax group, therefore the imputation credits available to the Group and the Company are the same. 44 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

Group Company 2009 2008 2009 2008 $000 $000 $000 $000

9) Cash and cash equivalents

Cash at bank and in hand 186 218 186 218 Short term deposits 1,861 5,123 1,861 5,123 Cash and cash equivalents 2,047 5,341 2,047 5,341 Bank overdrafts used for cash management purposes (171) (567) (171) (567) Cash and cash equivalents in the statement of cash flows 1,876 4,774 1,876 4,774

10) Receivables and prepayments

Trade receivables 34,940 42,108 34,940 42,108 Less provision for receivables impairment (114) (96) (114) (96) Prepaid programme rights 7,624 11,774 7,624 11,774 Prepayments - other 5,672 11,536 5,672 11,536 Tax receivable 2,338 942 2,354 942 50,460 66,264 50,476 66,264 a) Provision for receivables impairment Trade receivables are non interest bearing and are generally on 30-60 day terms. A provision for receivables impairment is recognised when there is objective evidence that the receivable is impaired.

Movements in the provision for receivables impairment At 1 July 96 312 96 312 Charge/(reversal) for the year 108 (169) 108 (169) Amounts written off (90) (47) (90) (47) At 30 June 114 96 114 96

Trade receivables that are less than 90 days overdue are not considered impaired. As at 30 June 2009 trade receivables of $1,228,000 (2008: $2,728,000) were past due but not considered impaired. Direct contact has been made with these debtors and the Company is satisfied that payment will be made in full. Payment terms on these amounts have not been renegotiated however credit has been stopped until full payment is made. At 30 June, the ageing analysis of trade receivables is as follows:

Current 33,598 39,284 33,598 39,284 Up to 30 days overdue 992 2,306 992 2,306 Between 30 and 90 days overdue 175 347 175 347 Over 90 days overdue - past due not impaired 61 75 61 75 Over 90 days overdue - past due considered impaired 114 96 114 96 34,940 42,108 34,940 42,108 b) Fair value and credit risk Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value (refer note 20 for details of credit risk). 45 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

11) Property, plant and equipment

Group and Company Land & Plant & Motor Work in buildings equipment vehicles progress Total $000 $000 $000 $000 $000

Year ended 30 June 2009 At 1 July 2008 net of accumulated depreciation and impairment 65,437 35,509 799 8,567 110,312 Additions 1,200 5,480 0 4,886 11,566 Reclassification from WIP 183 6,031 88 (6,302) 0 Reclassification open WIP to intangibles 0 0 0 (1,049) (1,049) Disposals 0 (10) 0 0 (10) Depreciation charge (2,862) (10,380) (182) 0 (13,424) Closing net book amount 63,958 36,630 705 6,102 107,395

At 30 June 2009 Cost 105,249 184,228 2,574 6,102 298,153 Accumulated depreciation (41,291) (147,598) (1,869) 0 (190,758) 63,958 36,630 705 6,102 107,395

Year ended 30 June 2008 At 1 July 2007 net of accumulated depreciation and impairment 65,077 32,550 860 6,648 105,135 Additions 1,473 12,945 115 1,919 16,452 Disposals (11) (440) 0 0 (451) Assets held for sale transferred back 1,620 0 0 0 1,620 Depreciation charge (2,722) (9,546) (176) 0 (12,444) Closing net book amount 65,437 35,509 799 8,567 110,312

At 30 June 2008 Cost 103,866 173,200 2,486 8,567 288,119 Accumulated depreciation (38,429) (137,691) (1,687) 0 (177,807) 65,437 35,509 799 8,567 110,312

The Directors are satisfied that the fair value of land and buildings is not less than their book value and that there has been no permanent diminution in the overall value of land and buildings. 46 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

12) Intangible assets

Group and Company Programme Rights Software Licences Total $000 $000 $000 $000

Year ended 30 June 2009 At 1 July 2008 net of accumulated amortisation and impairment 96,168 10,156 3,814 110,138 Additions (internal) 72,997 0 0 72,997 Additions (external) 158,697 9,487 0 168,184 Reclassification from PPE WIP 0 1,049 0 1,049 Amortisation charge (231,589) (2,574) (949) (235,112) Closing net book amount 96,273 18,118 2,865 117,256

At 30 June 2009 Cost 243,374 47,837 17,986 309,197 Accumulated amortisation (147,101) (29,719) (15,121) (191,941) 96,273 18,118 2,865 117,256

Current asset 78,555 0 0 78,555 Non current asset 17,718 18,118 2,865 38,701 96,273 18,118 2,865 117,256

Year ended 30 June 2008 At 1 July 2007 net of accumulated amortisation and impairment 114,252 10,570 4,951 129,773 Additions (internal) 69,527 0 0 69,527 Additions (external) 134,812 2,824 0 137,636 Disposals 0 (914) 0 (914) Amortisation charge (222,423) (2,324) (1,137) (225,884) Closing net book amount 96,168 10,156 3,814 110,138

At 30 June 2008 Cost 247,207 37,301 17,986 302,494 Accumulated amortisation (151,039) (27,145) (14,172) (192,356) 96,168 10,156 3,814 110,138

Current asset 73,514 0 0 73,514 Non current asset 22,654 10,156 3,814 36,624 96,168 10,156 3,814 110,138

Included in software are assets under development of $11,506,000 (2008: $6,384,000). 47 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

Company 2009 2008 $000 $000

13) Investments in subsidiaries Shares 1,594 1,416 Advances to subsidiaries 3,616 81 Advances from subsidiaries 0 (1,357) 5,210 140

The Company’s investment in its subsidiaries comprises shares at cost, advances to/(from) subsidiaries less any provision for impairment. Advances to subsidiaries are interest free, unsecured and repayable on demand.

Subsidiaries of Television New Zealand Limited comprise:

% holding Name Principal activity 2009 2008

TVNZ Satellite Services Limited Non trading 100% 100% nzoom Limited Non trading 100% 100% TVNZ International Limited Non trading 100% 100% Avalon Studios Limited Non trading 100% 100% Horizon Pacific Television Limited and subsidiaries Non trading 100% 100%

All companies are incorporated in New Zealand. All have balance dates of 30 June.

14) Interest in associate The Group acquired a 33% interest in Hybrid Television Services (ANZ) Pty Ltd on 19th March 2009. The total acquisition price was $9,984,000 payable in two equal instalments in June and August 2009. The final instalment is included in trade and other payables.

2009 2008 $000 $000 a) Movement in carrying amount of the Group's investment in associate Hybrid Television Services (ANZ) Pty Ltd - 33% At 1 July 0 0 Acquisition cost 9,984 0 Share of losses after income tax (1,011) 0 Increase in investment 178 0 At 30 June 9,151 0 b) Summarised financial information The following table illustrates summarised financial information relating to the Group's associate.

Current assets 18,377 0 Non current assets 3,851 0 22,228 0

Current liabilities 3,431 0 Non current liabilities 11,973 0 15,404 0 Net assets 6,824 0

Share of associates' net assets 2,252 0

Revenue 19,933 0 Net loss 13,895 0 48 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

15) Interest in joint venture The Company has a 44.9% interest in Freeview Limited an incorporated joint venture with TVWorks Limited, Maori Television Service and Radio New Zealand Limited. Freeview Limited is audited by Ernst Young and has a balance date of 30 June.

The carrying amount of the company’s investment in Freeview Limited is $nil (2008: $nil).

The following table provides summarised financial information relating to the Company’s joint venture:

Extract from the joint venture balance sheet:

2009 2008 $000 $000

Current assets 751 781 Non current assets 815 701 1,566 1,482

Current liabilities 1,156 876 Non current liabilities 410 606 1,566 1,482 Net assets 0 0

Share of joint ventures net assets 0 0

Extract from joint venture income statement: Revenue 6,766 4,918 Net profit 0 0

There are no contingent liabilities relating to the Company’s interest in the joint venture and no contingent liabilities or capital commitments of the venture itself.

Group Company 2009 2008 2009 2008 $000 $000 $000 $000

16) Loans and borrowings Current Bank overdraft (unsecured) 171 567 171 567 Bank borrowings (unsecured) 36,050 0 36,050 0 36,221 567 36,221 567

Non current Bank borrowings (unsecured) 0 27,700 0 27,700

The Group has four revolving cash advance facilities committed to a maximum amount of $120 million (June 2008: $120 million); these facilities expire in January 2010 and are therefore classified as a current liability in 2009. The borrowings at 30 June are drawn down from these facilities. Refer Note 20 for details on management of interest rate risk related to these borrowings. Due to the short term nature of the borrowings, the financing cash flow has been presented as a net movement. a) Fair values The carrying amounts of the Group’s current and non current borrowings approximate their fair value. b) Defaults and breaches During the current and prior years, there were no defaults or breaches of any loan covenants. 49 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

Group Company 2009 2008 2009 2008 $000 $000 $000 $000

17) Trade and other payables Current Trade payables and accruals 44,294 39,440 39,299 39,440 Employee entitlements 7,666 7,417 7,666 7,417 51,960 46,857 46,965 46,857

Fair value Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.

Non-current Employee entitlements 2,047 2,034 2,047 2,034

18) Deferred income Government funding 26,482 34,544 26,482 34,544 Other 457 5,373 457 5,373 26,939 39,917 26,939 39,917 a) Government funding

Group and Company MCH NZOA TMP Total $000 $000 $000 $000

Year ended 30 June 2009 At 1 July 2008 31,454 3,090 0 34,544 Received/invoiced during the year 13,757 24,125 5,290 43,172 Released to the income statement (25,845) (20,099) (5,290) (51,234) Closing net book amount 19,366 7,116 0 26,482

Year ended 30 June 2008 At 1 July 2007 29,300 4,472 0 33,772 Received/invoiced during the year 37,668 9,113 5,371 52,152 Released to the income statement (35,514) (10,495) (5,371) (51,380) Closing net book amount 31,454 3,090 0 34,544

Government funding received during the year was in the form of cash, and has been recorded at fair value. The Ministry for Culture and Heritage (MCH) provides funding to TVNZ to assist in the implementation of the Charter (to June 2008), provide transmission of TVNZ programmes to Pacific nations, maintain non commercial transmission sites and fund TVNZ’s two digital channels broadcast on the Freeview platform. New Zealand on Air (NZOA) funds TVNZ for specific programmes and programme captioning and to assist in the implementation of the Charter (2009 only). Te Mangai Paho provides funding for the production and broadcast of specific programmes. The funding will be recognised in the income statement to match the expenditure associated with this funding. For further details of government funding please refer to the Statement of Service Performance. 50 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

Group Company 2009 2008 2009 2008 $000 $000 $000 $000

19) Provisions Restructuring 1,520 716 1,520 716 Onerous Lease 556 0 556 0 Dividend 0 10,301 0 10,301 2,076 11,017 2,076 11,017 a) Movement in provisions

Group and Company Onerous Restructuring Lease Dividend Total $000 $000 $000 $000

At 1 July 2008 716 0 10,301 11,017 Raised during the year 1,520 556 0 2,076 Utilised during the year (500) 0 (10,301) (10,801) Reversed during the year (216) 0 0 (216) At 30 June 2009 1,520 556 0 2,076

Current 1,520 278 0 1,798 Non-current 0 278 0 278 At 30 June 2009 1,520 556 0 2,076

Current 2008 716 0 10,301 11,017 Non-current 2008 0 0 0 0 At 30 June 2008 716 0 10,301 11,017 b) Nature and timing of provision i) Restructuring provision The current restructuring provision balance relates to the costs of redundancy, outplacement and other costs associated with the reorganisation of TVNZ which commenced in February 2009. ii) Onerous Lease provision The Group has a non-cancellable lease for office and garage space which due to changes in location of resources will no longer be used. The lease expires in 2011. iii) Dividend provision No dividend was declared by the Board prior to year end.

20) Financial risk factors The Group’s activities expose it to a variety of financial risks including currency risk, interest rate risk, credit risk and liquidity risk. The Group’s overall risk management policy seeks to minimise potential adverse effects on the Group’s financial performance.

Treasury policies have been approved by the Board for managing each of these risks including levels of authority on the type and use of financial instruments. The Group enters into derivative transactions, principally forward currency contracts and interest rate swaps, only if they relate to underlying exposures.

The Group has the following categories of financial instruments: Held for trading financial assets (including derivative financial instruments); loans and receivables (including cash and cash equivalents and trade receivables); held for trading financial liabilities (including derivative financial instruments); and financial liabilities measured at amortised cost (including trade and other payables and loans and borrowings).

The carrying amounts of these financial instruments are disclosed on the face of the balance sheet or in each of the applicable notes. 51 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

20) Financial risk factors (continued) Currency risk The Group undertakes transactions denominated in foreign currencies, predominately Australian and US dollars, for programme rights purchases. As a result of these transactions the Group has exposure to foreign exchange risk. The Group’s foreign exchange policy is to hedge a portion of material foreign currency denominated costs at the time of the commitment on a rolling 24 month basis. The Group ensures that its net exposure to foreign denominated cash balances is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short term imbalances.

At 30 June the Group had the following foreign currency exposures that are not specifically hedged.

Group Company 2009 2008 2009 2008 $000 $000 $000 $000

Financial assets Cash and cash equivalents 149 184 149 184 Trade and other receivables 139 1,806 139 1,806 Loan to associate 2,197 0 2,197 0 2,485 1,990 2,485 1,990

Financial Liabilities Bank overdraft (92) 0 (92) 0 Trade and other payables (15,110) (14,277) (15,110) (14,277) (15,202) (14,277) (15,202) (14,277)

Foreign Currency Derivatives Forward contracts 78,536 85,191 78,536 85,191 Embedded derivatives (20,752) (18,364) (20,752) (18,364) 57,784 66,827 57,784 66,827

Total net exposure 45,067 54,540 45,067 54,540

At 30 June , had the New Zealand dollar strengthened/(weakened) by 10% against foreign currencies with all other variables held constant, post tax profit and equity would have been (lower)/higher as follows: a) Government funding Group and Company Post Tax Proft Equity +10% (10%) +10% (10%)

2009 (3,326) 3,326 (3,350) 3,350 2008 (4,049) 4,049 (4,049) 4,049

Interest rate risk The Group’s exposure to interest rate risk relates primarily to long term borrowings. At 30 June, the Group had the following mix of financial assets and liabilities exposed to variable interest rate risk that are not designated in cash flow hedges:

Interest risk

Group Company 2009 2008 2009 2008 $000 $000 $000 $000

Financial assets Cash and cash equivalents 2,047 5,341 2,047 5,341

Financial liabilities Bank overdrafts (171) (567) (171) (567) Bank loans (16,050) (7,700) (16,050) (7,700) Net exposure (14,174) (2,926) (14,174) (2,926) 52 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

20) Financial risk factors (continued) The Group’s interest rate policy is to have between 0% and 100% of its borrowings at fixed rates over the medium term. The Group uses interest rate swaps in order to achieve the desired mix between fixed and floating rates. These swaps are designated to hedge underlying debt obligations. At 30 June 2009, after taking into account the effect of interest rate swaps, approximately 55% of the Group’s borrowings are at a fixed rate of interest (2008: 72%).

At 30 June, if interest rates had increased/(decreased) by 1% with all other variables held constant, post tax profit and equity would have been (lower)/higher as follows:

Group and Company Post Tax Proft Equity +1% (1%) +1% (1%)

2009 (239) 239 (239) 239 2008 (151) 151 (151) 151

Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its obligations. In the normal course of business the Group incurs credit risk with financial institutions and trade receivables. The Group has a credit policy which is used to limit counterparty risk through restrictions on the amount of short-term investments that may be placed with any one approved financial institution.

The exposure at balance date equals the carrying value of cash, derivative financial instruments (assets) and trade receivables as shown in the balance sheet and specified in applicable notes.

The major concentration of credit risk within trade receivables is the extension of credit to advertisers through accredited advertising agencies. These agencies are required to comply with a formal accreditation process, which includes the regular review of their financial position. Each accredited agency is required to meet a certain financial ratio or alternatively provide other forms of financial reassurance to the Group. The Group has a credit insurance policy for a selected range of agencies, to protect against loss through default. The Group does not have any other significant concentrations of credit risk.

The Group does not require collateral or security to support financial instruments due to the quality of the financial institutions with which it deals.

Liquidity risk Liquidity risk is the risk that the Group and Company may be unable to meet its financial obligations as they fall due. It is the Group’s policy to ensure that adequate funding is available at all times to meet future commitments as they arise. Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flows.

At 30 June 2009 the Group has available $83,950,000 (2008: $92,300,000) of un-drawn committed facilities. These bank facilities expire in January 2010. The Group is currently seeking new finance facilities from the existing facility providers with the intention of having new committed facilities in place prior to December 2009.

The considered view of the directors is that, after making due enquiry, there is a reasonable expectation that the Group has adequate resources to continue operations at existing levels for the next 12 months from 30 September 2009.

The Group is reliant on the continued financial support of the banks to extend financing before the relevant roll over date. To date the banks have not given any indication that they will call their debt or not provide funding to the Group. All covenants have been complied with in the current year and at this time it is expected that this will be the case for the next 12 months. To this end the Directors believe that the going concern assumption is a valid basis on which to prepare the financial statements.

If the Group was unable to continue in operational existence, adjustments would have to be made to reflect the situation that assets may need to be realised other than in the normal course of business and at amounts which could differ significantly from amounts which are currently recorded in the balance sheet. In addition, liabilities may need to be recognised for costs associated with the realisation process.

The income and balance sheet statements for the Group do not include any adjustments should the financial support not continue. 53 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

20) Financial risk factors (continued) The table below analyses the contractual cash flows for all financial liabilities and derivatives.

2009 Within One to Two to 1 year two years five years Total Group $000 $000 $000 $000

Bank overdraft 171 0 0 171 Borrowings 36,050 0 0 36,050 Trade and other payables 44,294 0 0 44,294 Interest rate swaps 81 0 0 81 Forward exchange contracts 69,290 11,899 0 81,189 149,886 11,899 0 161,785

Within One to Two to 1 year two years five years Total Parent $000 $000 $000 $000

Bank overdraft 171 0 0 171 Borrowings 36,050 0 0 36,050 Trade and other payables 39,299 0 0 39,299 Interest rate swaps 81 0 0 81 Forward exchange contracts 69,290 11,899 0 81,189 144,891 11,899 0 156,790 2008 Within One to Two to 1 year two years five years Total Group $000 $000 $000 $000

Bank overdraft 567 0 0 567 Borrowings 2,402 29,101 0 31,503 Trade and other payables 39,440 0 0 39,440 Interest rate swaps 12 0 0 12 Forward exchange contracts 60,031 29,187 0 89,218 102,452 58,288 0 160,740

Within One to Two to 1 year two years five years Total Parent $000 $000 $000 $000

Fair value The methods of estimating fair value are outlined in the relevant notes to the financial statements.

Capital management The Group’s capital includes share capital, reserves and retained earnings.

The Crown has a general preference for state-owned enterprises and crown-entity companies (including TVNZ) to manage their balance sheets to a BBB (flat) credit rating. The Group’s capital structure is broadly in line with the Crown’s expectations. The Group targets a gearing ratio of less than 40% (refer note 28e).

There have been no material changes to the Group’s management of capital during the period. 54 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

Group Company 2009 2008 2009 2008 $000 $000 $000 $000

21) Derivative financial instruments Current assets Forward currency contracts - held for trading 3,235 4,970 3,235 4,970 Forward currency contracts - fair value hedge 136 58 136 58 Interest rate swap contracts - cash flow hedge 156 0 156 0 3,527 5,028 3,527 5,028

Non-Current assets Forward currency contracts - held for trading 825 2,489 825 2,489 Foreign currency embedded derivative contracts 26 0 26 0 851 2,489 851 2,489

Current liabilities Forward currency contracts - fair value hedge 136 58 136 58 Foreign currency embedded derivative contracts 80 1,234 80 1,234 Forward currency contracts - cash flow hedge 7 0 7 0 Interest rate swap contracts - cash flow hedge 0 25 0 25 Interest rate swap contracts - held for trading 30 0 30 0 253 1,317 253 1,317

Non-Current liabilities Foreign currency embedded derivative contracts 0 94 0 94 0 94 0 94 a) Instruments used by the Group Derivative financial instruments are used by the Group in the normal course of business in order to hedge exposures to fluctuations in foreign exchange and interest risk. i) Forward currency contracts – held for trading The Group has entered into forward exchange rate contracts which are economic hedges but do not satisfy the requirements for hedge accounting. The following table details the notional amounts of these derivative financial instruments at balance date.

Group and Company 2009 2008 NZD NZD $000 $000

Buy AUD/Sell NZD - Maturity 0 - 12 months 64,872 52,851 Buy AUD/Sell NZD - Maturity 13 - 24 months 11,899 29,187 Buy EUR/Sell NZD - Maturity 0 - 12 months 1,765 3,152 ii) Forward currency contracts – fair value hedge The Group has entered into forward exchange rate contracts which are economic hedges against the purchase of certain capital, programme rights and production expenditure. The fair value gains/(losses) on the hedged item are equal to the fair value gains/(losses) of the hedging instrument. The following table details the notional amounts of these derivative financial instruments at balance date.

Buy EUR/Sell NZD - Maturity 0 - 12 months 1,569 1,554 Buy GBP/Sell NZD - Maturity 0 - 12 months 202 379 Buy USD/Sell NZD - Maturity 0 - 12 months 882 2,095 55 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

21) Derivative financial instruments (continued)

Group and Company 2009 2008 NZD NZD $000 $000 iii) Foreign currency embedded derivatives The Group has entered into programme supply contracts that contain a foreign currency embedded derivative. The following table details the notional amounts of these embedded derivatives at balance date.

Sell AUD/Buy NZD - Maturity 0 - 12 months 18,619 16,774 Sell AUD/Buy NZD - Maturity 13 - 24 months 2,133 1,590 iv) Interest rate swaps – cash flow hedges To protect against rising interest rates the Group hedges its borrowings by entering into interest rate swaps contracts under which it has the right to receive interest at fixed rates and pay interest at variable rates. All interest rate swaps are current and have a notional value at balance date of $20,000,000 (2008: $20,000,000). As at 30 June 2009 there were also interest rate swaps with a notional value of $15,000,000 (2008: nil) that were not designated as cash flow hedges.

22) Share capital and reserves For movements in share capital and reserves refer to the Statement of Changes in Equity. a) Share capital As at 30 June 2009 there were 140,000,000 shares issued and fully paid (2008: 140,000,000). All ordinary shares rank equally with one vote per share and carry rights to dividends.

Upon winding up, shareholders rank equally with regard to the companies residual assets. b) Nature and purpose of the Cash Flow Hedge Reserve This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.

Group Company 2009 2008 2009 2008 $000 $000 $000 $000

Net movement in cash flow hedge reserve Gain/(loss) taken to equity 84 (17) 84 (17) Transferred to cost of hedged item 17 (96) 17 (96) 101 (113) 101 (113) 23) Cash flow statement reconciliation Reconciliation of net profit after tax to net cash flows from operations

Net profit 2,102 19,426 3,077 19,467 Adjustments for: Depreciation 13,424 12,444 13,424 12,444 Amortisation 3,523 3,461 3,523 3,461 Gain on disposal of property, plant and equipment (25) (106) (25) (106) Unrealised foreign currency losses (955) 2,019 (955) 2,019 Share of associate net losses 1,011 0 0 0

Changes in assets and liabilities (Increase)/decrease in receivables and prepayments 17,138 (14,439) 17,138 (14,462) (Increase)/decrease derivative financial instruments 2,125 (12,747) 2,125 (12,747) (Increase)/decrease deferred tax asset 1,048 6,186 1,001 6,136 (Increase)/decrease inventories 26 47 26 46 (Increase)/decrease programme rights (105) 18,084 (105) 18,084 Increase/(decrease) trade and other payables 1,080 (9,245) 1,080 (9,645) Increase/(decrease) deferred income (12,978) 5,267 (12,978) 5,667 Increase/(decrease) income tax payable (1,396) 2,100 (1,412) 2,077 Increase/(decrease) provisions 1,360 (7,263) 1,360 (7,263) Net cash from operating activities 27,378 25,234 27,279 25,178 56 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

24) Related party disclosures a) Subsidiaries The consolidated financial statements include the financial statements of Television New Zealand Limited and its subsidiaries, listed in note 13. The company did not purchase or supply goods and services from or to any of its subsidiaries during the year (2008: $nil). b) Joint venture The following table provides the total amount of transactions that were entered into with Freeview Limited.

Company 2009 2008 $000 $000

Joint Venture Sales and Funding to/from Freeview Limited 2,787 1,753 Purchases from Freeview Limited 642 600

Amounts owed by Freeview Limited 491 21 Amounts owed to Freeview Limited 9 60

All transactions with the joint venture arise in the normal course of business on an arm’s length basis. None of the balances are secured. c) Associate Loan to Hybrid Television Services (ANZ) Pty Ltd 2,197 0

The loan to associate is interest free and repayable as soon as the associate is able to repay funds. d) Government entities Funding from Government entities 51,234 51,380 Sales to Government entities 1,456 2,069 Purchases from Government entities 24,714 25,108

Amounts owed by Government entities 1,702 349 Amounts owed to Government entities 0 46

Revenue in advance from Government entities 26,482 34,544

All sales and purchases with Government owned entities arise in the normal course of business on an arm’s length basis. None of the balances are secured. e) Key management personnel Key management consists of TVNZ’s Chief Executive Officer and the members of the executive team. Key management personnel compensation is as follows:

Salary and other short term benefits 3,447 2,765 Defined contribution superannuation expense 169 115 3,616 2,880

Certain key management personnel are also non-executive directors of companies with which TVNZ has transactions in the normal course of business. Any transactions undertaken with these entities have been entered into on an arm’s length commercial basis. e) Directors Directors fees 323 330

Certain Directors are also non-executive directors of companies with which TVNZ has transactions in the normal course of business. Any transactions undertaken with these entities have been entered into on an arm’s length commercial basis. 57 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

Group and Company 2009 2008 $000 $000

25) Commitments a) Programme rights Within one year 94,873 87,266 One to two years 68,899 74,804 Two to five years 62,904 105,940 Later than five years 0 0 226,676 268,010

Commitments for programme rights are primarily denominated in Australian dollars and are converted at the exchange rate ruling at the date of transaction and revalued at year end. The commitments are determined with reference to the licence period start dates. b) Operating leases Within one year 4,032 4,159 One to two years 2,738 2,914 Two to five years 3,205 3,650 Later than five years 0 581 9,975 11,304

Neither the Company nor the Group had any finance lease commitments at balance date (2008: nil). c) Property, plant and equipment and software Within one year 5,185 4,781

26) Contingent liabilities In the normal course of business various legal claims have been made against Television New Zealand Limited. Given the stage of proceedings and uncertainty as to the outcomes of the cases, no estimate of the financial effect can be made and no provision for any potential liability has been made in the financial statements.

27) Events after the balance sheet date On 27 August 2009 the Board of Directors declared a final dividend of $1,471,400, 1.05 cents per share, (2008 – $10,301,500, 7.35cents per share) to be paid in September 2009.

There have been no other significant events occurring since balance date requiring disclosure. 58 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

28) Comparison of budget to actual results

Group Actual Budget $000 $000 a) Financial Performance Income 384,786 414,507 Operating expenses (374,645) (387,719)

Earnings before non recurring expenditure, interest, tax and financial instruments 10,141 26,788

Reorganisation costs (3,729) 0 Interest expense (2,173) (3,560) Financial instruments/foreign currency gains/(losses) 376 0 Share of results of associated company (1,011) 0 Income tax expense (1,502) (6,968) Net profit for the year 2,102 16,260 b) Movements in equity Net profit for the year 2,102 16,260 Distributions to the shareholder 0 (11,382) Effective portion of changes in fair value of cash flow hedges, net of tax 101 0 Movements in equity for the year 2,203 4,878 Equity at start of the year 182,689 178,059 Equity at end of the year 184,892 182,937

The decrease in operating revenue primarily relates to lower advertising revenues as a result of the economic downturn. Operating expenses are below budget levels. Interest expense is below budget due to lower average levels of borrowings and lower interest rates. Fair value changes in financial instruments are not budgeted for due to inherent volatility in exchange rates; there was a small positive result for the year. The positive income tax variance is a direct result of lower profits.

The budgeted distributions to shareholders are based on 70% of the net surplus (before fair value changes in financial instruments) and the dividend being declared prior to year end; no dividend was declared prior to year end. c) Financial Position Current assets 134,818 115,147 Non current assets 169,570 179,397 Total assets employed 304,388 294,544

Current liabilities 117,171 90,033 Non current liabilities 2,325 21,974 Total liabilities 119,496 112,007

Share capital 140,000 140,000 Cash flow hedge reserves 84 0 Retained earnings 44,808 42,537 Total equity 184,892 182,537 Total equity and liabilities 304,388 294,544

Certain balance sheet budgeted amounts have been reclassified to give a direct comparison to actual results. Current asset values are greater than budget and reflect a greater portion of current programme rights and higher levels of cash than budgeted. Non current assets are below budget as expenditure on property, plant and equipment and software intangibles was below budget and a lower proportion of programme rights partly offset by the investment in Hybrid Television Services (ANZ) Pty Ltd (HTS). The mix of current and term liabilities has changed as all debt is classified as current in the financial statements. Overall increase in liabilities reflects lower cash flows for the year and the amount owing on the Hybrid investment. 59 / TVNZ ANNUAL REPORT FY2009

Notes to the Financial Statements (continued) For the year ended 30 June 2009

28) Comparison of budget to actual results (continued)

Group Actual Budget $000 $000 d) Cash flows Net cash flows from/(to): Operating activities 27,378 39,820 Investing activities (28,384) (30,820) Financing activities (1,951) (12,500) Net (decrease)/increase in cash held (2,957) (3,500)

Add opening cash brought forward 4,774 3,700 Net foreign exchange differences 59 0 Ending cash carried forward 1,876 200

Lower revenues and the investment in HTS have been partly offset by lower levels of expenditure on property plant and equipment and intangibles have resulted in increased borrowings. e) Performance Targets Profitability Return on average equity 1.0% 9.0% excludes net tax effect of financial instruments/foreign currency gains/(losses) EBITDRA/Core television revenue 9.1% 13.4% Gearing Net interest bearing debt/net interest bearing debt plus equity 16.4% < 40% Financial Stability Total equity/Total assets 60.7% > 40% Interest Cover EBITDRA/Interest expense 12.5 times > 4 times

EBITDRA – earnings before interest, tax, depreciation, amortisation, reorganisation costs and revaluation of financial instruments. 60 / TVNZ ANNUAL REPORT FY2009

Statement of Service Performance For the year ended 30 June 2009

This statement reports on the performance of Television New Zealand Limited (TVNZ) in relation to the output targets set in the Statement of Intent for the year ended 30 June 2009.

TVNZ reports under the Crown Entities Act 2004. Under this Act, TVNZ’s expectations of revenue and related outputs were stated in the Statement of Intent for the year ended 30 June 2009 for all categories of funding from the Crown.

TVNZ has been granted an exemption under section 143 of the Crown Entities Act from including in its Statement of Service Performance outputs which are not directly funded (in whole or in part) by the Crown. a) Direct Government funding from the Ministry for Culture and Heritage and NZ On Air to assist TVNZ to implement the Charter The Government has provided TVNZ with direct funding through Vote Arts, Culture and Heritage. This funding is for programmes and initiatives that TVNZ would not have committed funding to in a wholly commercial environment.

The table on pages 61 and 62 details the programmes that have been broadcast in the period 1 July 2008 to 30 June 2009 that were funded by direct government funding, and the financial year in which TVNZ received the funding.

In addition to the table of programmes broadcast during the period, the following table reconciles the receipt of direct government funding by fiscal year with the year of broadcast of the programmes for which the funds were used.

There is generally a time lag between receipt of funding and broadcast of the programmes.

The programmes funded by direct government funding in FY2003 – FY2005 were all broadcast prior to 1 July 2008 and are therefore not included in the tables below. i) Reconciliation of funding received by year of broadcast

Direct Government Funding Received: $

FY2006 (MCH) 15,111,110 FY2007 (MCH) 15,111,000 FY2008 (MCH) 15,111,000 FY2009 (NZOA) 15,111,000 60,444,110

Direct Government Funded Programmes Broadcast:

Funding Year FY2006 FY2007 FY2008 FY2009 Total $ $ $ $ $ Year of Broadcast FY2006 6,435,816 6,435,816 FY2007 1,677,180 4,976,223 6,653,403 FY2008 1,311,022 6,810,572 9,195,137 17,316,731 FY2009 2,497,321 1,718,951 1,686,393 10,888,642 16,791,307 11,921,339 13,505,746 10,881,530 10,888,642 47,197,257 Still to Broadcast 3,189,771 1,605,254 4,229,470 4,222,358 13,246,853 Total Funding 15,111,110 15,111,000 15,111,000 15,111,000 60,444,110 61 / TVNZ ANNUAL REPORT FY2009 285,600 928,500 792,000 964,100 754,200 299,800 955,400 703,300 456,700 518,300 831,900 Reach 5+ 2,112,900 2,335,300 1,702,400 1,371,300 1,969,900 2,478,600 2,120,500 1,605,000 2,015,700 1,834,700 1,132,400 1,084,800 Audience FY2009 468,806 462,500 580,000 385,146 15,000 18,100 77,348 FY2008 158,549 544,918 495,542 165,000 151,936 Funding Year FY2007 240,000 357,500 192,500 228,000 330,000 119,921 150,000 150,441 377,880 375,000 404,000 1,040,000 FY2006 15,000 18,100 $ 544,918 240,000 150,000 158,549 468,806 150,441 377,880 375,000 404,000 330,000 165,000 357,500 192,500 495,542 228,000 580,000 539,848 119,921 151,936 385,146 271,857 1,040,000 2,973,915 2,737,321 1,504,994 Funding 3.0 4.0 2.0 5.5 9.5 1.8 2.0 2.0 6.5 3.0 3.0 1.5 6.5 3.5 5.0 4.0 2.0 8.5 7.0 1.5 8.5 13.0 22.0 15.0 46.5 31.3 45.5 Hours Jan Jan Jun Apr Apr Feb Nov May Jul - Oct Jul - Dec Jul - Dec Jul - Nov Month of Apr - Jun Feb - Jun Mar - Jun Mar - Jun Nov - Jan Oct - Nov Sep - Nov Aug - Sep Feb - May Aug - Nov Aug - Nov Transmission of S ervice P erformance ( continued ) S tatement F or t h e year ended 30 J une 2009 Country Calendar 2008* Country Calendar 2009* Mucking In 2008 Documentary/Factual Total Drama/Comedy The Pretender* Piece of My Heart* Innocent* Until Proven Show of Hands* Strings* Apron Diplomatic Immunity* Go Girls* Drama/Comedy Total Dirt/Off The Radar* Dirt/Off Homegrown* Piha Rescue How the Other Half Lives* to Stay Series 2* Here The School of Success* Lost In Libya* Total Current Affairs Current Total Documentary/Factual Attitude Paralympic Documentaries ii) Funded programmes Programme Arts Artsville* The Life & Art of Alun Bollinger Arts Total Affairs Current Eye to Q & A Agenda 62 / TVNZ ANNUAL REPORT FY2009 664,700 474,800 374,600 155,100 352,900 385,300 234,700 476,300 970,000 Reach 5+ 1,161,700 1,873,400 3,557,600 2,384,300 1,713,800 2,095,300 1,010,800 Audience 23,035 59,040 18,495 48,725 98,471 38,716 20,542 50,055 FY2009 425,582 265,151 278,733 199,998 4,560,934 1,246,233 1,658,480 10,888,642 60,000 FY2008 1,686,393 Funding Year FY2007 251,030 1,718,951 FY2006 2,497,321 $ Funding 18,495 59,040 6,560,934 425,582 48,725 98,471 60,000 16,791,307 265,151 23,035 38,716 20,542 50,055 632,778 1,246,233 278,733 2,109,508 4,560,934 199,998 1,658,480 251,030 2.5 2.0 1.3 3.0 1.0 9.0 2.0 2.0 8.0 1.5 n/a 15.0 79.0 13.8 20.8 26.0 20.3 11.5 203.3 Hours 358.5 522.0 Jul Jan Jan Feb Sep Feb Feb Sep Dec Nov Aug Jul - Oct Jul - Aug Month of Apr - Jun Feb - Apr Oct - Dec Transmission of S ervice P erformance ( continued ) S tatement F or t h e year ended 30 J une 2009 *These programmes were jointly funded with NZ On Air/Te Mangai Paho. jointly funded with NZ On Air/Te were *These programmes at any time during a specified period. people who viewed a particular programme Audience Reach is the total number of different first run only. included in this table are The programmes Triathlon Triathlon Sport Total Special I nterest Beijing Paralympics Hokianga Mai - Armistice Day Coming Home Te Day Waitangi Farmer Young Womens World Cup Soccer World Womens Hockey Tennis Beach Volleyball Total Direct GovernmentTransmitted Direct Funded P rogrammes Total Total Special I nterest Total Programme Netball Netball Other Minority Sport Sport Beijing Olympics Entertainment Sir With Love* To Town* Top Life This Is Your Entertainment Total ii) Funded programmes (continued) ii) Funded programmes 63 / TVNZ ANNUAL REPORT FY2009

Statement of Service Performance (continued) For the year ended 30 June 2009 b) Programme funding from NZ On Air On a specific programme-by-programme basis, funding is received from NZ On Air. The table below notes the specific funding received directly by TVNZ, from NZ On Air. This table excludes NZ On Air funding provided directly to independent production companies for programmes broadcast by TVNZ.

Month of Funding Audience Programme Hours Transmission $ Reach 5+

Arts Artsville Nov - Jan 11.5 37,327 1,270,880 Total Arts 11.5 37,327

Entertainment World of Wearable Arts Awards Nov 1.0 139,635 217,750 Total Entertainment 1.0 139,635

Factual Country Calendar Feb - Jun 9.5 390,000 2,335,330 Total Factual 9.5 390,000

Maori I Am TV 2008 Jul - Dec 24.0 953,610 1,003,690 I Am TV 2009 Apr - Jun 12.0 495,544 702,820 Polyfest May - Jun 2.5 200,728 469,230 Total Maori 38.5 1,649,882

Sport Paralympics Sep 15.0 284,769 1,161,690 Halberg Awards Feb 1.5 85,898 796,760 Total Sport 16.5 370,667

Special Interest Cinderella Dec 1.5 284,196 77,280 Anzac Day Wreath laying Apr 1.5 47,641 273,790 Anzac Day Dawn Service Apr 0.8 59,763 72,890 Praise Be 2008 Jul - Feb 11.0 231,389 613,090 Praise Be 2009 Feb - Jun 10.5 212,099 639,480 Tagata Pasifika 2008 Jul - Mar 19.5 1,040,250 952,910 Tagata Pasifika 2009 Mar - Jun 7.0 389,124 526,410 Total Special Interest 51.8 2,264,462

Childrens Studio 2 2008 Jul - Dec 51.5 1,316,906 1,824,110 Studio 2 2009 Apr - Jun 23.5 593,579 1,419,250 Total Childrens 75.0 1,910,485

Total NZ On Air 203.8 6,762,458

Audience Reach is the total number of different people who viewed a particular programme at any time during a specified time period.

The programmes included in this table are first run only.

Statement of Service Performance (continued) For the year ended 30 June 2009 c) Programme funding from Te Mangai Paho Te Mangai Paho funds TVNZ for the production and broadcast of certain programmes. The use of Te Mangai Paho funding is for payment of costs and expenses identified in the various programme budgets.

Month of Funding Audience Programme Hours Transmission $ Reach 5+

Marae 2008 / 09 Aug - Jun 19.0 1,337,608 688,550 Te Karere 2008 Jul - Dec 33.0 1,155,889 1,296,130 Te Karere 2009 Jan - Jun 59.0 1,107,824 1,755,080 Waka Huia 2008 / 09 Aug - Jun 36.0 1,463,580 1,134,880

Total TMP 147.0 5,064,901

Audience Reach is the total number of different people who viewed a particular programme at any time during a specified time period.

The programmes included in this table are first run only.

TVNZ has met the forecast standard through completing each production in accordance with the proposal for the production and the production specifications, such that the programmes were permitted to be broadcast. d) Funding for programme captioning from NZ On Air NZ On Air funds TVNZ for the purpose of providing a captioning service on TV ONE, TV2 and TV3. This funding is used to provide continuous prime time coverage (with any failure rate not to exceed a weekly rate of 10% of non captioned hours) and at least ten hours of children’s programmes per week. In addition, the daily 6pm ONE News and Tonight bulletins and Close Up must be captioned and an English language subtitling service is provided for the Maori language news programme Te Karere.

Total funding received from NZ On Air: $1,900,000

Actual Performance Target Performance Measure Measure

Continuous captioning during prime time (6.00pm – 10.00pm) 100% 90% on TV ONE, TV2 and TV3. At least ten hours of children’s programmes captioned per week (average) 24 Hours 10 Hours Subtitles for Te Karere (repeat screening) every weekday 99.6% 100% Captions for ONE News 6.00pm daily 100% 100% Captions for Tonight every week night 99.6% 100% Captions for Close Up every week night 100% 100% Minimum 135 hrs per week (average) on TVNZ channels 165.9 hrs per week 135 hrs per week Minimum 40 hrs per week (average) during prime time on TVNZ channels 53.7 hrs per week 40 hrs per week Average 15hrs per week on TV3 33.1 hrs per week 15 hrs per week

Outside of contractual expectations of NZ On Air, any programme playing on the new digital channels TVNZ 6 and TVNZ 7 that had previously gone to air with captions and still had captions embedded is also screened with captions. This has increased the volume of captioned programmes on TVNZ channels to an average of 197 hours per week.

TVNZ has achieved the performance standard through meeting, and in most cases exceeding, the contractual conditions agreed with the funding authority. 65 / TVNZ ANNUAL REPORT FY2009

Statement of Service Performance (continued) For the year ended 30 June 2009 e) Transmitting TVNZ programmes to Pacific nations with funding from the Ministry for Culture and Heritage The transmission funding received by TVNZ is to enable it to transmit programming by satellite to Pacific nations.

TVNZ undertakes to provide a minimum 11 hours transmission of TVNZ programming to Pacific nations weekly, such programming to include the daily transmission of ONE News, the weekly transmission of Tagata Pasifika and the transmission of other programmes relevant to the Pacific nations.

There are 18 broadcasters from the following Pacific nations receiving programming: • Cook Islands • Vanuatu • Samoa • Tuvalu • US Samoa • Fiji • Niue • Solomon Islands • Tonga • Marshall Islands • Nauru • Kiribati

Total funding received from the Ministry for Culture and Heritage: $607,000.

Total costs of transmission: $681,836. The additional costs utilised unspent funding from the prior year.

Programmes Transmitted Hours ONE News 365.0 Close Up 88.5 South Pacific Arts Festival 32.3 Tagata Pasifika 27.0 I Am TV 21.0 Taste NZ 17.0 Country Calendar 14.0 Mucking In 10.0 Elections 6.8 Netball (New Zealand vs Australia) 4.0 King of Tonga Coronation 3.5 Waka Huia 2.5 Rugby League 2.2 Polyfest 2.0 Total Hours 595.8

In addition to these hours, TVNZ’s Pacific Service in collaboration with the International Olympic Committee enabled viewers throughout the Pacific to access coverage of the 2008 Beijing Olympic Games totalling 240 hours. f) Maintaining non-commercial transmission sites with funding from the Ministry for Culture and Heritage This funding is to assist the transmission coverage of the TV ONE and TV2 signals to those New Zealand communities that would not otherwise receive a commercially viable terrestrial signal.

The Company operates and maintains 152 non-commercial transmission sites in accordance with the Memorandum of Understanding with the Ministry for Culture and Heritage.

TVNZ undertakes to meet performance standards including the quality of the signal, maintenance and responses to faults, and to provide performance reports at six-monthly intervals. It contracts transmission company Kordia to provide services to discharge these obligations.

The required performance standard was achieved through compliance with covenants contained in the Memorandum of Understanding.

TVNZ incurs annual costs of approximately $17,000,000 for the maintenance and operation of analogue terrestrial transmission including transmission from the non-commercial sites. The estimated annual operating costs of maintaining transmission from the non-commercial sites is approximately $1,551,000.

Total funding received from the Ministry for Culture and Heritage, to subsidise the cost of maintaining transmission from the non-commercial transmission sites, was $1,150,000. 66 / TVNZ ANNUAL REPORT FY2009

Statement of Service Performance (continued) For the year ended 30 June 2009 g) Funding for TVNZ’s two digital channels for the Freeview platform from the Ministry for Culture and Heritage TVNZ’s digital channels – TVNZ 6 and TVNZ 7 - are supported by a combination of shareholder investment and internal leverage of existing infrastructure and support systems. Shareholder investment funding of $79 million over six years through the Ministry for Culture and Heritage allows TVNZ to operate the channels in an advertising-free environment which, in turn, allows a stronger public broadcasting ethos than would be possible in a fully commercial model.

TVNZ 6 has been operating since September 30th 2007 and offered three distinct strands or sub-brands: Kidzone, TVNZ Family and TVNZ Showcase. On Sunday 28th June 2009 a new TVNZ 6 schedule was launched, retaining only the Kidzone sub-brand (extended by two hours), with the remainder of the schedule focusing on ‘shared viewing’ by a family audience.

TVNZ 7 has been operating since March 30th 2008 and focuses on factual and current affairs programming. Since Sunday June 28th 2009 Showcase type programming that formerly formed part of the TVNZ 6 schedule has been integrated into the TVNZ 7 schedule.

The total funding received from the Ministry for Culture and Heritage in FY2009 was $12,000,000. To 30th June 2009 TVNZ had received operational funding to the value of $38,000,000.

Funding received $ FY2007 5,200,000 FY2008 20,800,000 FY2009 12,000,000 38,000,000

The following table reconciles the receipt of government funding by fiscal year with the year the revenue was recognised in the income statement.

FY2007 FY2008 FY2009 Total Funding Year $000 $000 $000 $000

Year of recognition FY2007 1,029 1,029 FY2008 4,171 8,467 12,638 FY2009 - 12,333 3,850 16,183 5,200 20,800 3,850 29,850 Still to recognise - - 8,150 8,150 Total Funding 5,200 20,800 12,000 38,000

The following table breaks down the $16,183,000 recognised in FY2009 by area/activity.

FY2009 Actual Budget $000 $000

Funding revenue 16,183 20,213 Other revenue 0 276 Total revenue 16,183 20,489

Expenditure Programme amortisation 11,173 14,008 Other costs 5,010 6,481 Total expenditure 16,183 20,489 Surplus 0 0

In accordance with TVNZ’s accounting policies content costs are only recognised when programmes are transmitted. TVNZ Digital Services have commissioned more programmes than have so far been transmitted. 67 / TVNZ ANNUAL REPORT FY2009

Statement of Service Performance (continued) For the year ended 30 June 2009 g) Funding for TVNZ’s two new digital channels for the Freeview platform from the Ministry for Culture and Heritage (continued)

These commitments are outlined by programming genre in the following table and show that within the period under review $8,295,000 of funding was committed to commissioning local content, and that of this $4,955,000 (60%) has yet to be recognised as those programmes had not been transmitted by 30th June 2009. A lag between commitment and recognition of expenses is normal for commissioned programming.

Total Recognised To be Indicative Original/Commissioned Costs to date Recognised Programme Genres Commitments $000 $000 $000

Arts/Music 3,153 579 2,574 Children's factual 881 342 539 Current Affairs 2,600 2,316 284 Factual 1,518 90 1,428 Pre School 143 13 130 Total Commissioned Programmes 8,295 3,340 4,955

Local Programming For the Total Content costs recognised by TVNZ 6 and TVNZ 7 in FY2009 the following table shows the percentage by genre dedicated to providing local content i.e. New Zealand made content.

Sub-brand TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 7 TVNZ (Ave across all TVNZ Kidzone TVNZ Family Showcase sub-brands) Genre Cumulative % Cumulative % Cumulative % Cumulative % Cumulative %

Arts / Music n/a n/a 93% 50% n/a Children’s Drama n/a 1% n/a 0% n/a Children’s Factual n/a 30% n/a 10% n/a Current Affairs n/a n/a n/a 0% 44% Documentary n/a 1% 0% 1% 1% Drama n/a 4% 3% 3% n/a Entertainment n/a 2% 0% 1% n/a Factual n/a 56% 0% 19% 0% Features (inc Movies) n/a n/a 0% 0% n/a News n/a n/a n/a 0% 52% Pre-School 85% n/a n/a 10% n/a Sport n/a n/a n/a 0% 0% Total 85% 94% 96% 94% 97% Target Average 70% 70% 70% 70% 70% 68 / TVNZ ANNUAL REPORT FY2009

Local Programming (continued) The table below outlines the percentage, by genre, for total schedule hours dedicated to Local Content (cumulative to June 30th 2009).

Sub-brand TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 7 TVNZ (Weighted for TX hrs TVNZ Kidzone TVNZ Family Showcase across all sub-brands) Genre Cumulative % Cumulative % Cumulative % Cumulative % Cumulative %

Arts / Music n/a n/a 16% 3% n/a Children’s Drama n/a 4% n/a 1% n/a Children’s Factual n/a 3% n/a 1% n/a Current Affairs n/a n/a n/a n/a 21% Documentary n/a 2% 3% 1% 16% Drama n/a 9% 35% 9% n/a Entertainment n/a 8% 19% 6% n/a Factual n/a 51% 1% 13% 9% Features (inc Movies) n/a n/a 3% 1% n/a News n/a n/a n/a n/a 34% Pre-School 53% n/a n/a 29% n/a Sport n/a n/a n/a n/a 0% Total 53% 77% 77% 64% 80% Target Average 50% 70% 70% 60% 70%

Well over 50% of the TVNZ Kidzone schedule has been composed of New Zealand made content. For the TVNZ 6 schedule as a whole 64% of the schedule is made up of local content and on TVNZ 7 the figure is 80%. 69 / TVNZ ANNUAL REPORT FY2009

Local Commissioning Of the Total Local Content costs recognised by TVNZ 6 and TVNZ 7 in FY2009 the table below shows the percentage, by genre, dedicated to providing Original / Local Production Commissions ( i.e. new original programming receiving its 1st run on TVNZ 6 and 7)

Sub-brand TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 7 TVNZ TVNZ Kidzone TVNZ Family Showcase Genre Cumulative % Cumulative % Cumulative % Cumulative % Cumulative %

Arts / Music n/a n/a 95% 53% n/a Children’s Drama n/a 0% n/a 0% n/a Children’s Factual n/a 32% n/a 11% n/a Current Affairs n/a n/a n/a 0% 45% Documentary n/a 0% 0% 0% 0% Drama n/a 0% 0% 0% n/a Entertainment n/a 1% 0% 0% n/a Factual n/a 56% 0% 19% 0% Features (inc Movies) n/a n/a 0% 0% n/a News n/a n/a n/a 0% 53% Pre-School 96% n/a n/a 10% n/a Sport n/a n/a n/a 0% 0% Total 96% 89% 95% 93% 98% Target Average 70% 70% 70% 70% 70%

The following table outlines the percentage, by genre, of the total schedule hours dedicated to locally commissioned content. The targets outlined are for the cumulative position at the end of the funding period and the totals shown are the cumulative position at the end of FY2009.

Sub-brand TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 7 TVNZ (Weighted for TX hrs TVNZ Kidzone TVNZ Family Showcase across all sub-brands) Genre Cumulative % Cumulative % Cumulative % Cumulative % Cumulative %

Arts / Music n/a n/a 10% 2% n/a Children’s Drama n/a 0% n/a 0% n/a Children’s Factual n/a 1% n/a 0% n/a Current Affairs n/a n/a n/a n/a 3% Documentary n/a 0% 0% 0% 0% Drama n/a 0% 0% 0% n/a Entertainment n/a 0% 10% 2% n/a Factual n/a 14% 0% 4% 0% Features (inc Movies) n/a n/a 0% 0% n/a News n/a n/a n/a n/a 31% Pre-School 17% n/a n/a 9% n/a Sport n/a n/a n/a n/a 0% Total 17% 15% 20% 17% 34% Target Average 15% 15% 15% 15% 40%

Locally commissioned content accounts for 17% of the TVNZ 6 schedule and 34% of the TVNZ 7 schedule. The TVNZ Kidzone, Family and Showcase schedules have 17%, 15% and 20% respectively, of locally commissioned content

Please note that the combined TVNZ 6 value is not an average as the three sub-brands have different total schedule hours. 70 / TVNZ ANNUAL REPORT FY2009

Awareness and Appreciation As the digital channels are non-commercial they are not included in the daily ratings analysis carried out by AC Nielsen. However, TVNZ commissions research to monitor awareness and appreciation of the digital channels.

Two surveys were conducted during the 2009 fiscal year, the latest in May 2009. Results show that public awareness of the digital channels is growing with 47% of New Zealanders aware of TVNZ 6 and 39% aware of TVNZ 7 (which launched 6 months later). Both TVNZ Kidzone and TVNZ 7 showed strong growth in appreciation.

Objectives The digital channels have four key objectives, which are aspirational rather than legislative, and in the 2009 fiscal year the channels continued to meet these objectives in a number of ways, as outlined below.

• To extend public service broadcasting beyond that provided by TV ONE and TV2:

The re-broadcast of public service programming and the commissioning and acquisition of high quality pre-school and children’s programmes for broadcast during the day.

InBeTween, an issues-based series for young people, was launched on TVNZ 6, with a second series also commissioned during the year and Giggles, a sketch-comedy show for pre-schoolers, was also commissioned for screening on TVNZ 6.

Arts programming - including The Good Word, The Sitting, New Artland, Talk Talk and The Gravy – was commissioned specifically for TVNZ 6 to serve the needs of this niche audience.

TVNZ 6’s partnership with the Department of Conservation for the Meet the Locals interstitials continued – bringing flora and fauna to the fore, enabling the audience to extend their knowledge of New Zealand’s natural heritage.

Once again TVNZ 6 supported Outlook for Someday - the sustainability film challenge for young New Zealanders - by providing media coverage and broadcasting the entries.

TVNZ 7 continued its focus on news, current affairs and other factual content, broadcasting 80% local content - more than a third of which is made specifically for the channel.

As well as rebroadcasting some Election 08 coverage, TVNZ 7 specifically commissioned content to complement the TV ONE coverage, including Leaders on 7 and Swing Seats.

Media 7 kept up debate on and about the multi-media world in which we now live and Back Benches continued to provide an informative – and satirical – view of politics, including a Job Summit special in February.

TV ONE’s coverage of Coming Home – Te Hokinga Mai was also extended on TVNZ 7 with the screening of specially commissioned poignant tributes.

• To make public service broadcasting content more available through scheduling more of it in prime time:

The time-shifted rebroadcast of programmes across diverse areas of interest, including - among others; Te Karere, Attitude, Praise Be, Rural Delivery, Q & A, Waka Huia and Asia Downunder.

The acquisition and screening of programmes that haven’t recently screened on television - including local drama series and a large number of locally produced documentaries.

TVNZ 7’s News at 8 continues to offer extended duration and thus more in-depth coverage of the day’s news.

• To strengthen New Zealanders’ sense of national identity by commissioning more original local content:

Local content % by genre is set out in the tables on page 68.

• To encourage households to switch from analogue to digital reception by promoting TVNZ channels on Freeview:

As of June 2009, Freeview Limited announced that uptake is still well ahead of projections with Freeview now available in 255,048 homes in New Zealand.

The abovementioned Awareness and Appreciation survey also showed the awareness of the digital channels amongst Freeview owners is much greater with TVNZ 6 and TVNZ 7 at 83% and 82% respectively. 71 / TVNZ ANNUAL REPORT FY2009

Statement of Service Performance (continued) For the year ended 30 June 2009 h) Additional goals for each output in FY2009

Crown funded outputs Actual Target a) Direct Government funding to Minimum 250 hours per annum of local 522 hours assist implementation of Charter programming on TV ONE and TV2

Minimum 375 hours per annum of local b) Contestable programme 523.8 hours programming on TV ONE and TV2 (subject to funding from NZ On Air success of applications for contestable funding)

Minimum 130 hours per annum of Maori c) Programme funding from Te Mangai Paho 147 hours programming on TV ONE and TV2 and replays of Maori programming on TVNZ 6

Minimum 150 hours per week of d) Funding for programme 197 hours per week programming captioned on TV captioning from NZ On Air (average) ONE, TV2, TVNZ 6 and TVNZ 7 e) Transmitting TVNZ programmes Minimum 572 hours per annum of 595.8 hours to Pacific Nations programming transmitted to the Pacific

Minimum 100% response to reported f) Maintaining non-commercial 100% breakdowns in transmission within seven transmission coverage days (subject to winter weather constraints) g) Funding for TVNZ’s two new digital channels 64% Minimum 60% local content on TVNZ 6 80% Minimum 70% local content on TVNZ 7 72 / TVNZ ANNUAL REPORT FY2009

Report of the Auditor-General

To the Readers of Television New Zealand Limited and Group’s Financial Statements and Statement of Service Performance For the year ended 30 June 2009

The Auditor-General is the auditor of Television New Zealand Limited (the Company) and Group. The Auditor-General has appointed me, Gordon Fulton, using the staff and resources of Ernst & Young, to carry out the audit. The audit covers the financial statements and statement of service performance included in the annual report of the Company and Group for the year ended 30 June 2009.

Unqualified Opinion In our opinion:

• The financial statements of the Company and Group on pages 32 to 59:

• comply with generally accepted accounting practice in New Zealand;

• comply with International Financial Reporting Standards; and

• give a true and fair view of:

- the Company and Group’s financial position as at 30 June 2009; and

- the results of operations and cash flows for the year ended on that date.

The statement of service performance of the Company and Group on pages 60 to 71:

• complies with generally accepted accounting practice in New Zealand; and

• gives a true and fair view of, for each class of outputs:

- standards of delivery performance achieved, as compared with the forecast standards outlined in the statement of forecast service performance adopted at the start of the financial year; and

- actual revenue earned and output expenses incurred, as compared with the forecast revenues and output expenses outlined in the statement of forecast service performance adopted at the start of the financial year.

• Based on our examination the Company and Group kept proper accounting records.

The audit was completed on 30 September 2009, and is the date at which our opinion is expressed.

The basis of our opinion is explained below. In addition, we outline the responsibilities of the Board of Directors and the Auditor, and explain our independence.

Basis of Opinion We carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the New Zealand Auditing Standards.

We planned and performed the audit to obtain all the information and explanations we considered necessary in order to obtain reasonable assurance that the financial statements and statement of serviceperformance did not have material misstatements, whether caused by fraud or error.

Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the financial statements and statement of service performance. If we had found material misstatements that were not corrected, we would have referred to them in our opinion.

The audit involved performing procedures to test the information presented in the financial statements and statement of service performance. We assessed the results of those procedures in forming our opinion. 73 / TVNZ ANNUAL REPORT FY2009

Audit procedures generally include:

• determining whether significant financial and management controls are working and can be relied on to produce complete and accurate data;

• verifying samples of transactions and account balances;

• performing analyses to identify anomalies in the reported data;

• reviewing significant estimates and judgements made by the Board of Directors;

• confirming year-end balances;

• determining whether accounting policies are appropriate and consistently applied; and

• determining whether all financial statement and statement of service performance disclosures are adequate.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements and statement of service performance.

We evaluated the overall adequacy of the presentation of information in the financial statements and statement of service performance. We obtained all the information and explanations we required to support our opinion above.

Responsibilities of the Board of Directors and the Auditor The Board of Directors is responsible for preparing the financial statements and statement of service performance in accordance with generally accepted accounting practice in New Zealand. The financial statements must give a true and fair view of the financial position of the Company and Group as at 30 June 2009 and the results of operations and cash flows for the year ended on that date. The statement of service performance must give a true and fair view of, for each class of outputs, the Company and Group’s standards of delivery performance achieved and revenue earned and expenses incurred, as compared with the forecast standards, revenue and expenses adopted at the start of the financial year. The Board of Directors’ responsibilities arise from the Financial Reporting Act 1993, the Crown Entities Act 2004 and the Television New Zealand Act 2003.

We are responsible for expressing an independent opinion on the financial statements and statement of service performance and reporting that opinion to you. This responsibility arises from section 15 of the Public Audit Act 2001 and the Crown Entities Act 2004.

Independence When carrying out the audit we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the Institute of Chartered Accountants of New Zealand.

In addition to the audit we have carried out assignments in the areas of other IT assurance services which are compatible with those independence requirements. Other than the audit and these assignments, we have no relationship with or interests in the Company or any of its subsidiaries.

Matters Relating to the Electronic Presentation of the Audited Financial Statements

This audit report relates to the financial statements and statements of service performance of Television New Zealand Limited (“TVNZ”) and Group for the year ending 30 June 2009 included on the TVNZ and group’s website. The TVNZ and Group’s Board of Directors is responsible for the maintenance and integrity of the G A Fulton Television New Zealand Limited website. We have not been engaged to report on the integrity of TVNZ Ernst & Young and Group’s website. We accept no responsibility for any changes that may have occurred to the financial On behalf of the Auditor-General statements and statement of service performance since they were initially presented on the website. Auckland, New Zealand The audit report refers only to the financial statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these financial statements. If readers of this report are concerned with the inherent risks arising from electronic data communication they should refer to the published hard copy of the audited financial statements and related audit report dated 30 September 2009 to confirm the information included in the audited financial statements presented on this website.

Legislation in New Zealand governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 74 / TVNZ ANNUAL REPORT FY2009

Five Year Trend Statement For the year ended 30 June 2009

Current NZ GAAP Previous NZ GAAP 2009 2008 2007 2006 2005 $000 $000 $000 $000 $000

Group Financial Performance Television advertising revenue 298,404 315,540 312,824 334,753 344,130 Other revenue 86,382 76,777 62,147 75,037 92,602 Total income 384,786 392,317 374,971 409,790 436,732 Net surplus/(deficit) after taxation 2,102 19,426 (7,168) 13,302 6,269 Dividends 0 10,301 0 84,525 48,052

Group Financial Position Funds employed: Share capital 140,000 140,000 140,000 140,000 140,000 Reserves 84 (17) 96 0 0 Retained earnings 44,808 42,706 33,581 58,861 130,084 Total equity 184,892 182,689 173,677 198,861 270,084 Current liabilities 117,171 99,675 103,731 62,531 61,036 Term liabilities 2,325 29,828 46,592 50,956 2,528 Total funds employed 304,388 312,192 324,000 312,348 333,648

Assets employed: Current assets 56,263 76,888 70,342 66,240 93,764 Programme rights 96,273 96,168 114,252 114,801 108,916 Property, plant and equipment 107,395 110,312 105,135 117,752 120,312 Deferred tax asset 11,233 12,323 18,455 7,324 3,052 Other non current assets 33,224 16,501 15,816 6,231 7,604 Total assets employed 304,388 312,192 324,000 312,348 333,648

Financial Ratios EBITDRA*/Core television revenue 9.1% 13.6% 8.9% 10.7% 21.0% Net surplus after taxation**/equity (average) 1.0% 8.3% -1.5% 5.7% 2.2% Equity/total assets employed 60.7% 58.5% 53.6% 63.7% 80.9% Interest cover (times) *** 12.5 11.5 6.7 217.5 658.4

* EBITDRA - earnings before interest, tax, depreciation, amortisation, reorganisation costs and revaluation of financial instruments.

** Net surplus after taxation excludes net after tax effect of financial instruments (Current NZ GAAP only).

*** Excludes non recurring items and derivative financial instruments (Current NZ GAAP only). 75 / TVNZ ANNUAL REPORT FY2009

Additional Information

Principal Activity The Group’s principal activity during the year was television (programme content supply and delivery, production, acquisition of television programmes, and online services).

Shareholding The Group is wholly owned by the Crown. The Shareholding Ministers at balance date were: Hon Bill English Minister of Finance Hon Dr Jonathan Coleman Minister of Broadcasting

Directors Mr Phillip Melchior’s term ended on 30 April 2009.

Auditor The Auditor-General is the auditor of the Group in accordance with Section 14 (1) of the Public Audit Act 2001 and has appointed Gordon Fulton of Ernst & Young to act for and on his behalf as auditor in 2009.

General Disclosures The following disclosure of interests were made to the Board:

Directors’ Disclosures General disclosures of interest given by the Company pursuant to Section 211 of the Companies Act 1993 as at 30 June 2009:-

Sir John Anderson, KBE Capital and Coast District Health Board Chairman Commonwealth Bank of Australia Director Hawkes Bay District Health Board Commissioner New Zealand Cricket Foundation Secretary New Zealand Venture Investment Fund Chairman Wellington International Arts Foundation Chairman Wellington Regional Stadium Trust Trustee Wellington Regional Strategy Committee Chairman

Anne Blackburn Centre for Clinical Research and Effective Practice (CCREP) Chairman Chinese Language Foundation Trustee Forsyth Barr Director Meridian Energy Limited Director New Zealand Venture Investment Fund Director Royal New Zealand Ballet Chairman The Boardroom Practice Limited Associate Unitec Council Member (co-opted) Wellington Regional Holdings Limited (and each of its subsidiaries) Director

Robert Fenwick Air New Zealand Environment Trust Trustee Antarctica NZ Chairman BNZ Save the Kiwi Trust Chairman Hauraki Charters Limited Director Living Earth Limited Director National Waste Advisory Board Chairman NZ Business Council for Sustainable Development Board Member Pacific Development & Conservation Trust Trustee Te Matuku Bay Oysters Limited Director Waiheke Fresh Seafoods Limited Director 76 / TVNZ ANNUAL REPORT FY2009

Additional Information (continued)

Directors’ Disclosures (continued) Bryan Gould Eros Capital Limited Consultant National Centre for Tertiary Teaching Excellence Chair New Zealand National Commission for UNESCO Chair Opotiki Community Trust Trustee Red Stag Limited Consultant The Foundation for Research, Science & Technology Chair

Sir John Goulter, KNZM, JP Ngapuhi Asset Holding Company Limited Chairman Northland Deepwater JV Limited Chairman NZ Business & Parliament Trust Chairman Opua Commercial Estate Limited Director Packard House Limited Director Paraparaumu Airport Limited Chairman Reserve Bank of New Zealand Director

June McCabe Crown Health Financing Agency Director FINSIA – Financial Services Institute of Australasia Councillor Hui Taumata Trust Trustee & Board Member MOI Limited Director Payworks Limited Chairman Peace Foundation Councillor Sustainable Prosperity (NZ) Limited Director Te Wai o Aotearoa Trustee Te Wananga o Aotearoa Councillor Tribal Affiliations Ngapuhi Te Rarawa Te Aupouri Ngati Kahu Ngati Kaharau

Specific Disclosures No specific disclosures were given pursuant to Section 211 of the Companies Act 1993.

Use of Company Information No notices have been given to the Board under Section 145 of the Companies Act 1993 with regard to the use of company information received by Directors in their capacity as a Director.

Directors’ Remuneration and Benefits The following persons held the office of director of the Company during the year and received the total amount of remuneration and other benefits shown.

Director $ Sir John Anderson, KBE 80,000 Anne Blackburn 40,000 Robert Fenwick 50,000 Bryan Gould 40,000 Sir John Goulter, KNZM, JP 40,000 June McCabe 40,000 Phillip Melchior 33,333 323,333 77 / TVNZ ANNUAL REPORT FY2009

Additional Information (continued)

Directors’ Indemnity Insurance The Company has arranged directors’ and officers’ liability insurance cover with QBE Insurance (International) Limited for $20 million. The 2009 premium (net of GST) was $15,000. This cover is effected for all directors and employees of the Group.

Employee Remuneration Employee remuneration includes salary, at risk remuneration, payments for projects, programme production, presentation, motor vehicles, employer’s contributions to superannuation and health schemes, redundancy, other compensation on termination of employment and other sundry benefits received in their capacity as employees.

Employees include executives and staff involved in programme production and presentation where applicable.

Employee remuneration in overseas locations has been converted to New Zealand dollars at current exchange rates.

Current Former Employees Employees

$100,000 to $110,000 35 4 $110,001 to $120,000 29 6 $120,001 to $130,000 23 4 $130,001 to $140,000 12 4 $140,001 to $150,000 11 2 $150,001 to $160,000 6 3 $160,001 to $170,000 10 2 $170,001 to $180,000 8 2 $180,001 to $190,000 9 1 $190,001 to $200,000 3 1 $200,001 to $210,000 1 2 $210,001 to $220,000 1 0 $220,001 to $230,000 3 0 $230,001 to $240,000 0 1 $240,001 to $250,000 1 3 $260,001 to $270,000 1 0 $270,001 to $280,000 2 0 $280,001 to $290,000 1 1 $290,001 to $300,000 1 1 $300,001 to $310,000 1 0 $310,001 to $320,000 1 1 $320,001 to $330,000 0 1 $340,001 to $350,000 1 0 $370,001 to $380,000 2 1 $390,001 to $400,000 1 0 $400,001 to $410,000 1 0 $410,001 to $420,000 1 0 $500,001 to $510,000 1 0 $580,001 to $590,000 1 0 $830,001 to $840,000 1 0 168 40

Employee Compensation on Termination of Employment During the year $3,106,676 compensation was paid in total to 87 employees whose employment was terminated. Compensation includes redundancy entitlements, payment in lieu of notice and any payments in settlement of disputes. 78 / TVNZ ANNUAL REPORT FY2009

Corporate Governance

The Board The Board comprises individuals with individual performance, for the Role of the Board a wide range of experiences and responsibilities and skills required in skills to ensure that all governance their jobs, benchmarked against both In addition to its duties under the responsibilities are completed external and internal relativities. Companies Act 1993, the Board, in a manner consistent with best under Section 92 of the Crown Entities possible management practice. At year end, membership of Act 2004, must ensure that the Profiles of each of the Directors are the committee comprised all Company acts in a manner consistent set out on page 80 of this report. the members of the Board. with its current Statement of Intent and current output agreement. Board Committees Key Governance Statements Business Continuity, Insurance Each year the Board negotiates The Board has two and Risk Management the Statement of Intent with its standing committees: shareholding Ministers. It includes TVNZ has developed Business Audit and Risk Committee the Company’s objectives, nature Continuity Plans for use in and scope of the activities to be The Audit and Risk Committee any emergency situation undertaken and the performance met three times during the year. facing the Company. targets and other measures by which The Committee assists the Board TVNZ maintains a number of its performance may be judged in fulfilling its responsibilities by insurance policies designed to for the current year and following providing recommendations, support the philosophy that, in the two years. The Board monitors counsel and information concerning event of a disaster, the Company management’s performance relative its accounting and reporting would not be materially affected. to these objectives and targets. responsibilities under the Companies The Company has in place policies TVNZ’s principal output agreement Act 1993 and related legislation, and and procedures to identify and with the Crown relates to the provision evaluating risk management practices. manage risks. Exposure to foreign of funding for programming broadcast During the year membership of exchange and interest rate risk in accordance with the Company’s the Committee comprised Sir John is managed in accordance with a Charter. The Board monitors Goulter (Chairperson), Sir John comprehensive Board-approved compliance with the Company’s Anderson, Mr B C Gould, Ms J N treasury policy, which sets limits of obligations under that agreement. McCabe and Ms A Blackburn. management authority. Derivative The full Board met formally 10 instruments are used by the Company Remuneration and HR Committee times during the financial year. to manage specific business risk; they The Remuneration and HR Committee are not used for speculative purposes. The Board has delegated day- met once during the year. Its work is to-day management to the Chief consistent with TVNZ’s obligations Editorial Independence Executive Officer. Policies are in to be a good employer under TVNZ has in place an editorial place that define the individual and the Crown Entities Act 2004. protocol that details the duties and collective responsibilities of the responsibilities of TVNZ, its Board and Board and management. In particular, In addition to its role of adding value its executives on editorial matters. The the Board has approved specific to TVNZ’s human resources’ plans principle of editorial independence delegated authorities to enable and practices at a strategic level, the recognises the importance of isolating management to incur expenditure Committee approves any movement control of editorial content from and create binding obligations. to the remuneration of the Company’s commercial or political influence. top executives and presenters. This principle is reflected in the Appointment of Directors The Committee also approves the Television New Zealand Act 2003 and Shareholding Ministers make all level of any ‘at risk’ payments to be the Company’s Statement of Intent. appointments to the Board, including awarded to Executives, based on the that of the Chairman. Appointments Company’s business performance. are for fixed terms not exceeding TVNZ operates a remuneration three years, which may be renewed. system designed to ensure that employees are rewarded for 79 / TVNZ ANNUAL REPORT FY2009

External Auditor Programme Standards The Auditor-General is the Company’s The Broadcasting Act 1989 auditor pursuant to Section 14 of places an obligation on the the Public Audit Act 2001. The Company for the broadcasting Auditor-General has appointed Mr of programmes to comply with Gordon Fulton of Ernst & Young the requirements of that Act and to act as external auditor on his with programme codes approved behalf in the current financial year. by the Broadcasting Standards Authority. TVNZ as a broadcaster Legislative Compliance is required to receive and consider The Company has in place a legislative formal complaints and to have compliance programme to ensure procedures for investigating them. the Company’s compliance with its various statutory obligations. A biannual review is undertaken, the results of which are reported to the Audit and Risk Committee.

Occupational Safety and Health TVNZ’s Health and Safety policy is to promote excellence in health, safety and welfare by implementing best practice health and safety systems while seeking continuous improvement. 80 / TVNZ ANNUAL REPORT FY2009

Directors’ Profiles

SIR JOHN ANDERSON KBE, CHAIRMAN (WELLINGTON)

Sir John is currently Chairman of Capital & Coast District Health Board, the New Zealand Venture Investment Fund and the Wellington Regional Strategy Committee, Commissioner of the Hawke’s Bay District Health Board and serves as a director on the boards of Commonwealth Bank of Australia and the Wellington Regional Stadium Trust.

Sir John was formerly Chief Executive of the ANZ National Bank until his retirement in 2005, former Chairman of New Zealand Cricket, New Zealand’s representative director on the ICC –positions he held from 1995 until 2008 and former Chairman of the New Zealand Sports Foundation.

He has held advisory and governance roles for successive governments through the 1980’s and 1990s and received the 1990 Commemoration Medal for Services to New Zealand and was knighted in 1994. In 1995 Sir John was awarded NBR “New Zealander of the Year”, in 2003 he received the Deloittes Top 200 Company Award “New Zealand’s Most Visionary Leader” and in 2005 was the inaugural winner of “The Blake Medal”. In 2006 his home town of Wellington awarded him the “Wellington Icon” award for a lifetime of services to business and the community.

ROB FENWICK CNZM, KStJ, DEPUTY CHAIRMAN (AUCKLAND)

Rob Fenwick’s business interests are closely aligned with sustainable development. He is Chairman of Antarctica New Zealand, New Zealand Waste Advisory Board, and BNZ Save the Kiwi Trust. He is a Director of Living Earth, Te Matuku Oysters, CarboNZero, Air New Zealand Environment Trust and Fred Hollows Foundation NZ. He was made Companion of NZ Order of Merit in 2008.

ANNE BLACKBURN (AUCKLAND)

Anne Blackburn is a banker by professional background, having had earlier careers in journalism and diplomacy. She is currently a Director of a number of businesses in the infrastructure, finance, investment and research sectors. She also holds governance positions in arts and education not-for-profit organisations.

BRYAN GOULD CNZM (OPOTIKI)

Bryan Gould was born and educated in New Zealand before winning a Rhodes Scholarship to Oxford, where he gained a postgraduate law degree. He was the Vice-Chancellor of Waikato University for 10 years. He previously served in the UK’s Labour Shadow Cabinet, was a law don at Oxford, and spent a number of years in the British Foreign Office. He was also a presenter and reporter on Thames Televisions former current affairs programme TV Eye. 81 / TVNZ ANNUAL REPORT FY2009

SIR JOHN GOULTER, KNZM, JP (PAIHIA)

Sir John is former Managing Director of Auckland International Airport Limited and former Chairman of the New Zealand Lotteries Commission and United Carriers Group Limited. As well as being a Director of the Reserve Bank of New Zealand, he is currently Chairman of Ngapuhi Asset Holding Company Limited, Northland Deepwater JV Limited and The New Zealand Business and Parliament Trust. In 2003 he was inducted as a laureate into the New Zealand Business Hall of Fame and was appointed a Distinguished Companion of the New Zealand order of Merit for services to Business and the Community. In 2009 his re-designation as a Knight Companion of the New Zealand Order of Merit was approved by Her Majesty the Queen.

JUNE McCABE (AUCKLAND)

June McCabe is an Auckland-based Director and was formerly with Westpac Banking Corporation. Her career spans both the public and private sector with extensive experience in policy-making, banking and finance. Her governance roles cover a range of sectors including health, education, finance and investment , plus private and not for profit enterprises.

PHILLIP MELCHIOR (WANAKA)

Phillip Melchior has held a range of senior positions with the Reuters Group plc, culminating in his appointment as the London-based Managing Director of Reuters Media. Before his international career with Reuters, he had an extensive career in journalism in New Zealand (both press and television). He has also held governance roles with a number of international media companies. Phillip is actively involved in search and rescue and is a Board member of New Zealand Land Search and Rescue.

He completed his six year term of office with the TVNZ Board at the end of April 2009. 82 / TVNZ ANNUAL REPORT FY2009

Management Structure as at 30 June 2009

Jeff Latch Head of Television

ANTHONY FLANNERY Head of News & Current Affairs

DAVE WALKER Head of Advertising Sales

Jason Paris Head of Digital Media/Marketing, Research & Insights

Rick Ellis Chief Executive Officer Helen CLIFTON Head of Broadcast Services DAVID LAZARUS Company Secretary/ General Counsel

RODNEY PARKER Chief Financial Officer

Kerry heath Head of Internal Audit

Diane Obrien Head of Human Resources

PETER PARUSSINI Head of Corporate Affairs 83 / TVNZ ANNUAL REPORT FY2009

Main Locations

AUCKLAND Avalon Studios LONDON Registered Office 41 Percy Cameron Street Europe Bureau Television Centre Lower Hutt 5011 54 Portland Place 100 Victoria Street West PO Box 31444 London W1B 1DY Auckland 1010 Lower Hutt 5040 United Kingdom PO Box 3819 Tel: 64 4 914 5600 Tel: 44 20 7079 3241 Auckland 1140 Fax: 64 4 914 5888 Fax: 44 20 7079 3243 Tel: 64 9 916 7000 New Zealand Television Archive Fax: 64 9 916 7934 TVNZ also has News tvnz.co.nz Archive Building representatives in Queenstown, Avalon Studios New Plymouth, Napier and New York Percy Cameron Street HAMILTON Wellington 5011 PO Box 31444 Sales Lower Hutt 5040 533 Anglesea Street Tel: 64 4 914 5300 Hamilton 3204 Fax: 64 4 914 5319 PO Box 889 email: [email protected] Hamilton 3240 Tel: 64 7 957 6300 Fax: 64 7 957 6311 CHRISTCHURCH 202 Gloucester Street Christchurch 8013 ROTORUA PO Box 1945 News Christchurch 8140 5th Floor, Trustbank Building Sales 1154 Hinemoa Street Rotorua 3010 Tel: 64 3 961 8500 PO Box 944 Fax: 64 3 961 8555 Rotorua 3040 Tel: 64 7 350 2540 News Fax: 64 7 350 2543 Tel: 64 3 961 8585 Fax: 64 3 365 6705

WELLINGTON Sales DUNEDIN Level 6 News Prime Property Tower 11 Dowling Street 86-90 Lambton Quay Dunedin 9016 Wellington 6011 PO Box 1070 PO Box 1752 Dunedin 9054 Wellington 6140 Tel: 64 3 474 2880 Tel: 64 4 914 5198 Fax: 64 3 474 2885 Fax: 64 4 914 5140

News & Current Affairs SYDNEY Prime Property Tower News 86-90 Lambton Quay C/- ABC News Wellington 6011 Level 1, 700 Harris Street PO Box 1910 Ultimo, NSW 2001 Wellington 6140 Tel: 61 2 8333 4744 Tel: 64 4 914 5000 Fax: 61 2 8333 4188 Fax: 64 4 914 5043 tvnz.co.nz