TVNZ Announces Annual Result

TVNZ Announces Annual Result

TVNZ has announced its fiscal year 2002 annual results recording slightly reduced revenues, principally as a result of difficult market conditions.

The company recorded a net surplus after taxation of $19.3 million for the year and paid dividends during the year totaling $8.6 million.

TVNZ Chairman, Dr Ross Armstrong, said that in a challenging year for both the television and transmission businesses, Group revenue decreased by $3.8 million compared to the same period last year to $477.3 million. The company's operating surplus before interest, tax and non-recurring expenditure was $43.8 million.

Despite mirroring broadcasters all over the world and experiencing significant falls in advertising revenue in the first half of the financial year, the television business recovered well in the second half of the year to record advertising revenue of $285.7 million, an increase of $1 million on the previous year.

Net surplus after taxation for the television business was $5.1 million, a reduction of $2.7 million on the previous year, largely due to non-recurring expenditure in the 2002 financial year.

The most significant non-recurring expenditure impacting the television businesses' strong operating surplus has been the requirement to provision a write down in the value of the broadcast rights for the 2003 Rugby World Cup. These rights were purchased from Rugby World Cup Limited in 1996 at a cost of US$10 million. As a result of the IRB's decision to award the sole hosting rights to this event to Australia, TVNZ has suffered a diminution in the value of these broadcast rights and has been required to provide $5.2 million for this loss in value.

Transmission related revenues for the year were $114.5 million, a decline of $18.9 million over the previous year. This was largely due to the renegotiation of analogue contracts for Sky Television and TVNZ. Declines in design and build revenues were also experienced in both New Zealand and Australia due to the change in market conditions within the telecommunications sector.

Net surplus after taxation for the transmission businesses was $14.2 million, which while a reduction of $7.9 million on the previous year, continues to represent a healthy after-tax return on average shareholder's equity of 16.7%.

During the year, BCL made considerable progress towards implementing its new wireless broadband strategy with trials successfully completed in Taranaki and Southland. Across the Tasman, TVNZ Australia completed the installation of a state of the art maritime safety communications network, which monitors distress calls and disseminates safety and weather information to one of the largest maritime jurisdictions in the world.

TVNZ International was also active offshore and won a key contract to provide studio and transmission facilities for community radio stations throughout the newly formed Republic of East Timor.

TVNZ Chief Executive Ian Fraser said the television business had performed creditably when benchmarked against international broadcasters.

"TVNZ's ability to grow its advertising revenue during the year is a reflection of TV ONE and TV2's strong position in the market. A number of highlights occurred during the year including Shortland Street celebrating 10 years on TV2 and the opening of the new state of the art Television Archive at Avalon.

"In addition to the strong performance of the television business in an increasingly competitive and fragmented market, the company's web portal nzoom.com, has established itself as one of the most visited and comprehensive local content Internet sites for New Zealanders both at home and overseas attracting more than 12 million page views a month," said Mr Fraser.

Dr Armstrong said the pending TVNZ Bill, which will see the company changed from an SOE into a Crown Owned Company will better enable TVNZ to meet its new public broadcasting mandate.

"While the television business will be required to focus on giving effect to its Charter while maintaining commercial performance, the transmission businesses, which include BCL and TVNZ Australia, will continue to operate in much the same way as an SOE with a strong emphasis on commercial performance," said Dr Armstrong.

A copy of the annual report can be downloaded from the TVNZ website at: http://www.tvnz.co.nz

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