apr-11.pdf (2.07 MB) - Crown Ownership Monitoring Unit

OperationsTVNZ has focused on improving its performance througha combination of cost reduction, process and technologychanges. In 2009/10, TVNZ undertook a significant costreduction programme and invested in new technologyto transform itself into a digital media company. TVNZcontinues to explore further ways to diversify its revenuestreams. Consistent with this strategy, TVNZ launchedits second pay TV channel Kidzone24 on the SKYTV platform (its first pay TV channel is called TVNZHeartland).Financial performanceTVNZ made NPAT of $2.1 million for 2010/11, whichcompares with a net loss of $26 million for 2009/10. NPAT included a fullwrite-down of its investment in HTS. While this was a disappointing result,TVNZ’s operating profit for 2010/11, as measured by EBITDAF, of $54 millionwas strong. This is an increase of $50 million on the prior year (2009/10had included a one-off expense of $26.8 million owing to changing theway programme costs are expensed). TVNZ’s 2010/11 performance wasunderpinned by an increase in advertising revenues of $18 million from2009/10. TVNZ increased its share of all television advertising from 61% to63% in 2010/11.TVNZ’s strong 2010/11 operating result is benefiting from the previouslyundertaken cost reduction initiative which was completed to respond to theimpact on advertising revenues of the GFC.Performance against planThe write-down of its investment in HTS meant that ROE of 1.3% was wellbelow the target of 6.6%. However, if the write-down is excluded, this wouldhave resulted in a ROE of 12.3%, illustrating the strong operating result. TVNZalso met its gearing, financial stability and interest cover targets for the year.DividendsTVNZ declared a dividend of $13.8 million for the 2010/11 year, as its dividendis calculated as being 70% of normalised NPAT (ie, before the write-down ofHTS). This is a significant increase on the 2010/11 dividend of $4.9 million andreflects the strong operating result.Major investmentsTVNZ completed theimplementation of digital televisionand digital media technology totransition TVNZ into a digital mediacompany.Non-financial performanceIn July 2011, the amendment to theTelevision New Zealand Act 2003was passed. The amendmentremoved the TVNZ Charter fromlegislation and therefore this isthe last year TVNZ has beensubject to the Charter. The overallperformance of TV ONE and TV2was strong with TVNZ achievingbudget and growth over the prioryear. TVNZ won a number ofawards during 2010/11, includingthe Qantas Television Award forBest News and tvnz.co.nz wasnamed Best Media Site at the 2010Netguide awards.Corporate social responsibilityTVNZ undertakes a number ofprogrammes to lessen its impacton the environment, such asrestricting travel where possiblethrough utilising technology, andreplacing its fleet of vehicles withdiesel alternatives.page | 99