Inspiring New Zealanders on Every Screen - Tvnz

04 / TVNZ ANNUAL REPORT FY2009Chairman’s Introduction“TVNZ responded tothe change in marketconditions swiftly...”

05 / TVNZ ANNUAL REPORT FY2009TVNZ has concluded the year in profitdespite the most challenging marketconditions in the industry’s history.For the first half of the yearTVNZ’s revenues were trackingahead of the prior year.But like other advertising-reliantmedia in <strong>New</strong> Zealand, TVNZsuffered heavy year on year revenuedeclines from the beginning of 2009as the impact of the recession onour clients’ businesses took hold.TVNZ responded to the changein market conditions swiftly withcost reduction initiatives.Much of the credit for the company’squick and effective response tothe recession must go to TVNZmanagement and staff.The company finished the year withan EBIT of $10.1 million, and a netprofit after tax of $2.1 million. TheBoard has approved a shareholderdividend of $1.47 million.The changes occurring in the mediaindustry are accelerating. As aresult the Board has endorsed arevised strategy developed by theExecutive to transform the companyfrom a Television Broadcaster to<strong>New</strong> Zealand’s leading Televisionand Digital Media company.The vision of “<strong>Inspiring</strong> <strong>New</strong><strong>Zealanders</strong> on every screen”remains, but with an even strongerfocus on providing viewers, consumersand customers with the contentand services they want and expectfrom the nation’s leading Televisionand Digital Media company.E Tātaringa a te ManukuraKua oti pai te tau a TVNZ me te whaihua anō ahakoa nga uauatanga pakihiki nga maharatanga o te tangata.He tino pai te āhua o te tahua putumo te wāhanga tuatahi o te tau, irunga noa atu i to te tau i mua.Engari ko te tino rerekētanga ki etahiatu pakihi pāpāho o te motu, he kahate hekenga mai i nga tau i o mua tata ite pokiatanga mai o te whakahekengao nga rawa a o matou kaihoko rato.He tere te whakautu a teneirōpu mahi ki te hekenga, i kiteawawe nei te whakamāmā i ngataumahatanga o nga utu ki a mātou.E tika āna kia rere nga whakapai ki tetere me te hāngai o taua whakautu kite Runanga Urungi me te hunga mahi.I te mutunga o te tau, i mua i te whaitakunga, $10.1 miriona te tahua i kohiaa, i muri mai, $2.1 miriona. Kua whakaete Runanga Urungi kia $1.47 miriona tehua hei whakarato ki te kawanatanga.Kei te tere te huri o nga tikangapāpāho. Na kōnei i whakaetia ai e tauaRūnanga i runga anō i te whakaaronuka a te Hunga Whakahaere kiawhakaumutia nga mahi whakaata,ki te kōkiri atu ki te taumata o ngawhare pakihi Pāpāho Māmati.Ko te tūtoru anga whakamua hei “TeWhakaaratanga o Aotearoa ki ngaRīanga Whakaata Katoa” ka tū tonu,engari kia hāngai ki nga tikanga ehiahiatia āna e ēra kei te mātaki, kei tehoko i nga rawa, me erā kei te hangārānei i nga hōtaka, kia tū motuhake aihei kōkiri i nga tauira pāpāho māmati.Sir John Anderson - Chairman

06 / TVNZ ANNUAL REPORT FY2009Chief Executive’s Overview“Despite predictions tothe contrary, televisionaudiences are attheir highest levelsin nearly 10 years”

07 / TVNZ ANNUAL REPORT FY2009The impact of the recession hasbrought mixed results for TVNZ.In the first six months the companyenjoyed steady progress, buildingon a remarkable number of initiativessupporting our strategy of “inspiring<strong>New</strong> <strong>Zealanders</strong> on every screen” andreturning profitability to the company.Then in the second half of theyear the impact of the globaland domestic recession tookhold with advertisers, leading toa sharp downturn in revenue.As a result, the priorities we set inour Statement of Intent have takenon a form somewhat different tothat envisaged at the start of theyear, and the company has had todemonstrate a new level of agility andadaptability to bring us to the closeof the year as a profitable entity.The Company’s progress against itsbusiness priorities is set out below:1. TV ONE and TV2 channelturnaround and contentstrategies implementationDespite predictions to the contrary,television audiences are at theirhighest levels in nearly 10 years.TV ONE has concluded the year withstrong prime time ratings, particularlyin the critical 8.30-9.30pm time zone.TV ONE has successfully launcheda number of new local programmesincluding The Politically IncorrectParenting Show, The Missing and asecond series of The Investigator aswell as some acclaimed internationaldramas such as Packed to theRafters and Eleventh Hour. Othercore local shows such as Fair Go,Country Calendar and Sunday haveall performed strongly through thelast quarter of the financial year.TVNZ’s multiplatform coverage of theBeijing Olympic Games – one of themost ambitious single projects in ourhistory – has been our most successful.Over 17 days the Olympics waswatched by more <strong>New</strong> <strong>Zealanders</strong>than any other television event.More than a million people watchedthe groundbreaking ONE <strong>New</strong>sYouTube Election Debate, whichmarked the first time a head ofa national government and thechallenger for the top job hadappeared in a live televised debate toanswer questions posted via YouTube.Election night coverage itselfreached 1.9 million viewersduring the course of the night.By January, ONE <strong>New</strong>s had achieveda run of 13 consecutive months of yearon year growth, with the <strong>New</strong>s contentexpanded and enhanced online viatvnz.co.nz and, from August, msn’slocal news and entertainment website.As part of the implementation of theMaori programme strategy, Te Kareredoubled in length, its production coststopped up with commercial revenue;its reach has increased substantially,from 735,400 viewers in June 2008to 1,045,000 viewers in June 2009.TV2 has performed exceptionally well,with June ratings up 33% on the prioryear. It has enjoyed a strong reboundfrom the impact of the US writers’strike, and a very pleasing publicresponse to local productions such asGo Girls and Illegal <strong>New</strong> Zealand.For the first six months of 2009, TV2’saverage audience in peak time [6pm– 10.30pm] was up 10% on the sametime in 2008, and the highest since2006. Daytime audience levels in the5+ demographic were the highestsince 2004. In the commerciallyimportant demographic of HouseholdShoppers with Kids aged 0-14, June2009 was the highest rating monthsince June 1996 – a 13 year high.The channel is well positioned tocontinue this performance into 2010with compelling new internationaldramas The Mentalist and Fringeand two new local dramas TheCult and This is Not My Life.2. Advertising revenue growth andsales ‘go to market’ transformationThis year TVNZ’s sales teamembarked on a watershedtransformation of the relationshipwith clients, which shifts the focusfrom a product-driven offering toa tailored, customer solution.In order to align TVNZ’s sales processto the evolution of TVNZ as abusiness, TVNZ Sales has become abusiness-focused partner for strategicagencies and clients. This evolutionhas filled a void in the market,with advertisers wanting greaterintegration with media partners.TVNZ Sales has undertaken to fullyunderstand the business issuesof its clients, to become a trustedbusiness consultant rather than justan implementer of a media idea. Anumber of advertisers have embracedthis new approach to develop andexecute innovative new advertisingscenarios. Notable examples arethe Ford Fiesta “This is Music”vignette series which used TVNZprogramme production resourcesto create a series of 8 programmelikevignettes playing across TVNZon-air and digital media channels;the fully interactive Noel Leemingpartnership with Wheel of Fortune;and the on-air sponsorship and instorepromotional activity by Tip Topin partnership with Stars in Their Eyes.3. Fiscal turnaround momentumThe impact of global recession onour advertisers was sharply felt atthe start of the March quarter, witha further deterioration in the Junequarter. From a position of 1.1%growth over the 2007 calendar year,the company moved to a defensiveposition, taking rapid action in aprogramme to remove $25 million ofcost from the business before the endof the financial year. Regrettably, thisincluded more than 80 redundancies.

8 / TVNZ ANNUAL REPORT FY2009Chief Executive’s Overview (continued)The combined impact of thecost-cutting measures has enabledTVNZ to stay profitable.This stringent focus onreducing cost will continue.We are cautiously optimistic aboutthe 2010-2011 financial year. At thetime of writing the advertising markethas not yet bottomed out, but weare hopeful that it will have turnedthe corner by the middle of 2010.4. Government funding oflocal content on TVNZWith a change of Government,direct funding for local contentwas transferred to NZ On Air ina contestable framework, witheffect from July 1, 2009.During the year the companyattracted some outstanding proposalsfrom writers and producers whichenabled success in securing apleasing level of funding from NZon Air’s existing funding pool.The allocation from NZ on Air’sInnovation Fund for the ‘virtual’coverage of the Louis Vuittonseries was particularly pleasing.Funding for Maori programminghas been successfully negotiatedwith Te Mangai Paho.A longer formatted Te Karere wasapproved, with additional fundingfrom TVNZ; and Marae and WakaHuia were both funded for the 2010financial year at the level requested.5. Consumer insight andcompetitive trendsUnderstanding consumer needsand behaviour has become aprimary focus of the business.As television audiences fragmentin response to greater choice andcontrol, it becomes essential tobusiness success to generate strategicinsights into viewer behaviours.The value to television viewership ofthe tvnz.co.nz ondemand catchupservice was amply demonstratedthrough research into consumerbehaviours, which proved that a viewerwho could catch up on a missedprogramme online was 13% morelikely to return to the programmeon television the next week.With the predicted growth ofmedia consumption on screens(TV, computers, mobile devicesetc) the company believes it is wellpositioned to capitalise on this shiftin media consumption patterns.6. Organisation culturaltransformation andleadership developmentIn 2008 the company invested in aprogramme of business leadershiptraining for 50 senior staff members, inconjunction with Auckland University’sBusiness School. During FY2009 thisprogramme continued and has verysuccessfully strengthened leadershipand management capability,and has significantly increasedcollaboration across the company.It has been an important factor inthe positive way the company hasbeen able to respond to and managethe impact of the recession.Linked with the process of businesstransformation, a new performancemanagement framework has beenimplemented to foster a culture ofaccountability and excellence.7. Emerging Business growthplan implementationThe company exceeded its BusinessPlan targets for Emerging Business(renamed Digital Media in May).Advertisers responded well tothe redesign of the tvnz.co.nzwebsite, with a new <strong>New</strong>s sitelaunched in December and a newEntertainment site in May.Growth in viewing of TVNZ onlinetelevision has been exceptional,with 230,000 hours watchedonline every month. This is as wellas growth in standard televisionviewing, not instead of it.The company has also deliveredon its strategic objective ofresponding to consumer demandfor video content and services inthe broadband environment. It hasnegotiated a one third shareholdinginterest in the Australian SevenMedia Group subsidiary, HybridTelevision Services (ANZ) Pty Ltd.Hybrid holds the Australasianlicence for the US market leadingPersonal Video Recorder – TiVo.The launch of the company’s twodigital channels – TVNZ 6 andTVNZ 7 – on the SKY platformrepresented a significant advancein public accessibility, also akey strategic objective.8. Broadcast Servicesoperational reviewWith production budgets underpressure, TVNZ is examiningits processes and activities tolower costs and better meet theneeds of content producers.TVNZ was the first in the market withHD equipment, and has completedconstruction of a fully HD postproduction facility which is well usedand has attracted new clients.A new public website has beenlaunched, assisting content producersto assess available facilities.9. Digital infrastructure andbusiness transformationTVNZ has begun transforming thefundamental technical structure ofits operation from analogue to fullydigital media management. Theproject was initially cast as a technicalupgrade but in the last year hasbeen revised in scope to include theredesign of workflows in all areas ofthe business that intersect with thecurrent tape-based workflow. Analysisand design are almost complete, andinstallation and implementation isscheduled for completion in July 2010.

9 / TVNZ ANNUAL REPORT FY200910. Sales system implementationTVNZ is in the process of replacingits sales system in order to moreeffectively and efficiently transact withadvertising partners. Implementationof the new system, which is underway,will enable TVNZ to maximise therevenue potential from its commercialinventory. This priority supports thecompany’s desire to improve in linewith international best practice.11. Analogue Switch Off (ASO)TVNZ is committed to encouragingand supporting the establishment ofan early switch off of the analoguetransmission network, in favourof a purely Digital system.A date for ASO, or Digital Switch On(DSO) as it is increasingly known, isyet to be set by the Government.TVNZ is a member and full participantin the Digital Switchover SteeringGroup (DSOSG), a body of industryand Government representativesestablished to oversee and advise theGovernment on successful transition.15.9% of the market. This is almostdouble the projected uptake.Despite the economic climateI am tremendously positiveabout the health of TVNZ.A recession tends to focus themind sharply and out of this focushas come a year of increasedagility, a leaner operation and adetermination to place ourselves ina position of maximum advantageonce the recession lifts.Our TVNZ people have respondedwell to the challenge. I havebeen impressed at the level ofunderstanding and commitmentthat I have seen as I moved aroundthe company this year, and I offermy warmest thanks to all.We are not out of the financialwoods yet, but I have everyconfidence that we are wellequipped to deal with a new, postrecessionera that will inevitablybring big change to our industry.The role of the DSOSG is to monitorthe take-up of digital television, torecommend dates for the transitionand to develop and implement apublic education programme.Freeview, the consortium of Freeto Air broadcasters offering Digitalchannels, of which TVNZ is a leadingmember, has been a great successin terms of its uptake to date.Rick Ellis - Chief Executive OfficerAt the close of the financial yearFreeview was in 255,048 <strong>New</strong>Zealand households, representing

10 / TVNZ ANNUAL REPORT FY2009Financial PerformanceTVNZ has reported total revenueof $384.8m and operatingearnings of $10.1m for the year.Total revenue was $7.5m (1.9%)down on prior year, a relativelysmall decline given the challengingeconomic and trading conditionsfaced in the current year.Advertising revenue was $298.4m,a $17.1m (5.4%) decline on the prioryear. This decline is significantlylower than other Australasian mediacompanies and reflects the gainsmade in the first half of the fiscalyear from the screening of theBeijing Olympics on TV ONE.During the year, TVNZ increasedits advertising revenue share from58.9% to 60.9%, with the 2.0% sharegrowth coming from both competingnational television networks. TVNZis focused on growing share ofrevenue from competing televisionnetworks and other media.The decline in advertising revenueswas offset in part by an $8.9m increasein other trading revenues. Thisincluded service fees generated fromthe provision of transmission servicesto international broadcasters inassociation with the Beijing Olympics.Income recognised from Governmentfunding is unchanged from prioryear. Funding is predominantly forprogramming costs and is recognisedas income as the programme costis recognised as an expense.Operating expenses increased $9.4mover the prior year to $374.6m. Thisincrease is predominantly due to therights and production costs associatedwith the Beijing Olympics. FY2009 alsoincludes a full year’s operating costsof the digital channel TVNZ 6, whileFY2008 only had three months costs(the channel launched in April 2008).Initiatives to reduce operatingexpenses, including restructuring,were undertaken during the year. Thecosts savings were partially reflectedin the FY2009 results and will befully reflected in FY2010. Savings of$13.1m were made in FY2009 againstbudgeted costs (refer note 28).Operating earnings were$10.1m, a decline of $16.9mon prior year. This decline canbe attributed to the decline inadvertising revenue of $17.1m.TVNZ has reported an after taxprofit of $2.1m for the year.TVNZ has expensed $3.7m ofreorganisation costs and $1mshare of losses from associatedcompanies. Fair value revaluationsof financial instruments and foreigncurrency gains, which have createdsignificant gains and losses in prioryears, have had little net effecton this year’s after tax profit.TVNZ declared a final dividendof $1.47m to be paid at theend of September 2009.FINANCIAL MEASURESFY2009FY2008Measurement actual Target ActualProfitabilityReturn on average equity* 1.0% 9.0% 8.3%EBITDRA/Core television revenue 9.1% 13.4% 13.6%GearingNet interest bearing debt/Net interest bearing debt plus equity 16.4% Less than 40% 13.2%Financial StabilityTotal equity/Total assets 60.7% More than 40% 58.5%Interest CoverEBITDRA and Financial Instruments/Interest expense 12.5 times More than 4 times 11.5 timesEBITRA - 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 FY2009TVNZ in SocietyAs a Crown entity, TVNZ isexpected to be a good employerand to demonstrate social andenvironmental responsibility. InFY2009 a number of initiatives andprogrammes were implemented.Environmental SustainabilityAs a responsible corporate citizen,TVNZ has recognised that our businessactivities do have an impact on theenvironment through the emission ofGreenhouse Gases (primarily CO2).Last year TVNZ commissioneda study from Landcare Researchwhich identified specifically theeffects our business was havingon the environment. The studydetermined that the main sourcesof greenhouse gas emissionsattributable to TVNZ came from:(a) Electricity usage by TVNZ(b) Air travel – Internationaland domestic(c) Vehicle fleet fuel usage(d) General waste that wastransferred to landfill(e) Electricity used by thetransmission networkmanaged by Kordia.Since receiving the results ofthe Landcare Research report ateam has been looking at ways toreduce TVNZ’s carbon footprint.(a) Electricity Used by TVNZInitiatives that have been taken toreduce our electricity usage includeturning off lights, PCs, printers andother equipment overnight and onweekends. Where possible the numberof hours the office air conditioningsystem operates has also beenreduced. Since the campaign to saveelectricity was introduced, savingshave been achieved of more than3 percent compared to last year.(b) Air travelThe nature of TVNZ’s business issuch that air travel is essential.However the current restrictionsin place for financial reasons havehelped reduce the greenhouse gasemissions applicable to air travel.(c) Vehicle Fleet Fuel UsageWork is ongoing to investigatealternatives to the current vehiclefleet that are more cost efficientand/or are a better alternative froma fuel efficiency perspective.(d) General Waste to LandfillFor a number of years TVNZ has hada waste recycling system in place. Theobjective is to reduce the amountof waste that gets taken to landfill.Until now the emphasis has been onrecycling paper, cans, glass, plasticand tapes. Further opportunities toimprove this are under investigation.(e) Electricity used byTransmission NetworkThe network is managed by Kordiaand TVNZ pays for the electricity usedby the transmitters. As the networkinfrastructure migrates from analogueto digital the number of transmittersrequired will be reduced and thoseremaining in place will operate farmore efficiently. This will mean areduction in the amount of greenhousegas emissions applicable to TVNZ.A volunteer programme has begunwith TVNZ people who have acommitment to environmentalsustainability and who can assistwith ideas around the recyclingprogramme as well as the overall planto reduce TVNZ’s carbon footprint.Community SupportFoundationThe TVNZ Community SupportFoundation provides charities withfree air time worth up to $50,000 amonth, which allows the recipientsto promote their services anddrive fundraising activities.In June, TVNZ chose four newcharitable organisations as thesuccessful recipients of free on-airadvertising for the next two years.• The Prostate CancerFoundation of <strong>New</strong> Zealand• Special Olympics <strong>New</strong> Zealand• BNZ Save the Kiwi Trust• LandSAR (<strong>New</strong> ZealandLand Search and Rescue)TVNZ is committed to helpingbuild stronger communities, inthe tradition of <strong>New</strong> <strong>Zealanders</strong>helping each other out.The newly-chosen charities are allorganisations reflecting importantaspects of kiwi life and the wellbeingof <strong>New</strong> Zealand’s people.The outgoing charities who havereceived sponsored air time for thepast two years are Surf Lifesaving <strong>New</strong>Zealand, National Heart Foundation<strong>New</strong> Zealand, the SPCA and RefugeeServices Aotearoa – <strong>New</strong> Zealand.TVNZ has provided charitableorganisations with more than$30 million in free advertisingtime on its channels over aperiod of more than 20 years.CapabilityTVNZ continued in FY2009 on ajourney to transform the business.The formal part of a very successfulleadership programme held withthe University of Auckland wascompleted in December 2008and the development programmehas continued internally.Research on the alignment of ourculture to deliver on the strategy wascompleted and this will be integratedinto the TVNZ brand internallyand externally later in the year.A new performance frameworkwas introduced and a focus hasbeen on talent management.

12 / TVNZ ANNUAL REPORT FY2009The Advertising Sales team hasdeveloped world class competenciesfor their go-to-market strategy througha robust development programme.A group of level 4 leaders in theBroadcast Services business havecommenced a four month businessskills training programme. At thecompletion participants will receivea National Certificate in Business(Level 4) – the programme includescompletion of a work based projectwith measurable business outcomes.Good employerTVNZ has continued with activitiesto enhance the experience ofbeing part of the TVNZ team.Employees are kept well informedthrough various communicationchannels, including strategy andCompany update sessions withthe CEO and a self publishing onlinemagazine where employeescan share their stories.Staff events continue on specialoccasions and a popular newmonthly company-wide networkingopportunity has been set up.As a response to the impact ofthe recession, TVNZ underwentsome restructuring this year.TVNZ supported this processwith confidential counsellingand outplacement support.There continued to be supportfor wellness initiatives such as onsiteyoga classes, subsidies forgym membership, blood checksand mole checks. Employeesalso enjoy a subsidised cafeteriawith healthy options and anon-site crèche, Educare.

13 / TVNZ ANNUAL REPORT FY2009General Charter MeasuresThese measures highlight national and internationalprogramming across all genres that entertains,informs and educates <strong>New</strong> Zealand audiences.General output measuresNumber of hours per genre across TVNZ analogue services*Local Content HoursFY20096am - Midnight1st Run Repeat TotalEntertainment 354.9 358.3 713.2Factual and Arts 1,056.8 341.7 1,398.5Kids 249.0 256.5 505.5Maori 157.3 47.6 204.9Lifestyle 28.0 78.5 106.5<strong>New</strong>s and Current Affairs 1,680.7 86.0 1,766.7Sport 500.7 - 500.74,027.4 1,168.6 5,196.0Local Content TotalsTV ONE TV2 TVNZTotal Hours 3983.4 1212.6 5196.0% Schedule 60.6% 18.5% 39.5%*Genres by % of schedule for both digital channels are reportedon in the Statement of Service Performance on page 67General Reach Measures• Average monthly cumulative audience(5+) of TVNZ channels:3,775,884 people aged 5+ tuned to aTVNZ channel in an average month, whichrepresents 95.5% of all the 5+ population• Number of TVNZ programmes within the yearlyTop 20 Programme lists in the demographicsof 5+ and 18-39 (see tables, right).Online Measures• The average monthly number of uniqueindividuals consuming TVNZ ondemandstreams across FY2009 was 166,129.• The average monthly number of unique visitorsto tvnz.co.nz for the year was 1,141,929FY2009Total PeopleChannel Ave Aud Ratings1 Fair Go Ad Awards 2008 TV ONE 741,860 18.82 Border Security TV ONE 674,010 17.03 Wild Vets TV ONE 647,240 16.34 Dancing With The Stars TV ONE 643,470 16.25 Fair Go TV ONE 610,770 15.56 Rapid Response TV ONE 603,360 15.27 Stars In Their Eyes (NZ) TV ONE 598,090 15.18 ONE <strong>New</strong>s TV ONE 595,870 15.19 Medical Emergency TV ONE 580,710 14.710 Animal Rescue TV ONE 567,050 14.311 Sensing Murder TV2 564,240 14.312 National Bank Country Calender TV ONE 563,370 14.213 Coastwatch TV ONE 558,820 14.114 Motorway Patrol TV2 550,380 13.915 Border Patrol TV ONE 525,840 13.316 Who Wants To BeA Millionaire TV ONE 525,720 13.417 Coronation Street TV ONE 520,340 13.218 Sunday (PM) TV ONE 518,290 13.119 One <strong>New</strong>s You TubeElection Debate TV ONE 514,360 13.120 One <strong>New</strong>s SpecialElection Night TV ONE 508,060 12.9FY2009AP 18-39Channel Ave Aud Ratings1 Sweet Home Alabama TV2 208,130 16.42 Two and a Half Men TV2 207,650 16.63 Desperate Housewives TV2 204,980 16.44 Motorway Patrol TV2 201,720 16.25 Britney: For the Record TV2 197,250 15.56 Shortland Street TV2 193,410 15.47 Charlie and theChocolate Factory TV2 191,550 15.38 The Pacifier TV2 189,790 15.09 My House My Castle TV2 189,350 15.210 Sensing Murder TV2 187,540 14.811 Cadbury Crunchie Comedy Gala TV2 184,810 14.812 Hell’s Kitchen TV2 177,430 14.213 Scrubs TV2 176,200 14.114 Grey’s Anatomy TV2 175,160 14.015 The Princess Diaries 2 TV2 169,460 13.716 Outrageous Fortune TV3 168,680 13.517 Mitre 10 Dream Home TV2 164,450 13.118 The Big Bang Theory TV2 163,190 12.919 Pirates of the Caribbean 2 TV2 161,840 12.820 NCIS TV3 161,400 12.8

14 / TVNZ ANNUAL REPORT FY2009Charter Performance MeasurementsFY2009 is the second year in whicha full performance measurementframework has been used toassess TVNZ’s non-financialperformance as <strong>New</strong> Zealand’snational television broadcaster.The approach taken is to summarisethe Charter objectives into sevenbroad themes for measurement– an informed society, nationalidentity/citizenship, Maori,diversity, high standards, innovationand <strong>New</strong> Zealand talent.TVNZ programmes are thenassessed against each themethrough a combination of quality,reach, impact and output measures.As a way of gauging quality, a unique‘appreciation/importance survey’has been introduced. This asksrespondents to rank programmesfrom the point of view of botha viewer and a citizen. While anindividual may not like a particularprogramme personally they mayappreciate, as a citizen, the fact thatthe national television broadcastermakes it available for those who do.This survey demonstrates thecommercial and public value ofTVNZ programmes and identifiesareas where the company needsto improve its performance.Reach is a measure of usage. Impact isa measure of external effects such asawards and industry/peer recognitionof achievement. Output is the numberof hours of content delivered.QUALITYAppreciation/Importance Survey.An independent research companyconducted online quantitativeresearch using a representativenational sample of 1005 viewersaged 18 and over in June 2009.The survey results show a smallbut steady improvement in TVNZ’sdelivery of almost all categoriescompared with last year’s survey.PERFORMANCE IMPROVEMENT IN MOST AREASTVNZ Performance – Themes (2008 vs. 2009)2008 Performance (Excellent, Very Good)2009 Performance (Excellent, Very Good)QualityConsistently high quality programmes4045Information andEducationNational IdentityNZ TalentDiversityMaoriIndependent newsEvents of national importanceAnalysis of issues of the dayEvents of international importanceEducational for young peopleEvents of importance to your regionDifferent perspectivesDiscussion on current issuesNZ’s history, heritage, natural environment<strong>Inspiring</strong> NZersReflects and reinforces our NZ identityMix of local and overseas programmesSupports local talentGood quality local dramaAppeal to smaller and wider audiencesReflects interests/tastes not coveredReflects NZ‘s many culturesUnderstanding different culturesDeals with minority interestsMaori history, culture, current issuesPromotes Maori language and cultureVoice to Maori perpectives0 20 40 60 80 100Percent5857687065646367343939423542424841 424345434850 5437433439323529343441323728313638364239 42

15 / TVNZ ANNUAL REPORT FY2009This improvement was markedlyhigher among Maori viewers, who alsoshowed a higher level of engagementwith TVNZ and higher levels ofexpectation regarding performance.TVNZ PERFORMANCE MORE POSITIVE WITH MAORIEspecially Diversity and Maori IssuesTotal Performance (Excellent, Very Good)Maori Performance (Excellent, Very Good)QualityConsistently high quality programmes4556Information andEducationIndependent newsEvents of national importanceAnalysis of issues of the dayEvents of international importanceEducational for young peopleEvents of importance to your regionDifferent perspectivesDiscussion on current issues39424442525448565771707264756777National IdentityNZ’s history, heritage, natural environment<strong>Inspiring</strong> NZersReflects and reinforces our NZ identity424553524857NZ TalentMix of local and overseas programmesSupports local talentGood quality local drama433948525467DiversityAppeal to smaller and wider audiencesReflects interests/tastes not coveredReflects NZ‘s many culturesUnderstanding different culturesDeals with minority interests35343731414350485058MaoriMaori history, culture, current issuesPromotes Maori language and cultureVoice to Maori perpectives3950425442560 20 40 60 80 100Percent

16 / TVNZ ANNUAL REPORT FY2009As in last year’s survey, expectationsaround the public value or importanceof TVNZ programming greatly exceedperceptions of TVNZ performance,especially in the categories relatingto ‘an informed society” (Informationand Education) and ‘national identityand citizenship” (Who We Are).This is in line with similar levelsof expectation for other publicbroadcasters around the world; it isunlikely that performance would evermatch expectation and by internationalstandards TVNZ is performing well.TVNZ was seen to over-deliverin Maori programming.The proportion of viewers regarding itas extremely or very important to havea <strong>New</strong> Zealand-owned TV Network hasrisen slightly, and again, this was anissue that was particularly importantto Maori, with 92% regarding itas extremely or very important.TVNZ CONTINUE TO DELIVER IN INFORMATIONHigh Performance in MaoriImportance (Extremely, Very)Performance (Excellent, Very Good)QualityConsistently high quality programmes4587Information andEducationIndependent newsEvents of national importanceAnalysis of issues of the dayEvents of international importanceEducational for young peopleEvents of importance to your regionDifferent perspectivesDiscussion on current issues39424248577064676967657885858383National IdentityNZ’s history, heritage, natural environment<strong>Inspiring</strong> NZersReflects and reinforces our NZ identity424548686463NZ TalentMix of local and overseas programmesSupports local talentGood quality local drama394354565572DiversityAppeal to smaller and wider audiencesReflects interests/tastes not coveredReflects NZ‘s many culturesUnderstanding different culturesDeals with minority interests3534374153515149MaoriMaori history, culture, current issuesPromotes Maori language and cultureVoice to Maori perpectives31 35 3833323942420 20 40 60 80 100Percent

17 / TVNZ ANNUAL REPORT FY2009Programme quality is consistentoverall since the last survey, althougholder viewers are slightly morenegative, and Maori, TV2 viewersand younger viewers are morepositive than the total population.Many programmes that viewers ratedhighly in terms of public importancehad lower ratings when it came topersonal interest, although ONE <strong>New</strong>sand the Beijing Olympic Games stoodout as both popular and important.Dancing with the Stars onthe other hand rated morepopular than important.In summary, TVNZ is establishedas ‘our’ network, with mostpeople seeing this as important,and TVNZ largely delivering.Across the Charter themes, in Qualityand Standards TVNZ is seen asimproving but still below expectations.TVNZ PARTICULARlY IMPORTANT TO MAORI(Extremely, Very Important)100(94) (80) (85) (92) (83) (90) (80) (82) (80) (82) (90)80Also more important toTVONE preferrers andolder viewers60Percent4086 8594 94 9187 86 8882 8286TotalImportance by Demographic200TotalAucklandersNon-AucklandersNZ MaoriOther EthnicitiesParticularlyimportant to MaoriTV ONE PreferresTV2 PreferrersCompetiitor Channel Preferres18-34 years35-54 years55+ years

18 / TVNZ ANNUAL REPORT FY2009In Information and Education,TVNZ is performing well althoughthere are seen to be gaps in theprovision of educational materialfor young people and the provisionof different perspectives.In National Identity, the provisionof events of national importanceis felt to be at a high level, butthere is a comparative lack ofmaterial on <strong>New</strong> Zealand history.In <strong>New</strong> Zealand talent and diversity,performance is well-regarded and, inMaori, delivery exceeds expectations.Compliance withStandards and CodesFormal ComplaintsThe Broadcasting StandardsAuthority (BSA) is responsibleunder the Broadcasting Act 1989for administering standards inprogramming and presentation ofprogramming. All formal complaintsmust be first made in writing to theBroadcaster (with the exception ofallegations of privacy). Complainantsmay refer their complaint to theBSA if they are not satisfied with theoutcome of the TVNZ process.In the period under review, TVNZreceived 584 complaints.• 93 more than in the previous year.• Of these 584 complaints,78 were upheld by the TVNZComplaints Committee.Public Importance versus Personal Interest - Programmes FY2009Importance (Extremely, Very)Interest (Appointment Viewing)ONE <strong>New</strong>sBeijing OlympicsTV ONE Anzac Day CoverageFair GoSundayCountry CalenderNetball (National and International)Waitangi 09: He MaramatangaWestpac Halberg AwardsWhat Now?Rural DeliveryTe KarereAttitudeQ & ATo Sir With Love (Howard Morrison)Tagata PasifikaKorero Mai: Speak to MeDancing With The StarsAsia Down UnderWaka HuiaShortland StreetDavid Daugherty - Until Proven InnocentStars in Their EyesHow the Other Half LivesVictoria’s EmpirePraise BeGo GirlsBeyond the DarklandsWestfield Style PasifikaTiger: Spy in the JungleThe InvestigatorDiplomatic ImmunityMy GodPiece of My HeartThe Erin Simpson Show2121311252341322528111571551410141111211311495817151885666536564355225513148323130272724232323232330222120192016 17180 20 40 60 80 100Percent

19 / TVNZ ANNUAL REPORT FY2009• 61 more complaints wereupheld than in FY2008.• The larger number of upholdswas because on one or twoissues there were an unusuallylarge number of formal complaints.2007 346 complaints, 35 upheld2008 491 complaints, 17 upheld2009 584 complaints, 78 upheldIn FY2009 the BSA handled 64referrals by viewers who weredissatisfied by TVNZ’s decisionson their complaints – an increaseof 23 referrals on the previousyear. Of these 5 were upheld- 6 fewer than in FY2008.2007 57 complaints, 16 upheld*2008 41 complaints, 11 upheld*2009 69complaints, 7 upheld**20 referrals have yet to bedecided by the BSA.The 7 referrals upheld were:• A promo for Fanny Hill thatscreened during G time.• Another for a news flash screenedduring the Olympics that wouldbe upsetting to children.• A One <strong>New</strong>s item on the Nationaland Labour Party policies forpeople who lost their jobs, whichwas found to be inaccurate.• A Breakfast interview withGarth McVicar, which wasfound to be unbalanced.• A Shortland Street episode wherea man was hit in the head with arock and put into the boot of a car,which was found to be in breachof good taste and unsuitablefor children.• A Shortland Street episode wherea woman hit a gang leader witha hammer, which was upheld underProgramme Classification& Violence.• A Shortland Street episode playeda re-cap where a woman hit agang member with a hammer. Thiswas also upheld under ProgrammeClassification and Violence.Awards and RecognitionQantas Television AwardsIn the Qantas Television Awards forFY2009, TVNZ won eight of the eleven<strong>New</strong>s and Current Affairs awards,including Best <strong>New</strong>s, Best Presenter(Mark Sainsbury), Best Current AffairsSeries (Sunday), and Investigation ofthe Year and TV journalist of the year(Mike Valintine and Hunter Wells).In the General Television andCraft Award categories, TVNZprogrammes and people pickedup another 13 awards.The full list of awards can be foundonline at tvnz.co.nz/view/page/2074076In other industry awards, TVNZ’s Salesdivision took Media Brand of the Yearat the 2009 CAANZ Media Awards.In the Promax Awards held in Sydneyin September 2008, TVNZ’s CreativeServices staff won one silver award andone gold for Best Drama promotion, asilver for Best Sports Campaign, anda silver for Best Sponsors Promotion.Staff from ProgrammePartnerships won two silvers, forBest Sales Promotion and BestInnovative Idea respectively.In the Nexus Awards 2008TVNZ won a gold and a bronzeaward for the Olympics websitecampaign, and a further bronzeaward for the launch of TVNZ 7.Output and ReachCharter themesThe assessment of which Charterthemes were reflected in eachprogramme broadcast in the 12months under review was carriedout using two guiding principles:• Preference would be givento selection of <strong>New</strong> Zealandprogramming, on the assumptionthat it would have an impactintrinsically greater than thatof overseas programming.• International programmes suchas the large number of naturalhistory or wildlife documentaries,where the emphasis was judged tobe as much on entertainment as oninformation, would not be included.DefinitionsAn Informed SocietyProviding impartial and comprehensiveinformation and national andinternational programming that isessential to having an informedand educated society.National Identity/CitizenshipProviding entertaining and informativeprogramming that reflects the diverserange of cultures and interests thatcontribute to an overall sense ofwho we are as <strong>New</strong> <strong>Zealanders</strong>.MaoriProviding entertaining andinformative programming thatreflects Maori interests, culture,and language and conveys theseinterests to a wider NZ audience.DiversityProviding entertaining nationaland international programmes thatservice the interests and needs ofdifferent audiences, including cultures,lifestyles, age and regions, andparticularly those that may not beprovided for in a purely commercialbroadcasting environment.InnovationPromoting innovation,risk-taking and creativity.<strong>New</strong> Zealand TalentSupporting and promotingthe talents and the creativeresources of <strong>New</strong> <strong>Zealanders</strong>.High StandardsPromoting high programmingstandards and editorial integrity.Note: the description of the output measure forprogrammes exhibiting High Standards is: hoursof local shows/films TVNZ has funded, co-funded,or commissioned. Because this category includestitles that are yet to be screened, and are thereforestill commercially sensitive, only the total forthe period is given. The total count for the fullfinancial year across all channels is 1,751.2 hours.

20 / TVNZ ANNUAL REPORT FY2009Charter Performance MeasurementFOR THE YEAR ENDED 30 JUNE 2009FIRST REPEAT TOTAL HOURS OFPROGRAMME TITLE CHANNEL GENRE RUN HOURS HOURS CAPTIONINGA Mad Business TV ONE Factual 5.0 - 5.0 5.0A Thousand Words TV ONE Doco - 0.5 0.5 -Activate TV2 Children’s 8.5 - 8.5 8.5Adventures of Massey Ferguson TV2 Pre School - 2.3 2.3 -Agenda TV ONE NCA 22.0 - 22.0 -Agenda TVNZ 7 NCA 36.7 -Amazing Extraordinary Friends TV2 Ch Drama 6.5 13.0 19.5 19.5Animal Academy TVNZ 6 Factual 12.1 -Anzac Day Dawn Service TV ONE SI 1.0 - 1.0 -Anzac Day Wreathlaying TV ONE SI 1.5 - 1.5 1.5Anzac Day Wreathlaying TVNZ 7 SI 1.5 -Apron Strings TV ONE Drama 1.8 - 1.8 1.8Artsville TV ONE Arts 8.5 16.0 24.5 13.8Asia Downunder TV ONE SI 23.0 4.0 27.0 27.0Asia Downunder TVNZ 7 SI 69.3 69.3Attitude TV ONE SI 21.0 4.5 25.5 25.5Attitude TVNZ 7 SI 68.7 68.7Attitude Docos TV ONE Doco 1.0 - 1.0 -Baby Looney Toons TV2 Pre School 6.5 6.5 13.0 13.0Back Benches TVNZ 7 NCA 61.5 -Back Benches in Recess TVNZ 7 NCA 25.7 -Back Benches Job Summit Special TVNZ 7 NCA 1.9 -Beach Volleyball TV2 Sport 9.0 - 9.0 -Beat Squad TV ONE Factual 4.0 - 4.0 4.0Beijing Paralympic Games TV ONE SI 14.0 - 14.0 -Beijing Paralympic Games TVNZ 7 SI 10.0 -Best of Border Patrol TV ONE Factual 2.5 - 2.5 2.5Best of Breakfast TV ONE NCA - 23.5 23.5 -Best of Breakfast TVNZ 7 NCA 455.8 -Best of Business & Breakfast TVNZ 7 NCA 455.8 -Beyond The Darklands TV ONE Doco 5.0 1.0 6.0 5.0Black Sheep TV2 Drama 2.0 - 2.0 2.0Border Patrol TV ONE Factual 5.0 6.3 11.3 11.3Border Patrol TVNZ 6 Factual 8.3 -Brain Power TV ONE Doco - 4.0 4.0 4.0Breakfast TV ONE NCA 604.0 - 604.0 -Burying Brian TV ONE Drama 6.0 5.9 11.9 11.9Business TV ONE NCA 117.5 - 117.5 -Business Weekend TV ONE NCA - 22.5 22.5 -Business Weekend TVNZ 7 NCA 77.9 -Buzzy Bee & Friends TV2 Pre School 1.5 1.1 2.6 -Cadbury Crunchie Comedy Gala TV2 Comedy 4.0 - 4.0 -Children of the Migration TV ONE Doco - 0.4 0.4 0.4Chuggington TV2 Pre School 11.5 - 11.5 -Cinderella TV ONE Arts 1.5 - 1.5 -Clifford Puppy Days TV2 Pre School 14.0 14.0 -Close Up TV ONE NCA 118.0 - 118.0 118.0Close Up TVNZ 7 NCA 97.9 -Close Up Weekend TVNZ 7 NCA 45.8 -

21 / TVNZ ANNUAL REPORT FY20095+ REACH 5+ REACH IN Informed National Identity/IN UNITS PERCENTAGE Society Citizenship Maori Diversity NZ Talent Innovation1,390,700 35.0% ✓105,570 2.7% ✓ ✓826,970 20.8% ✓546,360 13.8% ✓955,370 24.3% ✓n/a n/a ✓1,386,130 35.0% ✓ ✓n/a n/a ✓72,890 1.8% ✓ ✓273,790 6.9% ✓ ✓n/a n/a ✓ ✓754,200 19.0% ✓ ✓1,494,290 37.8% ✓ ✓ ✓1,093,740 27.7% ✓ ✓n/a n/a ✓ ✓1,212,150 30.7% ✓n/a n/a ✓244,250 6.2% ✓366,950 9.3% ✓n/a n/a ✓n/a n/a ✓n/a n/a ✓664,740 16.7% ✓ ✓1,866,860 47.3% ✓1,161,690 29.5% ✓ ✓n/a n/a ✓ ✓1,453,890 36.6% ✓808,840 20.5% ✓n/a n/a ✓n/a n/a ✓1,590,100 40.1% ✓948,810 23.9% ✓ ✓2,060,550 52.2% ✓n/a n/a ✓354,950 8.9% ✓ ✓2,722,700 68.9% ✓1,803,600 45.6% ✓ ✓1,122,350 28.4% ✓524,510 13.3% ✓n/a n/a ✓507,890 12.8% ✓1,516,420 38.2% ✓91,950 2.3% ✓ ✓916,310 23.1% ✓77,280 2.0% ✓ ✓ ✓367,910 9.3% ✓3,427,040 86.7% ✓n/a n/a ✓n/a n/a ✓

22 / TVNZ ANNUAL REPORT FY2009FIRST REPEAT TOTAL HOURS OFPROGRAMME TITLE CHANNEL GENRE RUN HOURS HOURS CAPTIONINGCoastwatch TV ONE Factual 5.0 - 5.0 5.0Colin McCahon TV ONE Doco - 0.7 0.7 0.7Comedy Christmas Gala TV2 Comedy 1.5 - 1.5 1.5Coming Home Te Hokianga Mai TV ONE SI 1.3 - 1.3 1.3Coming Home Te Hokianga Mai TVNZ 6 SI 5.8 -Coming Home Te Hokianga Mai Highlights TVNZ 7 SI 1.7 -Confederations Cup Soccer TV ONE Sport 3.7 - 3.7 -Cool Kids Cooking TV2 Children’s - 4.5 4.5 4.5Country Calendar TVNZ 6 Factual 149.2 53.5Custom Made TV ONE Doco - 0.5 0.5 -Cycling TV ONE Sport 1.0 - 1.0 -Dancing with the Stars TV ONE Ent 12.5 26.5 39.0 12.5Daughters of the Pacific TV ONE Doco - 0.4 0.4 0.4Death on the Beach TV ONE Doco - 1.0 1.0 -Diplomatic Immunity TV ONE Comedy 6.5 - 6.5 6.5Eating Media Lunch TV2 Comedy 3.0 - 3.0 3.0Election 08 ONE <strong>New</strong>s Specials TVNZ 7 NCA 7.5 -Election 08: Leaders on 7 TVNZ 7 NCA 12.5 -Election 08: Swing Seats TVNZ 7 NCA 5.0 -Ends of the Earth TV ONE Doco - 3.0 3.0 3.0Equestrian TV ONE Sport 5.5 - 5.5 -Erin Simpson Show TV2 Children’s 23.5 - 23.5 -Explorers TV ONE Doco - 4.0 4.0 4.0Eye To Eye TV ONE NCA 13.0 - 13.0 -Eye To Eye TVNZ 7 NCA 69.7 -FA Cup Soccer TV ONE Sport 2.0 - 2.0 -Fair Go TV ONE Factual 19.0 8.0 27.0 27.0Fair Go TVNZ 7 Factual 11.4 11.4Firehouse Tales TV2 Pre School 3.0 3.0 3.0Franklin TV2 Pre School 74.0 74.0 74.0Gardens of the World TV ONE Factual - 9.0 9.0 -Giggles TVNZ 6 Pre School 0.8 -Go Girls TV2 Drama 13.0 - 13.0 13.0Go Show TV2 Pre School - 177.7 177.7 177.7Great Gallagher TV ONE Sport 1.0 - 1.0 -Ground Rules TV ONE Factual - - - -Handy Manny TV2 Pre School 6.0 - 6.0 6.0Heart of the North TV ONE Doco - 0.5 0.5 -Here to Stay 2 TV ONE Doco 3.0 - 3.0 3.0Hi-5 TV2 Pre School 22.5 106.0 128.5 128.5Hockey TV ONE Sport 4.0 - 4.0 -Homefront Extra TV ONE Factual - 6.8 6.8 -Homegrown TV ONE Factual 3.5 - 3.5 3.5Homesick Extra TVNZ 6 Factual 8.4 -House and Garden Extra TV ONE Factual - 4.3 4.3 -How The Other Half Lives TV ONE Doco 4.0 - 4.0 4.0Hunger for the Wild TV ONE Factual 5.0 2.5 7.5 7.5I Am TV TV2 SI 36.0 - 36.0 -I Am TV Presents The Outlook for Someday TV2 SI 1.0 - 1.0 -Ice TV ONE Factual - 2.5 2.5 2.5In the Night Garden TV2 Pre School 109.0 109.0 -InBeTween TVNZ 6 Children’s 33.4 -Indo/Pacific Trampolining TV ONE Sport 1.0 - 1.0 -Intrepid Journeys TV ONE Factual - 17.8 17.8 17.8Is It Safe To Eat TV ONE Factual - 3.0 3.0 -Jamie’s Eat to Save Your Life TV ONE Factual 1.5 - 1.5 1.5

23 / TVNZ ANNUAL REPORT FY20095+ REACH 5+ REACH IN Informed National Identity/IN UNITS PERCENTAGE Society Citizenship Maori Diversity NZ Talent Innovation2,000,100 50.4% ✓67,930 1.7% ✓ ✓923,390 23.5% ✓155,060 3.9% ✓ ✓ ✓n/a n/a ✓ ✓ ✓n/a n/a ✓ ✓ ✓459,400 11.6% ✓ ✓1,026,300 25.9% ✓n/a n/a ✓ ✓49,280 1.2% ✓ ✓118,100 3.0% ✓ ✓2,729,990 69.0% ✓92,020 2.3% ✓ ✓103,920 2.6% ✓1,969,860 49.6% ✓ ✓1,151,350 29.3% ✓ ✓n/a n/a ✓n/a n/a ✓n/a n/a ✓256,440 6.5% ✓ ✓470,000 11.9% ✓ ✓1,625,140 40.9% ✓360,900 9.1% ✓ ✓ ✓592,280 15.0% ✓ ✓ ✓n/a n/a ✓ ✓ ✓430,710 10.9% ✓ ✓2,753,920 69.7% ✓n/a n/a ✓88,630 2.3% ✓1,217,100 30.8% ✓592,510 15.0% ✓ ✓n/a n/a ✓2,478,630 62.5% ✓ ✓2,005,860 50.7% ✓134,120 3.4% ✓ ✓n/a n/a ✓ ✓273,050 6.9% ✓100,420 2.6% ✓ ✓ ✓1,132,370 28.5% ✓ ✓1,142,380 28.9% ✓388,070 9.8% ✓ ✓779,710 19.7% ✓ ✓1,605,010 40.8% ✓n/a n/a ✓650,820 16.4% ✓ ✓1,834,680 46.2% ✓ ✓1,866,420 47.2% ✓ ✓ ✓1,151,560 29.2% ✓ ✓ ✓175,810 4.4% ✓ ✓ ✓292,410 7.4% ✓1,481,740 37.5% ✓n/a n/a ✓ ✓196,190 5.0% ✓ ✓856,310 21.6% ✓259,380 6.5% ✓855,740 21.6% ✓

24 / TVNZ ANNUAL REPORT FY2009FIRST REPEAT TOTAL HOURS OFPROGRAMME TITLE CHANNEL GENRE RUN HOURS HOURS CAPTIONINGJob Summit Addresses TVNZ 7 NCA 4.6 -Just the Job TV2 Children’s 7.0 5.0 12.0 -Karaoke High TV2 Ch Drama - 7.5 7.5 7.5Ken Douglas TV ONE Doco - 0.3 0.3 0.3Khaki All Blacks TV ONE Doco - 1.0 1.0 1.0Kia Kaha TV ONE Doco - 0.5 0.5 -Kidzone TVNZ 6 Pre School 608.4 -Killian Curse TV2 Ch Drama - 7.0 7.0 7.0King of Tonga Ceremony Highlights TV ONE SI 1.0 - 1.0 -Kiwi Kitchen TV ONE Factual - 12.0 12.0 12.0Kiwis At War TV ONE Doco - 3.0 3.0 3.0Korero Mai TV2 SI 23.3 11.0 34.3 -Korero Mai TVNZ 6 SI 34.3 -Leo’s Pride TV ONE Doco - 0.7 0.7 0.7Let’s Get Inventin’ TV2 Children’s 6.5 4.5 11.0 11.0Let’s Get Inventin’ TVNZ 6 Children’s 12.1 12.1Little Bear TV2 Pre School 105.5 105.5 -Little Einsteins TV2 Pre School 10.0 10.0 10.0Lost in Libya TV ONE Doco 1.5 - 1.5 1.5Louis Vuitton Pacific Series tvnz.co.nz Sport 4.4 - 4.4 -Marae TV ONE SI 20.0 5.5 25.5 -Marae TVNZ 7 SI 72.6 -Master Raindrop TV2 Pre School 12.5 0.5 13.0 13.0Media 7 TVNZ 7 NCA 135.0 -Meet the Locals TVNZ 6 Factual 217.1 -Mercury Falling TV ONE Doco - 1.0 1.0 1.0Mickey Mouse Clubhouse TV2 Pre School 19.5 6.5 26.0 16.5Midday TV ONE NCA 118.8 - 118.8 118.8Montana World of Wearable Art TV ONE Arts 1.0 1.0 2.0 -Montana World of Wearable Art TVNZ 6 Arts 0.8 -Moon TV TV2 Comedy 1.0 - 1.0 -Motorcycles and Mountaineers Legs TV ONE Doco - 0.5 0.5 -Mucking In TV ONE Factual 2.5 31.5 34.0 34.0Multisport TV ONE Sport 0.5 - 0.5 -Murder on the Blade TV ONE Doco - 2.0 2.0 2.0My God TV ONE SI 5.0 - 5.0 -My God TVNZ 7 SI 11.0 -National Bank Country Calendar TV ONE Factual 15.0 25.5 40.5 40.5National Bank Young Farmer TV ONE Factual 1.0 - 1.0 -Netball TV ONE Sport 41.7 - 41.7 -Netball TV2 Sport 4.0 - 4.0 -<strong>New</strong> Artland TVNZ 6 Arts 33.5 -<strong>New</strong> Breed Old Creed TV ONE Doco - 0.5 0.5 1.0<strong>New</strong> Oceania TV ONE Doco - 1.0 1.0 -Nine Lessons & Carols TV ONE SI 1.5 1.5 3.0 1.0Nobody’s Heroes TV ONE Doco - 1.0 1.0 29.5NZ Children’s Drama - various TVNZ 6 Ch Drama 80.2 -NZ Directs TVNZ 6 Ent 125.9 12.0NZ Documentaries - Various TVNZ 6 Doco 40.1 407.0NZ Documentaries - Various TVNZ 7 Doco 765.8 369.3NZ Drama - various TVNZ 6 Drama 604.4 78.0NZ Entertainment (incl. Comedy) - various TVNZ 6 Ent / Comedy 369.3 -NZ Exposed TV ONE Doco - 3.0 3.0 -NZ House and Garden TV ONE Factual - 1.0 1.0 -NZ Pre School - various TVNZ 6 Pre School 1,313.9 -Ocean Swim TV ONE Sport 2.5 - 2.5 6.5

25 / TVNZ ANNUAL REPORT FY20095+ REACH 5+ REACH IN Informed National Identity/IN UNITS PERCENTAGE Society Citizenship Maori Diversity NZ Talent Innovationn/a n/a ✓954,670 24.2% ✓633,860 16.0% ✓ ✓111,720 2.8% ✓ ✓171,190 4.3% ✓ ✓120,930 3.1% ✓ ✓ ✓ ✓n/a n/a ✓886,090 22.3% ✓ ✓222,670 5.7% ✓ ✓796,440 20.2% ✓352,390 8.9% ✓ ✓1,107,650 28.1% ✓ ✓ ✓n/an/a93,650 2.4% ✓ ✓ ✓1,499,070 38.1% ✓n/a n/a ✓1,869,860 47.4% ✓352,640 8.9% ✓285,630 7.2% ✓ ✓n/a n/a ✓ ✓ ✓878,050 22.2% ✓ ✓ ✓n/a n/a ✓ ✓ ✓999,820 25.2% ✓n/a n/a ✓n/a n/a ✓ ✓160,640 4.1% ✓692,900 17.5% ✓2,225,730 56.3% ✓311,620 7.9% ✓ ✓ ✓n/a n/a ✓ ✓ ✓310,680 7.9% ✓68,440 1.7% ✓ ✓1,722,160 43.5% ✓69,940 1.8% ✓ ✓71,220 1.8% ✓472,740 12.0% ✓ ✓n/a n/a ✓ ✓2,771,890 70.1% ✓ ✓2,480,460 62.7% ✓ ✓1,190,200 30.2% ✓ ✓n/a n/a ✓ ✓50,390 1.3% ✓ ✓ ✓ ✓91,730 2.3% ✓ ✓ ✓205,040 5.2% ✓ ✓184,380 4.6% ✓ ✓ ✓n/a n/a ✓ ✓n/a n/a ✓ ✓n/a n/a ✓ ✓n/a n/a ✓ ✓ ✓n/a n/a ✓ ✓ ✓n/a n/a ✓ ✓347,260 8.7% ✓ ✓222,630 5.6% ✓ ✓n/a n/a ✓366,190 9.2% ✓2,120,500 53.9% ✓ ✓

28 / TVNZ ANNUAL REPORT FY2009FIRST REPEAT TOTAL HOURS OFPROGRAMME TITLE CHANNEL GENRE RUN HOURS HOURS CAPTIONINGTennis TV ONE Sport 92.4 - 92.4 2.4The Big Picture TV ONE Arts - 2.4 2.4 -The Big Picture TVNZ 6 Arts 4.2 1.0The Girl Who Didn’t Grow TV ONE Doco 1.0 - 1.0 -The Good Word TVNZ 6 Arts 16.0 -The Gravy TVNZ 6 Arts 45.0 2.0The Investigator TV ONE Doco 2.0 - 2.0 1.8The Man Who Lost His Head TV ONE Drama - 1.8 1.8 -The Native’s School TV ONE Doco - 0.5 0.5 3.0The Outsiders TV ONE Doco 3.0 - 3.0 4.0The Pretender TV ONE Comedy 4.0 - 4.0 -The Road To Ellerslie TV ONE Factual 0.5 6.0 6.5 2.0The Singing Bee TV2 Ent 2.0 - 2.0 -The Sitting TVNZ 6 Arts 44.6 1.5This Is Your Life TV ONE Ent 1.5 1.0 2.5 3.0Tiger: Spy in the Jungle TV ONE Doco 3.0 - 3.0 -Time Trackers TV2 Children’s 6.5 - 6.5 4.0To Sir With Love TV ONE Ent 2.0 2.0 4.0 1.4To Sir With Love TVNZ 6 Ent 1.4 122.9Tonight TV ONE NCA 123.4 - 123.4 8.0Top Town TV2 Ent 8.0 - 8.0 -Tri TV TV ONE Sport 9.0 - 9.0 -Triathlon TV ONE Sport 4.5 - 4.5 -TVNZ <strong>New</strong>s at 8 TVNZ 7 NCA 364.0 -TVNZ <strong>New</strong>s Now TVNZ 7 NCA 1,666.2 4.0Unauthorised History TV ONE Comedy 4.0 - 4.0 4.0Under Investigation TV ONE Doco - 4.0 4.0 6.7Under Investigation TVNZ 7 Doco 6.7 1.8Until Proven Innocent TV ONE Drama 1.8 - 1.8 3.0Victoria Wood: Victoria’s Empire TV ONE Doco 3.0 3.0 -Vodafone One Tribe TV TV2 Sport 7.0 - 7.0 -Waitangi 09 TV ONE SI 3.0 0.5 3.5 -Waitangi 09 TVNZ 7 SI 2.5 52.0Waka Huia TV ONE SI 41.0 11.0 52.0 78.0Waka Huia TVNZ 7 SI 85.8 -Waka Huia: He Hokinga Mai TVNZ 7 SI 217.5 -Wayne Anderson TV2 Factual - 0.3 0.3 1.5Westpac Halberg Awards TV ONE Sport 1.5 - 1.5 1.7Whale Rider TV ONE Drama - 1.7 1.7 15.9Whanau TV ONE SI - 15.9 15.9 26.1Whanau TVNZ 6 SI 26.1 -What Now Sundays TV2 Children’s 82.0 - 82.0 3.0Why We Buy TV ONE Factual - 3.0 3.0 3.5Wild Vets TV ONE Factual 3.5 - 3.5 20.5Wonder Dogs TV ONE Ent - 20.5 20.5 -World Cup Soccer TV ONE Sport 2.8 - 2.8 2.0Worlds Fastest Indian TV ONE Drama - 2.0 2.0 12.0Wot Wots TV2 Pre School 12.0 - 12.0 0.7Wrestling with the Angels TV ONE Doco - 0.7 0.7 -Yachting TV ONE Sport 11.1 - 11.1 -Yo Gabba Gabba TV2 Pre School 10.0 13.5 23.5 23.5Zip & Macs Pad TV2 Pre School - 24.9 24.9 24.913,878.1 3,774.6

29 / TVNZ ANNUAL REPORT FY20095+ REACH 5+ REACH IN Informed National Identity/IN UNITS PERCENTAGE Society Citizenship Maori Diversity NZ Talent Innovation442,910 11.2% ✓ ✓n/a n/a ✓ ✓ ✓ ✓577,500 14.7% ✓ ✓ ✓ ✓n/a n/a ✓n/a n/a ✓ ✓ ✓1,111,540 28.0.% ✓ ✓ ✓416,090 10.6% ✓ ✓ ✓91,530 2.3% ✓ ✓ ✓972,440 24.5% ✓ ✓ ✓1,371,330 34.8% ✓ ✓466,940 11.8% ✓ ✓ ✓1,446,150 36.4% ✓n/a n/a ✓1,117,320 28.4% ✓ ✓ ✓1,229,720 31.2% ✓ ✓913,520 23.0% ✓1,237,810 31.3% ✓n/a n/a ✓3,327,700 84.2% ✓2,095,270 52.8% ✓954,210 24.0% ✓ ✓374,640 9.5% ✓ ✓n/a n/a ✓ ✓n/a n/a ✓983,600 25.0% ✓205,350 5.2% ✓ ✓n/a n/a ✓792,040 20.0% ✓1,259,560 31.7% ✓ ✓ ✓674,120 17.0% ✓351,810 8.9% ✓ ✓n/a n/a ✓ ✓ ✓ ✓1,309,920 33.1% ✓ ✓ ✓ ✓n/a n/a ✓ ✓ ✓n/a n/a ✓ ✓ ✓77,230 2.0% ✓ ✓ ✓796,760 20.1% ✓487,520 12.4% ✓ ✓ ✓1,347,110 34.2% ✓ ✓n/a n/a ✓ ✓ ✓ ✓1,792,780 45.4% ✓ ✓ ✓ ✓277,380 7.0% ✓2,070,960 52.2% ✓469,070 11.9% ✓258,350 6.6% ✓ ✓354,760 9.0% ✓ ✓827,100 20.8% ✓ ✓123,450 3.1% ✓476,300 12.1% ✓ ✓1,204,410 30.3% ✓ ✓969,410 24.4% ✓1,332,270 33.7% ✓ ✓

30 / TVNZ ANNUAL REPORT FY2009Financial StatementsStatement of Responsibility 31Income Statement 32Balance Sheet 33Statement of Changes in Equity 34Cash Flow Statement 35Notes to the Financial Statements 36Statement of Service Performance 60Report of the Auditor General 72Five Year Trend Statement 74Additional Information 75

31 / TVNZ ANNUAL REPORT FY2009Statement of ResponsibilityFor the year ended 30 June 2009The Board and management of Television <strong>New</strong> 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 financialreporting.In the opinion of the Board and management these financial statements fairly reflect the financial position of Television <strong>New</strong> Zealand Limited as at30 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 DirectorsSir John Anderson, KBEChairmanSir John Goulter, KNZM, JPChairman, Audit and Risk Committee30 September 2009

33 / TVNZ ANNUAL REPORT FY2009Balance SheetAs at 30 June 2009GroupCompany2009 2008 2009 2008Notes $000 $000 $000 $000ASSETSCurrent AssetsCash and cash equivalents 9 2,047 5,341 2,047 5,341Receivables and prepayments 10 50,460 66,264 50,476 66,264Programme rights - intangible assets 12 78,555 73,514 78,555 73,514Inventories 229 255 229 255Derivative financial instruments 21 3,527 5,028 3,527 5,028Total current assets 134,818 150,402 134,834 150,402Non-current assetsProperty, plant and equipment 11 107,395 110,312 107,395 110,312Other intangible assets 12 20,983 13,970 20,983 13,970Programme rights - intangible assets 12 17,718 22,654 17,718 22,654Deferred tax asset 8 11,233 12,323 11,200 12,245Derivative financial instruments 21 851 2,489 851 2,489Investment in subsidiaries 13 0 0 5,210 140Investment in associate 14 9,151 0 0 0Loan to associate 2,197 0 2,197Other investments 42 42 42 42Total non-current assets 169,570 161,790 165,596 161,852Total assets 304,388 312,192 300,430 312,254LIABILITIESCurrent LiabilitiesLoans and borrowings 16 36,221 567 36,221 567Trade and other payables 17 51,960 46,857 46,965 46,857Deferred income 18 26,939 39,917 26,939 39,917Derivative financial instruments 21 253 1,317 253 1,317Provisions 19 1,798 11,017 1,798 11,017Total current liabilities 117,171 99,675 112,176 99,675Non-current liabilitiesEmployee entitlements 17 2,047 2,034 2,047 2,034Derivative financial instruments 21 0 94 0 94Provisions 19 278 0 278 0Loans and borrowings 16 0 27,700 0 27,700Total non-current liabilities 2,325 29,828 2,325 29,828EquityShare capital 22 140,000 140,000 140,000 140,000Cash flow hedge reserves 84 (17) 84 (17)Retained earnings 44,808 42,706 45,845 42,768Total equity 184,892 182,689 185,929 182,751Total equity and liabilities 304,388 312,192 300,430 312,254The 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 2009Sir John Anderson, KBEChairmanSir John Goulter, KNZM, JPDirector

34 / TVNZ ANNUAL REPORT FY2009Statement of Changes in EquityFor the year ended 30 June 2009ShareCapitalCashflowhedgereserveRetainedearningsTotalNotes $000 $000 $000 $000GroupAt 1 July 2008 140,000 (17) 42,706 182,689Effective portion of changes in fair valueof cash flow hedges, net of tax22 0 101 0 101Income and expense recognised directly in equity 0 101 0 101Profit for the period 0 0 2,102 2,102Total recognised income and expense 0 101 2,102 2,203Dividends declared in the year 0 0 0 0At 30 June 2009 140,000 84 44,808 184,892At 1 July 2007 140,000 96 33,581 173,677Effective portion of changes in fair valueof cash flow hedges, net of tax22 0 (113) 0 (113)Income and expense recognised directly in equity 0 (113) 0 (113)Profit for the period 0 0 19,426 19,426Total recognised income and expense 0 (113) 19,426 19,313Dividends declared in the year 0 0 (10,301) (10,301)At 30 June 2008 140,000 (17) 42,706 182,689CompanyAt 1 July 2008 140,000 (17) 42,768 182,751Effective portion of changes in fair valueof cash flow hedges, net of tax22 0 101 0 101Income and expense recognised directly in equity 0 101 0 101Profit for the period 0 0 3,077 3,077Total recognised income and expense 0 101 3,077 3,178Dividends declared in the year 0 0 0 0At 30 June 2009 140,000 84 45,845 185,929At 1 July 2007 140,000 96 33,602 173,698Effective portion of changes in fair valueof cash flow hedges, net of tax22 0 (113) 0 (113)Income and expense recognised directly in equity 0 (113) 0 (113)Profit for the period 0 0 19,467 19,467Total recognised income and expense 0 (113) 19,467 19,354Dividends declared in the year 0 0 (10,301) (10,301)At 30 June 2008 140,000 (17) 42,768 182,751The accompanying notes form part of these financial statements.

36 / TVNZ ANNUAL REPORT FY2009Notes to the Financial StatementsFor the year ended 30 June 20091. Corporate informationTelevision <strong>New</strong> Zealand Limited (the “Company”) and its subsidiaries (the “Group’) operate in the broadcasting and production oftelevision programmes and channels within <strong>New</strong> Zealand.The Company is a limited liability company incorporated in <strong>New</strong> Zealand under the Companies Act 1993 and is wholly owned bythe Crown. The Company is bound by the requirements of the Television <strong>New</strong> Zealand Act 2003. The Crown does not guarantee theliabilities of Television <strong>New</strong> 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 policiesThe principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have beenconsistently applied to all periods presented, unless otherwise stated.a) Basis of preparationThe financial statements have been prepared in accordance with generally accepted accounting practice in <strong>New</strong> Zealand (NZ GAAP)and the requirements of the Television <strong>New</strong> Zealand Act 2003, Financial Reporting Act 1993 and the Companies Act 1993. The financialstatements have been prepared on a historical cost basis except for derivative financial instruments that have been measured at fairvalue.The carrying values of recognised assets and liabilities that are hedged with fair value hedges are adjusted to record changes in the fairvalues attributable to the risks that are being hedged.The financial statements are presented in <strong>New</strong> Zealand dollars ($), which is the Company’s functional currency. All financial informationpresented in <strong>New</strong> Zealand dollars has been rounded to the nearest thousand.b) Statement of complianceThe financial statements have been prepared in accordance with NZ GAAP. They comply with <strong>New</strong> Zealand equivalents to InternationalFinancial Reporting Standards (NZ IFRS), and other applicable Financial Reporting Standards, as appropriate for profit orientatedentities. The financial statements comply with International Financial Reporting Standards (IFRS).The accounting policies set out below have been applied consistently to all periods presented in these financial statements.c) Basis of consolidationThe consolidated financial statements comprise the financial statements of Television <strong>New</strong> Zealand Limited and its subsidiaries at 30June.Subsidiaries are those entities controlled, directly or indirectly, by the Group. The financial statements of subsidiaries are preparedfor the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into lineany dissimilar accounting policies that may exist. All intercompany transactions, balances and unrealised surpluses and deficits ontransactions between Group companies are eliminated on consolidation.The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commencesuntil the date that control ceases.The acquisition of subsidiaries is accounted for using the purchase method of accounting.Investments in subsidiaries are accounted for at cost, less allowance for impairment, in the separate financial statement of the Company.d) Foreign currencyThe functional and presentational currency of Television <strong>New</strong> Zealand Limited and its subsidiaries is the <strong>New</strong> Zealand dollar ($).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 theincome statement.Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at thedate of the initial transaction.

37 / TVNZ ANNUAL REPORT FY2009Notes to the Financial Statements (continued)For the year ended 30 June 2009e) Revenue recognitionRevenue is stated exclusive of goods and services tax (GST) and consists of sales of goods and services to third parties. Revenue fromthe sale of goods and services is recognised to the extent that it is probable that the economic benefits will flow to the Group and therevenue can be reliably measured. Key classes of revenue are recognised on the following basis:i) Rendering of servicesRevenue from advertising and sponsorship is recognised as income at the time of transmission.ii) Government grantsGovernment grants are recognised initially as deferred income when there is reasonable assurance that they will be received and thatthe Group will comply with the conditions associated with the grant. Grants that compensate the Group for expenses incurred arerecognised as income on a systematic basis in the same periods in which the expenses are recognised. Grants that compensate theGroup 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 revenueOther revenue is recognised when the product has been delivered or in the accounting period in which the actual service has beenprovided.iv) InterestInterest revenue is recognised as the interest accrues to the net carrying amount of the financial asset.f) Income tax expenseIncome tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to theextent 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 ofassets 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 (andtax 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 againstcurrent tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.g) LeasesOperating lease payments, where the lessors substantially retain all the risks and benefits of ownership of the leased items, arerecognised as an expense in the income statement on a straight-line basis over the lease term.h) DividendsProvision is made for the amount of dividend declared on or before balance date but not distributed at balance date.i) Property, plant and equipmentItems of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes the costto 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 partsof an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant andequipment.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:BuildingsPlant and equipmentMotor vehicles40 years3 to 10 years5 to 10 years

38 / TVNZ ANNUAL REPORT FY2009Notes to the Financial Statements (continued)For the year ended 30 June 2009ImpairmentThe carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate thecarrying value may not be recoverable. For an asset that does not generate largely independent cash flows, the recoverable amountis determined for the cash-generating unit the asset belongs to. If any such indication exists and where the carrying values exceed theestimated 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 arisefrom 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 netproceeds and the carrying value of the item) is included in the income statement in the period the item is derecognised.j) Intangible assetsProgramme RightsTelevision programmes which are available for use, including those acquired overseas, are recorded at cost less amounts charged tothe income statement based on management’s assessment of the useful life, which is regularly reviewed and additional write downsare made as considered necessary. Programmes produced internally for the purpose of broadcast are initially recognised as intangibleassets 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 exceedingone 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 threeyears from the broadcast licence period start date.Frequency licencesFrequency licences are recorded at cost less amortisation and impairment losses. Amortisation is calculated on a diminishing valuemethodology using the sum of digits over the remaining life of the licence.Other intangible assetsAcquired software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific asset. These costsare amortised on a straight line basis over their estimated useful economic lives of two to five years.Development costsDevelopment costs on internal projects are only capitalised by the Group when it can be demonstrated that the technical feasibility ofcompleting the intangible asset is valid so that the asset will be available for use. Any development costs capitalised are amortised overthe 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 carryingvalue of the item) is included in the income statement in the period the item is derecognised.k) Cash and cash equivalentsCash and short term deposits in the balance sheet comprise cash at the bank and in hand and short term deposits with an originalmaturity 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 ofoutstanding overdrafts.l) Trade and other receivablesTrade receivables are recognised and carried at original invoice amount and subsequently measured at amortised cost, less an allowancefor impairment.Collectibility of trade receivables is reviewed on an ongoing basis and debts that are known to be uncollectible are written offimmediately. An allowance for doubtful debts is recognised when there is objective evidence that the Group will not be able to collectthe receivable. Financial difficulties of the debtor, default payments or debts more than 90 days overdue are considered objectiveevidence of impairment.m) InventoriesInventories comprise technical stores and videotape. All inventories are recorded at the lower of cost or net realisable value.

39 / TVNZ ANNUAL REPORT FY2009Notes to the Financial Statements (continued)For the year ended 30 June 2009n) Derivative financial instrumentsThe Group uses derivative financial instruments, within predetermined policies and limits, to manage its exposure to foreign currencyexchange rate risk and interest rate risk. The Group also enters into programme supply contracts that contain a foreign currencyembedded derivative.Such derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and aresubsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivativecontract 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 inthe fair value of a recognised asset or liability or a firm commitment; or ii) a cash flow hedge where they hedge exposure to variabilityin cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a forecasted transaction.i) Fair value hedgeChanges 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 hedgeThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised inequity. The gain or loss relating to the ineffective portion is recognised in the income statement. Amounts accumulated are recycledin the income statement in the period when the hedged item affects profit or loss. When the hedged firm commitment results inthe recognition of an asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses that hadpreviously being recognised in equity are included in the initial measurement of the acquisition cost or other carrying amount of theasset or liability.Hedge accounting is discontinued when the hedging instrument expires or is sold, or when the hedge no longer meets the criteria forhedge 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 incomestatement.For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are recognised immediatelyin the income statement. The fair value of forward exchange contracts and embedded derivatives are calculated by reference to currentforward exchange rates for contracts with similar maturity profiles. The fair value of interest rate swap contracts is determined byreference to market values of similar instruments.In accordance with its treasury policy, the Group does not engage in speculative transactions or hold derivative financial instrumentsfor trading purposes.o) Borrowings and borrowing costsBorrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortisedcost using the effective interest method. Borrowing costs are recognised as an expense when incurred.p) Trade and other payablesTrade and other payables are carried at amortised cost and due to their short term nature they are not discounted. Trade and otherpayables are recognised when the Group becomes obliged to make future payments resulting from the purchases of goods andservices.q) Investment in associateThe 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. Theconsolidated financial statements include the Group’s share of the income and expenses of the associate from the date that significantinfluence commenced until the date that significant influence ceases. The Group’s share of its associate post acquisition profits or lossesis recognised in the income statement and its share of post acquisition movements in reserves is recognised in reserves. The cumulativepost acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in anassociate exceeds its interest in the associate, including any unsecured long-term receivables and loans, the Group does not recogniseany further losses, unless it has incurred obligations or made payments on behalf of the associate.r) Interest in a jointly controlled entityThe interest in a joint venture entity is accounted for in the consolidated financial statements using the equity method of accountingand is carried at cost by the parent entity. Under the equity method, the Group’s share of the results of the joint venture is recognisedin the income statement, and the share of movements in reserves is recognised in the balance sheet.

40 / TVNZ ANNUAL REPORT FY2009Notes to the Financial Statements (continued)For the year ended 30 June 2009s) Employee benefitsProvision is made for employee benefits accumulated as a result of employees rendering services up to balance date. The benefitsinclude wages and salaries, incentives, compensated absences and retirement leave which are expensed in the income statement whenservices are provided or benefits vest with the employee. The provision for employee benefits is stated at the present value of theestimated future cash outflows to be incurred resulting from employees’ services provided up to balance date.t) ProvisionsProvisions are recognised when the Group has present legal or constructive obligation as a result of a past event that can be estimatedreliably, 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-taxrate that reflects current market assessments of the time value of money and the risks specific to the liability.u) <strong>New</strong> accounting standards and interpretationsStandards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Groupfor the annual reporting period ending 30 June 2009. These are noted below.NZ IFRS 8 – Operating SegmentsReplaces NZ IAS 14 Segment Reporting, the new standard requires a management approach to segment reporting. NZ IFRS 8 isa disclosure standard so will not have a direct impact on the amounts included in the Group’s financial statements. However theamendments may have an impact on the Group’s segment disclosures. The application date for this standard is for accounting periodsbeginning 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 StatementsThe revised standard introduces a statement of comprehensive income. Other revisions include changes to the presentation of itemsin the statement of changes in equity, new presentation requirements for restatements or reclassifications of items in the financialstatements, changes in the presentation requirements for dividends and changes to the titles of financial statements. The amendmentsare expected to only affect the presentation of the Group’s financial statements and will not have a direct impact on the measurementand recognition of amounts under the current NZ IAS 1. The Group has not determined at this stage whether to present the newstatement of comprehensive income as a single or two statements. The application date for this standard is for accounting periodsbeginning 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: DisclosuresThe amended NZ IFRS requires fair value measurements to be disclosed by the source of inputs using a three level hierarchy. NZ IFRS 7is a disclosure standard so will not have a direct impact on the Group’s financial statements. The application date for this standard is foraccounting 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 CostsThe amendments to NZ IAS 23 require that all borrowing costs associated with a qualifying asset must be capitalised. The Group mayhave qualifying assets which will require borrowing costs to be capitalised. The application date for this standard is for accountingperiods 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 assumptionsThe preparation of the financial statements requires management to make judgements, estimates and assumptions that affect thereported amounts in the financial statements. Estimates and assumptions are reviewed by management on an ongoing basis. Actualresults 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 assetsThe estimated useful life of a particular asset is based on historical experience, the expected service potential of the assets andtechnological advances. Adjustments to useful lives are made when considered necessary.Income taxes and deferred taxThe Group’s accounting policy for taxation requires management to make estimates as to, amongst other things, the amount of tax thatwill 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 taxableprofits will be available to utilise those temporary differences.Capitalised development costsDevelopment costs are only capitalised by the Group when it can be demonstrated that the technical feasibility of completing theintangible 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 FY2009Notes to the Financial Statements (continued)For the year ended 30 June 2009GroupCompany2009 2008 2009 2008$000 $000 $000 $0004) Operating revenueTelevision advertising revenue 298,404 315,540 298,404 315,540Commercial production funding 5,462 3,673 5,462 3,673Satellite sub lease revenue 400 546 400 546Other trading revenue 28,947 20,075 28,947 20,075333,213 339,834 333,213 339,8345) ExpensesExpenses include:Employee benefits expenseWages and salaries and other short term benefits 94,802 89,256 94,802 89,256Defined contribution superannuation expense 2,718 2,481 2,718 2,481less employee benefits charged to programmes/capitalised (32,591) (29,712) (32,591) (29,712)64,929 62,025 64,929 62,025Depreciation and amortisationDepreciation 13,424 12,444 13,424 12,444Amortisation - software 2,574 2,324 2,574 2,324Amortisation - licences 949 1,137 949 1,13716,947 15,905 16,947 15,905Auditors' remunerationAudit of financial statements 249 256 249 256Other assurance related services 60 6 60 6309 262 309 262Other assurance related services in the current year primarily relate to technology assurance activities.Rental and operating lease costs 4,841 4,206 4,841 4,2066) Reorganisation costsReorganisation costs 3,729 0 3,729 0Costs 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) 12,746Foreign 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 FY2009Notes to the Financial Statements (continued)For the year ended 30 June 2009GroupCompany2009 2008 2009 2008$000 $000 $000 $0008) Income taxa) Income taxThe major components of income tax expense are:Income StatementCurrent income taxCurrent period 477 4,720 506 4,780Adjustments for prior period (22) 24 (22) 1455 4,744 484 4,781Deferred income taxOrigination and reversal of temporary differences 1,047 5,578 1,002 5,526Impact of change in corporate tax rate 0 609 0 6091,047 6,187 1,002 6,135Total income tax expense 1,502 10,931 1,486 10,916b) Income tax recognised directly in equityNet movement on revaluation of cash flow hedges (43) 55 (43) 55Total income tax recognised directly in equity (43) 55 (43) 55c) Reconciliation of income tax expenseProfit before income tax for the period 3,604 30,357 4,563 30,383Taxation at 30% (2008 - 33%) 1,081 10,018 1,369 10,026Adjusted for the tax effect of:Non deductible expenditure 139 280 139 280Share of results of associated company 304 0 0 0Income tax (over)/under provided in prior years (22) 24 (22) 1Impact of change in corporate tax rate 0 609 0 609Total tax expense 1,502 10,931 1,486 10,916d) Recognised deferred tax assetsCurrentIncome TaxGroup Company2009 2009DeferredIncome TaxCurrentIncome TaxDeferredIncome Tax$000 $000 $000 $000Opening balance 942 12,323 942 12,245Charged to income statement (455) (1,047) (484) (1,002)Charged to equity 0 (43) 0 (43)Other payments 1,851 0 1,896 0Closing balance 2,338 11,233 2,354 11,200Tax 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 FY2009Notes to the Financial Statements (continued)For the year ended 30 June 20098) Income tax (continued)CurrentIncome TaxGroupCompany2008 2008DeferredIncome TaxCurrentIncome TaxDeferredIncome Tax$000 $000 $000 $000Opening balance 3,042 18,455 3,019 18,325Charged to income statement (4,744) (6,187) (4,781) (6,135)Charged to equity 0 55 0 55Other payments 2,644 0 2,704 0Closing balance 942 12,323 942 12,245Tax expense in income statement (10,931) (10,916)Amounts recognised in the balance sheet:Deferred tax asset 12,323 12,245The 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 30June 2008.GroupCompanyBalance SheetBalance Sheet2009 2008 2009 2008$000 $000 $000 $000Deferred income tax at 30 June relates to the following:Deferred tax assetsProgramme rights 4,191 5,774 4,191 5,774Employee entitlements 2,964 2,992 2,964 2,992Property, plant and equipment and software 1,953 1,425 1,953 1,425Provisions 282 124 282 124Frequency licences 684 693 650 615Funding 92 338 92 338Doubtful debts 34 29 34 29Other 463 542 464 542Tax losses 553 0 553 0Derivative financial instruments 17 406 17 40611,233 12,323 11,200 12,245Group and Company2009 2008$000 $000e) Imputation credit accountBalance at start of the year 14,751 12,210Income tax paid/(received) during the year 1,785 2,541Credits attached to dividends paid during the year (5,073) 0Balance at end of the year 11,463 14,751The Company and subsidiaries are part of the same consolidated tax group, therefore the imputation credits available to the Group and theCompany are the same.

44 / TVNZ ANNUAL REPORT FY2009Notes to the Financial Statements (continued)For the year ended 30 June 2009GroupCompany2009 2008 2009 2008$000 $000 $000 $0009) Cash and cash equivalentsCash at bank and in hand 186 218 186 218Short term deposits 1,861 5,123 1,861 5,123Cash and cash equivalents 2,047 5,341 2,047 5,341Bank 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 4,77410) Receivables and prepaymentsTrade receivables 34,940 42,108 34,940 42,108Less provision for receivables impairment (114) (96) (114) (96)Prepaid programme rights 7,624 11,774 7,624 11,774Prepayments - other 5,672 11,536 5,672 11,536Tax receivable 2,338 942 2,354 94250,460 66,264 50,476 66,264a) Provision for receivables impairmentTrade receivables are non interest bearing and are generally on 30-60 day terms. A provision for receivables impairment is recognised when there isobjective evidence that the receivable is impaired.Movements in the provision for receivables impairmentAt 1 July 96 312 96 312Charge/(reversal) for the year 108 (169) 108 (169)Amounts written off (90) (47) (90) (47)At 30 June 114 96 114 96Trade 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 paymentwill be made in full. Payment terms on these amounts have not been renegotiated however credit has been stopped until full payment is made. At30 June, the ageing analysis of trade receivables is as follows:Current 33,598 39,284 33,598 39,284Up to 30 days overdue 992 2,306 992 2,306Between 30 and 90 days overdue 175 347 175 347Over 90 days overdue - past due not impaired 61 75 61 75Over 90 days overdue - past due considered impaired 114 96 114 9634,940 42,108 34,940 42,108b) Fair value and credit riskDue 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).

49 / TVNZ ANNUAL REPORT FY2009Notes to the Financial Statements (continued)For the year ended 30 June 2009GroupCompany2009 2008 2009 2008$000 $000 $000 $00017) Trade and other payablesCurrentTrade payables and accruals 44,294 39,440 39,299 39,440Employee entitlements 7,666 7,417 7,666 7,41751,960 46,857 46,965 46,857Fair valueDue to the short term nature of these payables, their carrying value is assumed to approximate their fair value.Non-currentEmployee entitlements 2,047 2,034 2,047 2,03418) Deferred incomeGovernment funding 26,482 34,544 26,482 34,544Other 457 5,373 457 5,37326,939 39,917 26,939 39,917a) Government fundingGroup and CompanyMCH NZOA TMP Total$000 $000 $000 $000Year ended 30 June 2009At 1 July 2008 31,454 3,090 0 34,544Received/invoiced during the year 13,757 24,125 5,290 43,172Released to the income statement (25,845) (20,099) (5,290) (51,234)Closing net book amount 19,366 7,116 0 26,482Year ended 30 June 2008At 1 July 2007 29,300 4,472 0 33,772Received/invoiced during the year 37,668 9,113 5,371 52,152Released to the income statement (35,514) (10,495) (5,371) (51,380)Closing net book amount 31,454 3,090 0 34,544Government 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 Pacificnations, maintain non commercial transmission sites and fund TVNZ’s two digital channels broadcast on the Freeview platform. <strong>New</strong> Zealand on Air(NZOA) funds TVNZ for specific programmes and programme captioning and to assist in the implementation of the Charter (2009 only). Te MangaiPaho provides funding for the production and broadcast of specific programmes. The funding will be recognised in the income statement to matchthe expenditure associated with this funding. For further details of government funding please refer to the Statement of Service Performance.

50 / TVNZ ANNUAL REPORT FY2009Notes to the Financial Statements (continued)For the year ended 30 June 2009GroupCompany2009 2008 2009 2008$000 $000 $000 $00019) ProvisionsRestructuring 1,520 716 1,520 716Onerous Lease 556 0 556 0Dividend 0 10,301 0 10,3012,076 11,017 2,076 11,017a) Movement in provisionsGroup and CompanyOnerousRestructuring Lease Dividend Total$000 $000 $000 $000At 1 July 2008 716 0 10,301 11,017Raised during the year 1,520 556 0 2,076Utilised 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 2,076Current 1,520 278 0 1,798Non-current 0 278 0 278At 30 June 2009 1,520 556 0 2,076Current 2008 716 0 10,301 11,017Non-current 2008 0 0 0 0At 30 June 2008 716 0 10,301 11,017b) Nature and timing of provisioni) Restructuring provisionThe current restructuring provision balance relates to the costs of redundancy, outplacement and other costs associated with the reorganisation ofTVNZ which commenced in February 2009.ii) Onerous Lease provisionThe 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 leaseexpires in 2011.iii) Dividend provisionNo dividend was declared by the Board prior to year end.20) Financial risk factorsThe 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 overallrisk 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 financialinstruments. The Group enters into derivative transactions, principally forward currency contracts and interest rate swaps, only if they relate tounderlying 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 tradereceivables); 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 FY2009Notes to the Financial Statements (continued)For the year ended 30 June 200920) Financial risk factors (continued)Currency riskThe Group undertakes transactions denominated in foreign currencies, predominately Australian and US dollars, for programme rights purchases. Asa result of these transactions the Group has exposure to foreign exchange risk. The Group’s foreign exchange policy is to hedge a portion of materialforeign currency denominated costs at the time of the commitment on a rolling 24 month basis. The Group ensures that its net exposure to foreigndenominated cash balances is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short termimbalances.At 30 June the Group had the following foreign currency exposures that are not specifically hedged.GroupCompany2009 2008 2009 2008$000 $000 $000 $000Financial assetsCash and cash equivalents 149 184 149 184Trade and other receivables 139 1,806 139 1,806Loan to associate 2,197 0 2,197 02,485 1,990 2,485 1,990Financial LiabilitiesBank overdraft (92) 0 (92) 0Trade and other payables (15,110) (14,277) (15,110) (14,277)(15,202) (14,277) (15,202) (14,277)Foreign Currency DerivativesForward contracts 78,536 85,191 78,536 85,191Embedded derivatives (20,752) (18,364) (20,752) (18,364)57,784 66,827 57,784 66,827Total net exposure 45,067 54,540 45,067 54,540At 30 June , had the <strong>New</strong> Zealand dollar strengthened/(weakened) by 10% against foreign currencies with all other variables held constant, post taxprofit and equity would have been (lower)/higher as follows:a) Government funding Group and CompanyPost Tax Proft Equity+10% (10%) +10% (10%)2009 (3,326) 3,326 (3,350) 3,3502008 (4,049) 4,049 (4,049) 4,049Interest rate riskThe 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 cashflow hedges:Interest riskGroupCompany2009 2008 2009 2008$000 $000 $000 $000Financial assetsCash and cash equivalents 2,047 5,341 2,047 5,341Financial liabilitiesBank 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 FY2009Notes to the Financial Statements (continued)For the year ended 30 June 200920) 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 rateswaps in order to achieve the desired mix between fixed and floating rates. These swaps are designated to hedge underlying debt obligations. At30 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 CompanyPost Tax Proft Equity+1% (1%) +1% (1%)2009 (239) 239 (239) 2392008 (151) 151 (151) 151Credit riskCredit 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 normalcourse of business the Group incurs credit risk with financial institutions and trade receivables. The Group has a credit policy which is used to limitcounterparty 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 balancesheet 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. Theseagencies are required to comply with a formal accreditation process, which includes the regular review of their financial position. Each accreditedagency is required to meet a certain financial ratio or alternatively provide other forms of financial reassurance to the Group. The Group has acredit insurance policy for a selected range of agencies, to protect against loss through default. The Group does not have any other significantconcentrations 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 riskLiquidity 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 ensurethat adequate funding is available at all times to meet future commitments as they arise. Management monitors rolling forecasts of the Group’sliquidity 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 January2010. The Group is currently seeking new finance facilities from the existing facility providers with the intention of having new committed facilities inplace 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 tocontinue 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 havenot 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 yearand 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 assumptionis 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 berealised other than in the normal course of business and at amounts which could differ significantly from amounts which are currently recorded in thebalance 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 FY2009Notes to the Financial Statements (continued)For the year ended 30 June 200920) Financial risk factors (continued)The table below analyses the contractual cash flows for all financial liabilities and derivatives.2009Within1 yearOne totwo yearsTwo tofive years TotalGroup $000 $000 $000 $000Bank overdraft 171 0 0 171Borrowings 36,050 0 0 36,050Trade and other payables 44,294 0 0 44,294Interest rate swaps 81 0 0 81Forward exchange contracts 69,290 11,899 0 81,189149,886 11,899 0 161,785Within1 yearOne totwo yearsTwo tofive yearsTotalParent $000 $000 $000 $000Bank overdraft 171 0 0 171Borrowings 36,050 0 0 36,050Trade and other payables 39,299 0 0 39,299Interest rate swaps 81 0 0 81Forward exchange contracts 69,290 11,899 0 81,189144,891 11,899 0 156,7902008Within1 yearOne totwo yearsTwo tofive yearsTotalGroup $000 $000 $000 $000Bank overdraft 567 0 0 567Borrowings 2,402 29,101 0 31,503Trade and other payables 39,440 0 0 39,440Interest rate swaps 12 0 0 12Forward exchange contracts 60,031 29,187 0 89,218102,452 58,288 0 160,740Within1 yearOne totwo yearsTwo tofive yearsTotalParent $000 $000 $000 $000Bank overdraft 567 0 0 567Borrowings 2,402 29,101 0 31,503Trade and other payables 39,440 0 0 39,440Interest rate swaps 12 0 0 12Forward exchange contracts 60,031 29,187 0 89,218102,452 58,288 0 160,740Fair valueThe methods of estimating fair value are outlined in the relevant notes to the financial statements.Capital managementThe 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 aBBB (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 than40% (refer note 28e).There have been no material changes to the Group’s management of capital during the period.

54 / TVNZ ANNUAL REPORT FY2009Notes to the Financial Statements (continued)For the year ended 30 June 2009GroupCompany2009 2008 2009 2008$000 $000 $000 $00021) Derivative financial instrumentsCurrent assetsForward currency contracts - held for trading 3,235 4,970 3,235 4,970Forward currency contracts - fair value hedge 136 58 136 58Interest rate swap contracts - cash flow hedge 156 0 156 03,527 5,028 3,527 5,028Non-Current assetsForward currency contracts - held for trading 825 2,489 825 2,489Foreign currency embedded derivative contracts 26 0 26 0851 2,489 851 2,489Current liabilitiesForward currency contracts - fair value hedge 136 58 136 58Foreign currency embedded derivative contracts 80 1,234 80 1,234Forward currency contracts - cash flow hedge 7 0 7 0Interest rate swap contracts - cash flow hedge 0 25 0 25Interest rate swap contracts - held for trading 30 0 30 0253 1,317 253 1,317Non-Current liabilitiesForeign currency embedded derivative contracts 0 94 0 940 94 0 94a) Instruments used by the GroupDerivative financial instruments are used by the Group in the normal course of business in order to hedge exposures to fluctuations in foreignexchange and interest risk.i) Forward currency contracts – held for tradingThe 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 Company2009 2008NZDNZD$000 $000Buy AUD/Sell NZD - Maturity 0 - 12 months 64,872 52,851Buy AUD/Sell NZD - Maturity 13 - 24 months 11,899 29,187Buy EUR/Sell NZD - Maturity 0 - 12 months 1,765 3,152ii) Forward currency contracts – fair value hedgeThe Group has entered into forward exchange rate contracts which are economic hedges against the purchase of certain capital, programme rightsand production expenditure. The fair value gains/(losses) on the hedged item are equal to the fair value gains/(losses) of the hedging instrument. Thefollowing table details the notional amounts of these derivative financial instruments at balance date.Buy EUR/Sell NZD - Maturity 0 - 12 months 1,569 1,554Buy GBP/Sell NZD - Maturity 0 - 12 months 202 379Buy USD/Sell NZD - Maturity 0 - 12 months 882 2,095

55 / TVNZ ANNUAL REPORT FY2009Notes to the Financial Statements (continued)For the year ended 30 June 200921) Derivative financial instruments (continued)Group and Company2009 2008NZDNZD$000 $000iii) Foreign currency embedded derivativesThe Group has entered into programme supply contracts that contain a foreign currency embedded derivative. The following table details thenotional amounts of these embedded derivatives at balance date.Sell AUD/Buy NZD - Maturity 0 - 12 months 18,619 16,774Sell AUD/Buy NZD - Maturity 13 - 24 months 2,133 1,590iv) Interest rate swaps – cash flow hedgesTo protect against rising interest rates the Group hedges its borrowings by entering into interest rate swaps contracts under which it has the rightto 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 werenot designated as cash flow hedges.22) Share capital and reservesFor movements in share capital and reserves refer to the Statement of Changes in Equity.a) Share capitalAs 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 shareand 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 ReserveThis 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.GroupCompany2009 2008 2009 2008$000 $000 $000 $000Net movement in cash flow hedge reserveGain/(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 reconciliationReconciliation of net profit after tax to net cash flows from operationsNet profit 2,102 19,426 3,077 19,467Adjustments for:Depreciation 13,424 12,444 13,424 12,444Amortisation 3,523 3,461 3,523 3,461Gain on disposal of property, plant and equipment (25) (106) (25) (106)Unrealised foreign currency losses (955) 2,019 (955) 2,019Share of associate net losses 1,011 0 0 0Changes 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) 18,084Increase/(decrease) trade and other payables 1,080 (9,245) 1,080 (9,645)Increase/(decrease) deferred income (12,978) 5,267 (12,978) 5,667Increase/(decrease) income tax payable (1,396) 2,100 (1,412) 2,077Increase/(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 FY2009Notes to the Financial Statements (continued)For the year ended 30 June 200924) Related party disclosuresa) SubsidiariesThe consolidated financial statements include the financial statements of Television <strong>New</strong> Zealand Limited and its subsidiaries, listed in note 13. Thecompany did not purchase or supply goods and services from or to any of its subsidiaries during the year (2008: $nil).b) Joint ventureThe following table provides the total amount of transactions that were entered into with Freeview Limited.Company2009 2008$000 $000Joint VentureSales and Funding to/from Freeview Limited 2,787 1,753Purchases from Freeview Limited 642 600Amounts owed by Freeview Limited 491 21Amounts owed to Freeview Limited 9 60All 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) AssociateLoan to Hybrid Television Services (ANZ) Pty Ltd 2,197 0The loan to associate is interest free and repayable as soon as the associate is able to repay funds.d) Government entitiesFunding from Government entities 51,234 51,380Sales to Government entities 1,456 2,069Purchases from Government entities 24,714 25,108Amounts owed by Government entities 1,702 349Amounts owed to Government entities 0 46Revenue in advance from Government entities 26,482 34,544All sales and purchases with Government owned entities arise in the normal course of business on an arm’s length basis. None of the balances aresecured.e) Key management personnelKey management consists of TVNZ’s Chief Executive Officer and the members of the executive team. Key management personnel compensation isas follows:Salary and other short term benefits 3,447 2,765Defined contribution superannuation expense 169 1153,616 2,880Certain 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) DirectorsDirectors fees 323 330Certain Directors are also non-executive directors of companies with which TVNZ has transactions in the normal course of business. Any transactionsundertaken with these entities have been entered into on an arm’s length commercial basis.

57 / TVNZ ANNUAL REPORT FY2009Notes to the Financial Statements (continued)For the year ended 30 June 200925) CommitmentsGroup and Company2009 2008$000 $000a) Programme rightsWithin one year 94,873 87,266One to two years 68,899 74,804Two to five years 62,904 105,940Later than five years 0 0226,676 268,010Commitments for programme rights are primarily denominated in Australian dollars and are converted at the exchange rate ruling at the date oftransaction and revalued at year end. The commitments are determined with reference to the licence period start dates.b) Operating leasesWithin one year 4,032 4,159One to two years 2,738 2,914Two to five years 3,205 3,650Later than five years 0 5819,975 11,304Neither the Company nor the Group had any finance lease commitments at balance date (2008: nil).c) Property, plant and equipment and softwareWithin one year 5,185 4,78126) Contingent liabilitiesIn the normal course of business various legal claims have been made against Television <strong>New</strong> Zealand Limited. Given the stage of proceedings anduncertainty as to the outcomes of the cases, no estimate of the financial effect can be made and no provision for any potential liability has beenmade in the financial statements.27) Events after the balance sheet dateOn 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 FY2009Notes to the Financial Statements (continued)For the year ended 30 June 200928) Comparison of budget to actual resultsGroupActual Budget$000 $000a) Financial PerformanceIncome 384,786 414,507Operating expenses (374,645) (387,719)Earnings before non recurring expenditure, interest, tax and financial instruments 10,141 26,788Reorganisation costs (3,729) 0Interest expense (2,173) (3,560)Financial instruments/foreign currency gains/(losses) 376 0Share of results of associated company (1,011) 0Income tax expense (1,502) (6,968)Net profit for the year 2,102 16,260b) Movements in equityNet profit for the year 2,102 16,260Distributions to the shareholder 0 (11,382)Effective portion of changes in fair value of cash flow hedges, net of tax 101 0Movements in equity for the year 2,203 4,878Equity at start of the year 182,689 178,059Equity at end of the year 184,892 182,937The decrease in operating revenue primarily relates to lower advertising revenues as a result of the economic downturn. Operating expenses arebelow budget levels. Interest expense is below budget due to lower average levels of borrowings and lower interest rates. Fair value changes infinancial instruments are not budgeted for due to inherent volatility in exchange rates; there was a small positive result for the year. The positiveincome 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 dividendbeing declared prior to year end; no dividend was declared prior to year end.c) Financial PositionCurrent assets 134,818 115,147Non current assets 169,570 179,397Total assets employed 304,388 294,544Current liabilities 117,171 90,033Non current liabilities 2,325 21,974Total liabilities 119,496 112,007Share capital 140,000 140,000Cash flow hedge reserves 84 0Retained earnings 44,808 42,537Total equity 184,892 182,537Total equity and liabilities 304,388 294,544Certain 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 lowerproportion of programme rights partly offset by the investment in Hybrid Television Services (ANZ) Pty Ltd (HTS). The mix of current and termliabilities has changed as all debt is classified as current in the financial statements. Overall increase in liabilities reflects lower cash flows for the yearand the amount owing on the Hybrid investment.

59 / TVNZ ANNUAL REPORT FY2009Notes to the Financial Statements (continued)For the year ended 30 June 200928) Comparison of budget to actual results (continued)GroupActual Budget$000 $000d) Cash flowsNet cash flows from/(to):Operating activities 27,378 39,820Investing 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 3,700Net foreign exchange differences 59 0Ending cash carried forward 1,876 200Lower revenues and the investment in HTS have been partly offset by lower levels of expenditure on property plant and equipment and intangibleshave resulted in increased borrowings.e) Performance TargetsProfitabilityReturn 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%GearingNet interest bearing debt/net interest bearing debt plus equity 16.4% < 40%Financial StabilityTotal equity/Total assets 60.7% > 40%Interest CoverEBITDRA/Interest expense 12.5 times > 4 timesEBITDRA – earnings before interest, tax, depreciation, amortisation, reorganisation costs and revaluation of financial instruments.

60 / TVNZ ANNUAL REPORT FY2009Statement of Service PerformanceFor the year ended 30 June 2009This statement reports on the performance of Television <strong>New</strong> Zealand Limited (TVNZ) in relation to the output targets set in the Statement of Intentfor 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 Statementof 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 outputswhich 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 CharterThe Government has provided TVNZ with direct funding through Vote Arts, Culture and Heritage. This funding is for programmes and initiatives thatTVNZ 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 directgovernment 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 fiscalyear 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 includedin the tables below.i) Reconciliation of funding received by year of broadcastDirect Government Funding Received: $FY2006 (MCH) 15,111,110FY2007 (MCH) 15,111,000FY2008 (MCH) 15,111,000FY2009 (NZOA) 15,111,00060,444,110Direct Government Funded Programmes Broadcast:Funding Year FY2006 FY2007 FY2008 FY2009 Total$ $ $ $ $Year of BroadcastFY2006 6,435,816 6,435,816FY2007 1,677,180 4,976,223 6,653,403FY2008 1,311,022 6,810,572 9,195,137 17,316,731FY2009 2,497,321 1,718,951 1,686,393 10,888,642 16,791,30711,921,339 13,505,746 10,881,530 10,888,642 47,197,257Still to Broadcast 3,189,771 1,605,254 4,229,470 4,222,358 13,246,853Total Funding 15,111,110 15,111,000 15,111,000 15,111,000 60,444,110

61 / TVNZ ANNUAL REPORT FY2009Statement of Service Performance (continued)For the year ended 30 June 2009ii) Funded programmesProgrammeMonth ofTransmissionHoursFunding$Funding Year AudienceFY2006 FY2007 FY2008 FY2009 Reach 5+ArtsArtsville* Nov - Jan 7.0 119,921 119,921 703,300The Life & Art of Alun Bollinger Nov 1.5 151,936 151,936 456,700Total Arts 8.5 271,857Current AffairsEye to Eye Jul - Nov 8.5 580,000 580,000 518,300Q & A Mar - Jun 15.0 385,146 385,146 831,900Agenda Jul - Dec 22.0 539,848 77,348 462,500 955,400Total Current Affairs 45.5 1,504,994Documentary/FactualAttitude Paralympic Documentaries Aug - Sep 2.0 18,100 18,100 299,800Dirt/Off The Radar* Aug - Nov 6.5 357,500 357,500 2,120,500Homegrown* Oct - Nov 3.5 192,500 192,500 1,605,000Piha Rescue Aug - Nov 5.0 495,542 495,542 2,015,700How the Other Half Lives* Apr - Jun 4.0 228,000 228,000 1,834,700Here to Stay Series 2* Jan 3.0 330,000 330,000 1,132,400The School of Success* Jan 3.0 165,000 165,000 1,084,800Lost In Libya* Apr 1.5 15,000 15,000 285,600Country Calendar 2008* Jul - Oct 5.5 158,549 158,549 2,112,900Country Calendar 2009* Feb - Jun 9.5 468,806 468,806 2,335,300Mucking In 2008 Jul - Dec 3.0 544,918 544,918 1,702,400Total Documentary/Factual 46.5 2,973,915Drama/ComedyThe Pretender* Sep - Nov 4.0 240,000 240,000 1,371,300Piece of My Heart* Apr 2.0 150,000 150,000 928,500Until Proven Innocent* Feb 1.8 150,441 150,441 792,000Show of Hands* Jun 2.0 377,880 377,880 964,100Apron Strings* May 2.0 375,000 375,000 754,200Diplomatic Immunity* Mar - Jun 6.5 404,000 404,000 1,969,900Go Girls* Feb - May 13.0 1,040,000 1,040,000 2,478,600Total Drama/Comedy 31.3 2,737,321

62 / TVNZ ANNUAL REPORT FY2009Statement of Service Performance (continued)For the year ended 30 June 2009ii) Funded programmes (continued)ProgrammeMonth ofTransmissionHoursFunding$Funding Year AudienceFY2006 FY2007 FY2008 FY2009 Reach 5+EntertainmentTo Sir With Love* Dec 2.0 199,998 199,998 970,000Top Town* Feb - Apr 8.0 1,658,480 1,658,480 2,095,300This Is Your Life Sep 1.5 251,030 251,030 1,010,800Total Entertainment 11.5 2,109,508SportBeijing Olympics Aug 203.3 4,560,934 4,560,934 3,557,600Netball Jul - Oct 20.8 1,246,233 1,246,233 2,384,300Netball Apr - Jun 26.0 278,733 278,733 1,713,800Other Minority Sport n/a 38,716 38,716Womens World Cup Soccer Oct - Dec 13.8 20,542 20,542 385,300Hockey Feb 2.0 50,055 50,055 234,700Tennis Jan 79.0 265,151 265,151 1,873,400Beach Volleyball Jan 9.0 23,035 23,035 664,700Triathlon Feb 2.0 59,040 59,040 474,800Triathlon Jul - Aug 2.5 18,495 18,495 374,600Total Sport 358.5 6,560,934Special InterestBeijing Paralympics Sep 15.0 425,582 425,582 1,161,700Coming Home Te Hokianga Mai - Armistice Day Nov 1.3 48,725 48,725 155,100Waitangi Day Feb 3.0 98,471 98,471 352,900Young Farmer Jul 1.0 60,000 60,000 476,300Total Special Interest 20.3 632,778Total Direct Government Funded Programmes Transmitted 522.0 16,791,307 2,497,321 1,718,951 1,686,393 10,888,642*These programmes were jointly funded with NZ On Air/Te Mangai Paho.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.

63 / TVNZ ANNUAL REPORT FY2009Statement of Service Performance (continued)For the year ended 30 June 2009b) Programme funding from NZ On AirOn a specific programme-by-programme basis, funding is received from NZ On Air. The table below notes the specific funding received directly byTVNZ, from NZ On Air. This table excludes NZ On Air funding provided directly to independent production companies for programmes broadcastby TVNZ.ProgrammeMonth ofTransmissionHoursFunding$AudienceReach 5+ArtsArtsville Nov - Jan 11.5 37,327 1,270,880Total Arts 11.5 37,327EntertainmentWorld of Wearable Arts Awards Nov 1.0 139,635 217,750Total Entertainment 1.0 139,635FactualCountry Calendar Feb - Jun 9.5 390,000 2,335,330Total Factual 9.5 390,000MaoriI Am TV 2008 Jul - Dec 24.0 953,610 1,003,690I Am TV 2009 Apr - Jun 12.0 495,544 702,820Polyfest May - Jun 2.5 200,728 469,230Total Maori 38.5 1,649,882SportParalympics Sep 15.0 284,769 1,161,690Halberg Awards Feb 1.5 85,898 796,760Total Sport 16.5 370,667Special InterestCinderella Dec 1.5 284,196 77,280Anzac Day Wreath laying Apr 1.5 47,641 273,790Anzac Day Dawn Service Apr 0.8 59,763 72,890Praise Be 2008 Jul - Feb 11.0 231,389 613,090Praise Be 2009 Feb - Jun 10.5 212,099 639,480Tagata Pasifika 2008 Jul - Mar 19.5 1,040,250 952,910Tagata Pasifika 2009 Mar - Jun 7.0 389,124 526,410Total Special Interest 51.8 2,264,462ChildrensStudio 2 2008 Jul - Dec 51.5 1,316,906 1,824,110Studio 2 2009 Apr - Jun 23.5 593,579 1,419,250Total Childrens 75.0 1,910,485Total NZ On Air 203.8 6,762,458Audience 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 productionspecifications, such that the programmes were permitted to be broadcast.

64 / TVNZ ANNUAL REPORT FY2009Statement of Service Performance (continued)For the year ended 30 June 2009c) Programme funding from Te Mangai PahoTe Mangai Paho funds TVNZ for the production and broadcast of certain programmes. The use of Te Mangai Paho funding is for payment of costsand expenses identified in the various programme budgets.ProgrammeMonth ofTransmissionHoursFunding$AudienceReach 5+Marae 2008 / 09 Aug - Jun 19.0 1,337,608 688,550Te Karere 2008 Jul - Dec 33.0 1,155,889 1,296,130Te Karere 2009 Jan - Jun 59.0 1,107,824 1,755,080Waka Huia 2008 / 09 Aug - Jun 36.0 1,463,580 1,134,880Total TMP 147.0 5,064,901Audience 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 productionspecifications, such that the programmes were permitted to be broadcast.d) Funding for programme captioning from NZ On AirNZ 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 primetime 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 perweek. In addition, the daily 6pm ONE <strong>New</strong>s and Tonight bulletins and Close Up must be captioned and an English language subtitling service isprovided for the Maori language news programme Te Karere.Total funding received from NZ On Air: $1,900,000Actual PerformanceMeasureTarget PerformanceMeasureContinuous captioning during prime time (6.00pm – 10.00pm)on TV ONE, TV2 and TV3.100% 90%At least ten hours of children’s programmes captioned per week (average) 24 Hours 10 HoursSubtitles for Te Karere (repeat screening) every weekday 99.6% 100%Captions for ONE <strong>New</strong>s 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 weekMinimum 40 hrs per week (average) during prime time on TVNZ channels 53.7 hrs per week 40 hrs per weekAverage 15hrs per week on TV3 33.1 hrs per week 15 hrs per weekOutside of contractual expectations of NZ On Air, any programme playing on the new digital channels TVNZ 6 and TVNZ 7 that had previously goneto air with captions and still had captions embedded is also screened with captions. This has increased the volume of captioned programmes onTVNZ 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 fundingauthority.

65 / TVNZ ANNUAL REPORT FY2009Statement of Service Performance (continued)For the year ended 30 June 2009e) Transmitting TVNZ programmes to Pacific nations with funding from the Ministry for Culture and HeritageThe 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 thedaily transmission of ONE <strong>New</strong>s, 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• KiribatiTotal 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 TransmittedHoursONE <strong>New</strong>s 365.0Close Up 88.5South Pacific Arts Festival 32.3Tagata Pasifika 27.0I Am TV 21.0Taste NZ 17.0Country Calendar 14.0Mucking In 10.0Elections 6.8Netball (<strong>New</strong> Zealand vs Australia) 4.0King of Tonga Coronation 3.5Waka Huia 2.5Rugby League 2.2Polyfest 2.0Total Hours 595.8In addition to these hours, TVNZ’s Pacific Service in collaboration with the International Olympic Committee enabled viewers throughout the Pacificto 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 HeritageThis funding is to assist the transmission coverage of the TV ONE and TV2 signals to those <strong>New</strong> Zealand communities that would not otherwisereceive a commercially viable terrestrial signal.The Company operates and maintains 152 non-commercial transmission sites in accordance with the Memorandum of Understanding with theMinistry for Culture and Heritage.TVNZ undertakes to meet performance standards including the quality of the signal, maintenance and responses to faults, and to provide performancereports 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 transmissionfrom 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-commercialtransmission sites, was $1,150,000.

66 / TVNZ ANNUAL REPORT FY2009Statement of Service Performance (continued)For the year ended 30 June 2009g) Funding for TVNZ’s two digital channels for the Freeview platform from the Ministry for Culture and HeritageTVNZ’s digital channels – TVNZ 6 and TVNZ 7 - are supported by a combination of shareholder investment and internal leverage of existinginfrastructure and support systems. Shareholder investment funding of $79 million over six years through the Ministry for Culture and Heritage allowsTVNZ to operate the channels in an advertising-free environment which, in turn, allows a stronger public broadcasting ethos than would be possiblein a fully commercial model.TVNZ 6 has been operating since September 30 th 2007 and offered three distinct strands or sub-brands: Kidzone, TVNZ Family and TVNZ Showcase.On Sunday 28 th June 2009 a new TVNZ 6 schedule was launched, retaining only the Kidzone sub-brand (extended by two hours), with the remainderof the schedule focusing on ‘shared viewing’ by a family audience.TVNZ 7 has been operating since March 30 th 2008 and focuses on factual and current affairs programming. Since Sunday June 28 th 2009 Showcasetype 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 30 th June 2009 TVNZ had received operationalfunding to the value of $38,000,000.Funding received $FY2007 5,200,000FY2008 20,800,000FY2009 12,000,00038,000,000The following table reconciles the receipt of government funding by fiscal year with the year the revenue was recognised in the income statement.Funding YearFY2007 FY2008 FY2009 Total$000 $000 $000 $000Year of recognitionFY2007 1,029 1,029FY2008 4,171 8,467 12,638FY2009 - 12,333 3,850 16,1835,200 20,800 3,850 29,850Still to recognise - - 8,150 8,150Total Funding 5,200 20,800 12,000 38,000The following table breaks down the $16,183,000 recognised in FY2009 by area/activity.FY2009Actual Budget$000 $000Funding revenue 16,183 20,213Other revenue 0 276Total revenue 16,183 20,489ExpenditureProgramme amortisation 11,173 14,008Other costs 5,010 6,481Total expenditure 16,183 20,489Surplus 0 0In 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 FY2009Statement of Service Performance (continued)For the year ended 30 June 2009g) 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 fundingwas committed to commissioning local content, and that of this $4,955,000 (60%) has yet to be recognised as those programmes had not beentransmitted by 30 th June 2009. A lag between commitment and recognition of expenses is normal for commissioned programming.Total Recognised To beIndicative Original/CommissionedCosts to date RecognisedProgramme Genres Commitments $000 $000 $000Arts/Music 3,153 579 2,574Children's factual 881 342 539Current Affairs 2,600 2,316 284Factual 1,518 90 1,428Pre School 143 13 130Total Commissioned Programmes 8,295 3,340 4,955Local ProgrammingFor the Total Content costs recognised by TVNZ 6 and TVNZ 7 in FY2009 the following table shows the percentage by genre dedicated to providinglocal content i.e. <strong>New</strong> Zealand made content.Sub-brand TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 7TVNZ Kidzone TVNZ FamilyTVNZShowcase(Ave across allsub-brands)Genre Cumulative % Cumulative % Cumulative % Cumulative % Cumulative %Arts / Music n/a n/a 93% 50% n/aChildren’s Drama n/a 1% n/a 0% n/aChildren’s Factual n/a 30% n/a 10% n/aCurrent Affairs n/a n/a n/a 0% 44%Documentary n/a 1% 0% 1% 1%Drama n/a 4% 3% 3% n/aEntertainment n/a 2% 0% 1% n/aFactual n/a 56% 0% 19% 0%Features (inc Movies) n/a n/a 0% 0% n/a<strong>New</strong>s n/a n/a n/a 0% 52%Pre-School 85% n/a n/a 10% n/aSport 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 FY2009Statement of Service Performance (continued)For the year ended 30 June 2009g) Funding for TVNZ’s two new digital channels for the Freeview platform from the Ministry for Culture and Heritage (continued)Local Programming (continued)The table below outlines the percentage, by genre, for total schedule hours dedicated to Local Content (cumulative to June 30 th 2009).Sub-brand TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 6 TVNZ 7TVNZ Kidzone TVNZ FamilyTVNZShowcase(Weighted for TX hrsacross all sub-brands)Genre Cumulative % Cumulative % Cumulative % Cumulative % Cumulative %Arts / Music n/a n/a 16% 3% n/aChildren’s Drama n/a 4% n/a 1% n/aChildren’s Factual n/a 3% n/a 1% n/aCurrent Affairs n/a n/a n/a n/a 21%Documentary n/a 2% 3% 1% 16%Drama n/a 9% 35% 9% n/aEntertainment n/a 8% 19% 6% n/aFactual n/a 51% 1% 13% 9%Features (inc Movies) n/a n/a 3% 1% n/a<strong>New</strong>s n/a n/a n/a n/a 34%Pre-School 53% n/a n/a 29% n/aSport 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 <strong>New</strong> Zealand made content. For the TVNZ 6 schedule as a whole 64% of theschedule is made up of local content and on TVNZ 7 the figure is 80%.

70 / TVNZ ANNUAL REPORT FY2009Statement of Service Performance (continued)For the year ended 30 June 2009g) Funding for TVNZ’s two new digital channels for the Freeview platform from the Ministry for Culture and Heritage (continued)Awareness and AppreciationAs the digital channels are non-commercial they are not included in the daily ratings analysis carried out by AC Nielsen. However, TVNZ commissionsresearch 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 growingwith 47% of <strong>New</strong> <strong>Zealanders</strong> aware of TVNZ 6 and 39% aware of TVNZ 7 (which launched 6 months later). Both TVNZ Kidzone and TVNZ 7 showedstrong growth in appreciation.ObjectivesThe digital channels have four key objectives, which are aspirational rather than legislative, and in the 2009 fiscal year the channels continued to meetthese 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 forbroadcast 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, <strong>New</strong> Artland, Talk Talk and The Gravy – was commissioned specifically for TVNZ 6 toserve 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 <strong>New</strong> Zealand’s natural heritage.Once again TVNZ 6 supported Outlook for Someday - the sustainability film challenge for young <strong>New</strong> <strong>Zealanders</strong> - by providing media coverageand 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 madespecifically for the channel.As well as rebroadcasting some Election 08 coverage, TVNZ 7 specifically commissioned content to complement the TV ONE coverage, includingLeaders 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 – andsatirical – 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 locallyproduced documentaries.TVNZ 7’s <strong>New</strong>s at 8 continues to offer extended duration and thus more in-depth coverage of the day’s news.• To strengthen <strong>New</strong> <strong>Zealanders</strong>’ 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 <strong>New</strong>Zealand.The abovementioned Awareness and Appreciation survey also showed the awareness of the digital channels amongst Freeview owners is muchgreater with TVNZ 6 and TVNZ 7 at 83% and 82% respectively.

71 / TVNZ ANNUAL REPORT FY2009Statement of Service Performance (continued)For the year ended 30 June 2009h) Additional goals for each output in FY2009Crown funded outputs Actual Targeta) Direct Government funding toassist implementation of Charterb) Contestable programmefunding from NZ On Air522 hours523.8 hoursMinimum 250 hours per annum of localprogramming on TV ONE and TV2Minimum 375 hours per annum of localprogramming on TV ONE and TV2 (subject tosuccess of applications for contestable funding)c) Programme funding from Te Mangai Paho 147 hoursMinimum 130 hours per annum of Maoriprogramming on TV ONE and TV2 andreplays of Maori programming on TVNZ 6d) Funding for programmecaptioning from NZ On Aire) Transmitting TVNZ programmesto Pacific Nationsf) Maintaining non-commercialtransmission coverage197 hours per week(average)595.8 hours100%Minimum 150 hours per week ofprogramming captioned on TVONE, TV2, TVNZ 6 and TVNZ 7Minimum 572 hours per annum ofprogramming transmitted to the PacificMinimum 100% response to reportedbreakdowns in transmission within sevendays (subject to winter weather constraints)g) Funding for TVNZ’s two new digital channels 64% Minimum 60% local content on TVNZ 680% Minimum 70% local content on TVNZ 7

72 / TVNZ ANNUAL REPORT FY2009Report of the Auditor-GeneralTo the Readers of Television <strong>New</strong> Zealand Limited and Group’s Financial Statements and Statement of Service PerformanceFor the year ended 30 June 2009The Auditor-General is the auditor of Television <strong>New</strong> Zealand Limited (the Company) and Group. The Auditor-General has appointedme, Gordon Fulton, using the staff and resources of Ernst & Young, to carry out the audit. The audit covers the financial statements andstatement of service performance included in the annual report of the Company and Group for the year ended 30 June 2009.Unqualified OpinionIn our opinion:• The financial statements of the Company and Group on pages 32 to 59:• comply with generally accepted accounting practice in <strong>New</strong> 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 <strong>New</strong> 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 inthe 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 andoutput 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 ofthe Board of Directors and the Auditor, and explain our independence.Basis of OpinionWe carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the <strong>New</strong> Zealand Auditing Standards.We planned and performed the audit to obtain all the information and explanations we considered necessaryin order to obtain reasonable assurance that the financial statements and statement of serviceperformancedid 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’soverall understanding of the financial statements and statement of service performance. If we had foundmaterial 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 andstatement of service performance. We assessed the results of those procedures in forming our opinion.

73 / TVNZ ANNUAL REPORT FY2009Audit 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 serviceperformance. We obtained all the information and explanations we required to support our opinion above.Responsibilities of the Board of Directors and the AuditorThe Board of Directors is responsible for preparing the financial statements and statement of service performance in accordance with generallyaccepted accounting practice in <strong>New</strong> Zealand. The financial statements must give a true and fair view of the financial position of the Company andGroup 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 mustgive a true and fair view of, for each class of outputs, the Company and Group’s standards of delivery performance achieved and revenue earnedand expenses incurred, as compared with the forecast standards, revenue and expenses adopted at the start of the financial year. The Board ofDirectors’ responsibilities arise from the Financial Reporting Act 1993, the Crown Entities Act 2004 and the Television <strong>New</strong> Zealand Act 2003.We are responsible for expressing an independent opinion on the financial statements and statement of service performance andreporting that opinion to you. This responsibility arises from section 15 of the Public Audit Act 2001 and the Crown Entities Act 2004.IndependenceWhen carrying out the audit we followed the independence requirements of the Auditor-General, which incorporatethe independence requirements of the Institute of Chartered Accountants of <strong>New</strong> Zealand.In addition to the audit we have carried out assignments in the areas of other IT assurance services which are compatible with those independencerequirements. 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 StatementsG A FultonErnst & YoungOn behalf of the Auditor-GeneralAuckland, <strong>New</strong> ZealandThis audit report relates to the financial statements and statements of service performance of Television <strong>New</strong>Zealand Limited (“TVNZ”) and Group for the year ending 30 June 2009 included on the TVNZ and group’swebsite. The TVNZ and Group’s Board of Directors is responsible for the maintenance and integrity of theTelevision <strong>New</strong> Zealand Limited website. We have not been engaged to report on the integrity of TVNZand Group’s website. We accept no responsibility for any changes that may have occurred to the financialstatements and statement of service performance since they were initially presented on the website.The audit report refers only to the financial statements named above. It does not provide an opinion on anyother information which may have been hyperlinked to/from these financial statements. If readers of thisreport are concerned with the inherent risks arising from electronic data communication they should refer tothe published hard copy of the audited financial statements and related audit report dated 30 September2009 to confirm the information included in the audited financial statements presented on this website.Legislation in <strong>New</strong> Zealand governing the preparation and dissemination of financial statements may differfrom legislation in other jurisdictions.

74 / TVNZ ANNUAL REPORT FY2009Five Year Trend StatementFor the year ended 30 June 2009Current NZ GAAPPrevious NZ GAAP2009 2008 2007 2006 2005$000 $000 $000 $000 $000Group Financial PerformanceTelevision advertising revenue 298,404 315,540 312,824 334,753 344,130Other revenue 86,382 76,777 62,147 75,037 92,602Total income 384,786 392,317 374,971 409,790 436,732Net surplus/(deficit) after taxation 2,102 19,426 (7,168) 13,302 6,269Dividends 0 10,301 0 84,525 48,052Group Financial PositionFunds employed:Share capital 140,000 140,000 140,000 140,000 140,000Reserves 84 (17) 96 0 0Retained earnings 44,808 42,706 33,581 58,861 130,084Total equity 184,892 182,689 173,677 198,861 270,084Current liabilities 117,171 99,675 103,731 62,531 61,036Term liabilities 2,325 29,828 46,592 50,956 2,528Total funds employed 304,388 312,192 324,000 312,348 333,648Assets employed:Current assets 56,263 76,888 70,342 66,240 93,764Programme rights 96,273 96,168 114,252 114,801 108,916Property, plant and equipment 107,395 110,312 105,135 117,752 120,312Deferred tax asset 11,233 12,323 18,455 7,324 3,052Other non current assets 33,224 16,501 15,816 6,231 7,604Total assets employed 304,388 312,192 324,000 312,348 333,648Financial RatiosEBITDRA*/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).

76 / TVNZ ANNUAL REPORT FY2009Additional Information (continued)Directors’ Disclosures (continued)Bryan GouldEros Capital LimitedNational Centre for Tertiary Teaching Excellence<strong>New</strong> Zealand National Commission for UNESCOOpotiki Community TrustRed Stag LimitedThe Foundation for Research, Science & TechnologySir John Goulter, KNZM, JPNgapuhi Asset Holding Company LimitedNorthland Deepwater JV LimitedNZ Business & Parliament TrustOpua Commercial Estate LimitedPackard House LimitedParaparaumu Airport LimitedReserve Bank of <strong>New</strong> ZealandJune McCabeCrown Health Financing AgencyFINSIA – Financial Services Institute of AustralasiaHui Taumata TrustMOI LimitedPayworks LimitedPeace FoundationSustainable Prosperity (NZ) LimitedTe Wai o AotearoaTe Wananga o AotearoaTribal AffiliationsConsultantChairChairTrusteeConsultantChairChairmanChairmanChairmanDirectorDirectorChairmanDirectorDirectorCouncillorTrustee & Board MemberDirectorChairmanCouncillorDirectorTrusteeCouncillorNgapuhiTe RarawaTe AupouriNgati KahuNgati KaharauSpecific DisclosuresNo specific disclosures were given pursuant to Section 211 of the Companies Act 1993.Use of Company InformationNo notices have been given to the Board under Section 145 of the Companies Act 1993 with regard to the use of company information receivedby Directors in their capacity as a Director.Directors’ Remuneration and BenefitsThe following persons held the office of director of the Company during the year and received the total amount of remuneration and other benefitsshown.Director $Sir John Anderson, KBE 80,000Anne Blackburn 40,000Robert Fenwick 50,000Bryan Gould 40,000Sir John Goulter, KNZM, JP 40,000June McCabe 40,000Phillip Melchior 33,333323,333

77 / TVNZ ANNUAL REPORT FY2009Additional Information (continued)Directors’ Indemnity InsuranceThe Company has arranged directors’ and officers’ liability insurance cover with QBE Insurance (International) Limited for $20 million. The 2009premium (net of GST) was $15,000. This cover is effected for all directors and employees of the Group.Employee RemunerationEmployee remuneration includes salary, at risk remuneration, payments for projects, programme production, presentation, motor vehicles, employer’scontributions to superannuation and health schemes, redundancy, other compensation on termination of employment and other sundry benefitsreceived 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 <strong>New</strong> Zealand dollars at current exchange rates.CurrentEmployeesFormerEmployees$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 0168 40Employee Compensation on Termination of EmploymentDuring the year $3,106,676 compensation was paid in total to 87 employees whose employment was terminated. Compensation includes redundancyentitlements, payment in lieu of notice and any payments in settlement of disputes.

78 / TVNZ ANNUAL REPORT FY2009Corporate GovernanceThe BoardRole of the BoardIn addition to its duties under theCompanies Act 1993, the Board,under Section 92 of the Crown EntitiesAct 2004, must ensure that theCompany acts in a manner consistentwith its current Statement of Intentand current output agreement.Each year the Board negotiatesthe Statement of Intent with itsshareholding Ministers. It includesthe Company’s objectives, natureand scope of the activities to beundertaken and the performancetargets and other measures by whichits performance may be judgedfor the current year and followingtwo years. The Board monitorsmanagement’s performance relativeto these objectives and targets.TVNZ’s principal output agreementwith the Crown relates to the provisionof funding for programming broadcastin accordance with the Company’sCharter. The Board monitorscompliance with the Company’sobligations under that agreement.The full Board met formally 10times during the financial year.The Board has delegated dayto-daymanagement to the ChiefExecutive Officer. Policies are inplace that define the individual andcollective responsibilities of theBoard and management. In particular,the Board has approved specificdelegated authorities to enablemanagement to incur expenditureand create binding obligations.Appointment of DirectorsShareholding Ministers make allappointments to the Board, includingthat of the Chairman. Appointmentsare for fixed terms not exceedingthree years, which may be renewed.The Board comprises individuals witha wide range of experiences andskills to ensure that all governanceresponsibilities are completedin a manner consistent with bestpossible management practice.Profiles of each of the Directors areset out on page 80 of this report.Board CommitteesThe Board has twostanding committees:Audit and Risk CommitteeThe Audit and Risk Committeemet three times during the year.The Committee assists the Boardin fulfilling its responsibilities byproviding recommendations,counsel and information concerningits accounting and reportingresponsibilities under the CompaniesAct 1993 and related legislation, andevaluating risk management practices.During the year membership ofthe Committee comprised Sir JohnGoulter (Chairperson), Sir JohnAnderson, Mr B C Gould, Ms J NMcCabe and Ms A Blackburn.Remuneration and HR CommitteeThe Remuneration and HR Committeemet once during the year. Its work isconsistent with TVNZ’s obligationsto be a good employer underthe Crown Entities Act 2004.In addition to its role of adding valueto TVNZ’s human resources’ plansand practices at a strategic level, theCommittee approves any movementto the remuneration of the Company’stop executives and presenters.The Committee also approves thelevel of any ‘at risk’ payments to beawarded to Executives, based on theCompany’s business performance.TVNZ operates a remunerationsystem designed to ensure thatemployees are rewarded forindividual performance, for theresponsibilities and skills required intheir jobs, benchmarked against bothexternal and internal relativities.At year end, membership ofthe committee comprised allthe members of the Board.Key Governance StatementsBusiness Continuity, Insuranceand Risk ManagementTVNZ has developed BusinessContinuity Plans for use inany emergency situationfacing the Company.TVNZ maintains a number ofinsurance policies designed tosupport the philosophy that, in theevent of a disaster, the Companywould not be materially affected.The Company has in place policiesand procedures to identify andmanage risks. Exposure to foreignexchange and interest rate riskis managed in accordance with acomprehensive Board-approvedtreasury policy, which sets limits ofmanagement authority. Derivativeinstruments are used by the Companyto manage specific business risk; theyare not used for speculative purposes.Editorial IndependenceTVNZ has in place an editorialprotocol that details the duties andresponsibilities of TVNZ, its Board andits executives on editorial matters. Theprinciple of editorial independencerecognises the importance of isolatingcontrol of editorial content fromcommercial or political influence.This principle is reflected in theTelevision <strong>New</strong> Zealand Act 2003 andthe Company’s Statement of Intent.

79 / TVNZ ANNUAL REPORT FY2009External AuditorThe Auditor-General is the Company’sauditor pursuant to Section 14 ofthe Public Audit Act 2001. TheAuditor-General has appointed MrGordon Fulton of Ernst & Youngto act as external auditor on hisbehalf in the current financial year.Legislative ComplianceThe Company has in place a legislativecompliance programme to ensurethe Company’s compliance withits various statutory obligations. Abiannual review is undertaken, theresults of which are reported tothe Audit and Risk Committee.Programme StandardsThe Broadcasting Act 1989places an obligation on theCompany for the broadcastingof programmes to comply withthe requirements of that Act andwith programme codes approvedby the Broadcasting StandardsAuthority. TVNZ as a broadcasteris required to receive and considerformal complaints and to haveprocedures for investigating them.Occupational Safety and HealthTVNZ’s Health and Safety policyis to promote excellence inhealth, safety and welfare byimplementing best practice healthand safety systems while seekingcontinuous improvement.

81 / TVNZ ANNUAL REPORT FY2009SIR JOHN GOULTER, KNZM, JP (PAIHIA)Sir John is former Managing Director of Auckland International Airport Limited and former Chairman ofthe <strong>New</strong> Zealand Lotteries Commission and United Carriers Group Limited. As well as being a Director ofthe Reserve Bank of <strong>New</strong> Zealand, he is currently Chairman of Ngapuhi Asset Holding Company Limited,Northland Deepwater JV Limited and The <strong>New</strong> Zealand Business and Parliament Trust. In 2003 he was inductedas a laureate into the <strong>New</strong> Zealand Business Hall of Fame and was appointed a Distinguished Companionof the <strong>New</strong> Zealand order of Merit for services to Business and the Community. In 2009 his re-designationas a Knight Companion of the <strong>New</strong> 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 BankingCorporation. Her career spans both the public and private sector with extensive experience inpolicy-making, banking and finance. Her governance roles cover a range of sectors includinghealth, 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 hisappointment as the London-based Managing Director of Reuters Media. Before his international careerwith Reuters, he had an extensive career in journalism in <strong>New</strong> Zealand (both press and television). Hehas also held governance roles with a number of international media companies. Phillip is activelyinvolved in search and rescue and is a Board member of <strong>New</strong> 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 FY2009Management Structure as at 30 June 2009Jeff LatchHead of TelevisionANTHONY FLANNERYHead of <strong>New</strong>s &Current AffairsDAVE WALKERHead of Advertising SalesJason ParisHead of DigitalMedia/Marketing,Research & InsightsRick EllisChief Executive OfficerHelen CLIFTONHead of BroadcastServicesDAVID LAZARUSCompany Secretary/General CounselRODNEY PARKERChief Financial OfficerKerry heathHead of Internal AuditDiane ObrienHead of Human ResourcesPETER PARUSSINIHead of Corporate Affairs

83 / TVNZ ANNUAL REPORT FY2009Main LocationsAUCKLANDRegistered OfficeTelevision Centre100 Victoria Street WestAuckland 1010PO Box 3819Auckland 1140Tel: 64 9 916 7000Fax: 64 9 916 7934tvnz.co.nzHAMILTONSales533 Anglesea StreetHamilton 3204PO Box 889Hamilton 3240Tel: 64 7 957 6300Fax: 64 7 957 6311ROTORUA<strong>New</strong>s5th Floor, Trustbank Building1154 Hinemoa StreetRotorua 3010PO Box 944Rotorua 3040Tel: 64 7 350 2540Fax: 64 7 350 2543Avalon Studios41 Percy Cameron StreetLower Hutt 5011PO Box 31444Lower Hutt 5040Tel: 64 4 914 5600Fax: 64 4 914 5888<strong>New</strong> Zealand Television ArchiveArchive BuildingAvalon StudiosPercy Cameron StreetWellington 5011PO Box 31444Lower Hutt 5040Tel: 64 4 914 5300Fax: 64 4 914 5319email: archive@nztvarchive.co.nzCHRISTCHURCH202 Gloucester StreetChristchurch 8013PO Box 1945Christchurch 8140SalesTel: 64 3 961 8500Fax: 64 3 961 8555<strong>New</strong>sTel: 64 3 961 8585Fax: 64 3 365 6705LONDONEurope Bureau54 Portland PlaceLondon W1B 1DYUnited KingdomTel: 44 20 7079 3241Fax: 44 20 7079 3243TVNZ also has <strong>New</strong>srepresentatives in Queenstown,<strong>New</strong> Plymouth, Napier and <strong>New</strong> YorkWELLINGTONSalesLevel 6Prime Property Tower86-90 Lambton QuayWellington 6011PO Box 1752Wellington 6140Tel: 64 4 914 5198Fax: 64 4 914 5140<strong>New</strong>s & Current AffairsPrime Property Tower86-90 Lambton QuayWellington 6011PO Box 1910Wellington 6140Tel: 64 4 914 5000Fax: 64 4 914 5043DUNEDIN<strong>New</strong>s11 Dowling StreetDunedin 9016PO Box 1070Dunedin 9054Tel: 64 3 474 2880Fax: 64 3 474 2885SYDNEY<strong>New</strong>sC/- ABC <strong>New</strong>sLevel 1, 700 Harris StreetUltimo, NSW 2001Tel: 61 2 8333 4744Fax: 61 2 8333 4188

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