TVNZ reports life in after tax profit

Television New Zealand yesterday reported an increase in After Tax Profit for the year ended 30 June 2012 – from $2.1 million in the prior year to $14.2 million.

Advertising revenue was $313.7 million, up $9 million on the prior year and TVNZ increased its share of television advertising revenue to 62.2% from 61.6% in the prior year and secured 92% of the total market growth for the 12 months ended 30 June 2012.

Underlying earnings of $27.9 million decreased by just under $4 million on the previous financial year.  Increases in the cost of television programming, particularly overseas programming, were the primary driver of lower underlying earnings.

TVNZ Chief Executive Kevin Kenrick says the result is a satisfactory outcome and reinforces the company’s position as New Zealand’s leading Free to Air broadcaster and digital media company.

“Both the network’s Free to Air channels exceeded their commercial targets this year, driven largely by strong local content on TV ONE and the continuing success of TV2, which has now held the lead in its targeted demographic  of 18 to 39 year olds for an unbroken run of 44 consecutive months”, he said.

The strength of the network’s content was reflected in the annual Top 20 list – 17 out of the 20 most popular shows during the year came from TVNZ.

“TVNZ Ondemand has also shown strong growth and distribution of the platform is currently being extended to devices such as Apple iPads, Samsung Galaxy Tablets, and  Samsung smart TVs once testing is complete,” Mr Kenrick said.

During the year the company signed a joint venture deal with SKY TV for Igloo, a new pay platform due to launch shortly in which TVNZ holds a 49% interest.

It also ceased transmission of digital channel TVNZ 7 on the expiry of Government funding.

TVNZ won a number of top industry awards.  For an unprecedented fourth successive year, ONE News won Best News at the annual AFTA awards, and for the second year in a row the company was named by specialist recruitment & HR service provider Randstad as one of the top three most attractive employers in the country.

Mr Kenrick says TVNZ is embracing the need to adapt and keep pace with media industry changes and has embarked upon an update of its strategic direction to determine how it will continue to deliver the most compelling content for New Zealanders and expected financial returns.

The after tax profit of $14.2 million includes the impairment of assets held for sale and impairment & remediation costs associated with the switching off of the analogue transmission service for broadcasting television signals.  The results also reflect a share of associates relating to the start-up operation costs of the Igloo joint venture

This year, a dividend of $11.3 million will be paid to the Shareholder.   As in prior years, non-cash impairment charges were added back to the after tax profit when the Board declared the dividend from this year’s operating results.

The Annual Report is expected to be tabled in Parliament in early October.

Financial Highlights Summary – Year Ended 30 June 2012
		FY2012	FY2011	Variance	Variance
		$’000	$’000	$’000	%
Operating revenue		381,837	377,896	3,941	1.0%
	Advertising	313,687	304,666	9,021
Operating expenses		(353,913)	(346,085)	(7,828)
Underlying earnings		27,924	31,811	(3,887)	-12.2%
Interest expense		(1,618)	(2,702)	1,084
Asset impairment and remediation expenses		(5,663)	0	(5,663)
Financial Instruments		856	(457)	1,313
Share of results of associates /impairment		(2,050)	(17,674)	15,624
Income Tax		(5,242)	(8,898)	3,656
Net Profit after tax		14,207	2,080	12,127	583.0%
Dividend		11,287	13,828	(2,541)
Operating cash flow		33,750	44,682	(10,932)
Capital Investment		7,641	7,539	102
Investment in Igloo		12,250	0	12,250
Total assets		243,381	228,690	14,691
Debt		10,000	10,000	0
Shareholders equity		154,635	154,281	354