Inspiring New Zealanders on Every Screen - Tvnz

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)