kordia interim report 2011

8/7/2019 Kordia Interim Report 2011

1/18

KORDIA GROup LImIteD

INteRIm RepORtHALF YeAR ReSuLtS

2011


2/18

P.1


3/18

P.2

InterIm rePort

HALF YEAR RESULTS 2011

Kordia has deivered a soid nderying trading rest with a 5.5 per cent increase in revenerom $129.3m to $136.3m or the si months to December 2010, compared to the si monthsto December 2009. Net Prot Ater Ta, (beore abnormas) increased by 26 per cent rom$1.1m to $1.4m or the si months to December 2010 period compared to the si months toDecember 2009. Revene and prot are both ahead o bdget. Net debt has redced a rther$20.5m over the ast 12 months deivering a net debt position or the Grop o $80.6m.

For the past ve years Kordia has been eecting a broadcast to broadband transormationstrategy to enabe the bsiness to srvive and prosper beyond the termination o the originacore activity o anaoge teevision transmission. The Kordia bsiness pans have assmed

an anaoge teevision switch-o (ASO) date at 2015. The recent Government decision to bringorward commencement o anaoge teevision switch-o to 2012 has had a major impacton Kordia and has ed the Board to review the recoverabe amont o the Kordia Networksbsiness, being the part o the Grop most impacted by earier ASO. The Board is recording animpairment entry o $29.0m (beore ta), covering the write-down o assets associated withanaoge teevision transmission and an increase in the make-good provision reating to siteson which the transmission eqipment is ocated. This entry, a non-cash adjstment, redcesthe nderying NPAT rom a prot o $1.4m to a oss o $18m.

The FY12 bsiness pan wi refect the redced nds avaiabe or tre investment bt wi

aso refect an increase in joint ventring and aternative nding strategies.

KordIa networKs

There has contined to be an ptrn in saes activity or new prodcts incding KorKor(integrated two-way digita radio) and OnKor (Managed Ethernet) in New Zeaand. There isess evidence o the redction in capita ependitre and deays in decision-making insidecstomer organisations than reported on in Kordias 2010 Anna Report, bt the market inNew Zeaand sti remains chaenging and competitive.

Kordia contines to have a sharp ocs on providing New Zeaanders with more competition inthe whoesae internationa bandwidth market.

orcon

Orcon is trading ahead o bdget in both revene and in prot and is sccessy wideningits prodct range with sch initiatives as the prchase o the bsiness and assets o BIZO (inmanaged services) and commissioning o a content distribtion network with Sky Teevisionas the ondation cstomer.


4/18

P.3

KordIa solutIons australIa

Kordia Sotions Astraia has again deivered a strong rest with revene and prot ahead obdget and has over the ast si months deivered an nprecedented amont o proposas intothe Astraian Nationa Broadband Network, the teecommnications sector and the miningsector, and is very we paced to contine its growth trajectory. These anticipated new revenestreams wi not contribte signicanty nti net nancia year.

KordIa solutIons new Zealand

Kordia Sotions New Zeaand, oowing an etensive restrctre in the 2010 nancia year, is

trading on bdget and achieving some sccess in a sowy improving market in New Zeaandand importanty in the Pacic Isands.

Board

On 1 November 2010 Kordia wecomed two new directors, Debra Birch and John Aen. Debrahas an etensive backgrond in the nance and banking sector. John brings a wide knowedgeo the broadcast and media indstry. Phiip Meyer retired rom the Board by rotation on 31October 2010 and we thank Phiip or his contribtion to Kordia over the ast si years.

conclusIon

Kordia is now we throgh the broadcast to broadband transormation bt the earycommencement o anaoge teevision switch-o has impacted the crrent bsiness pan.Focs wi increase on the overa management o cape appied to the egacy bsiness whiethe Grop acceerates deveopment initiatives that can the gap et by eary ASO.

Geo Hnt David CarkeCEO - KORDIA GROuP CHAIRMAN - KORDIA GROuP

22 Febrary 2011


5/18

P.4

InterIm rePort

ConTEnTS

KoRdiA GRoUp LimiTEdCONSOlIDATED INTERIM FINANCIAl STATEMENTSFOR THE SIx MONTHS ENDED 31 DECEMBER 2010

05 Income Statement

06 Statement of comprehenSIve

Income

07 Statement of changeS In equIty

09 Statement of fInancIal poSItIon

10 Statement of caSh flowS

12 noteS to the InterIm

fInancIal StatementS


6/18

P.5

inComE STATEmEnTFor the sIx months ended 31 decemBer 2010

Adited ui

30/6/10 In thosands o New Zeaand doars Note 31/12/10 31/12/09

258,346 Revene 136,028 129,054

184 Finance income 292 208

258,530 136,320 129,262

114,786 Direct costs and overheads 60,415 57,965

91,270 Empoyee and contractor epenses 50,821 45,190

36,050 Depreciation and amortisation epense 15,933 17,689

9,850 Finance costs 4,208 5,497

1,513 Impairment o advances to associate 116 152

- Impairment o a cash-generating nit 4 29,043 -

5,061 Pf/() b i (24,216) 2,769

6,027 Income ta epense/(benet) (6,212) 1,686

(966) Pf/() pi ibb qiy (18,004) 1,083

The notes set ot on pages 12 to 14, orm part o, and shod be read in conjnction with, the Interim

Financia Statements.


7/18

P.6

InterIm rePort

STATEmEnT oF

CompREHEnSivE inComEFor the sIx months ended 31 decemBer 2010

Adited ui

30/610 In thosands o New Zeaand doars 31/12/10 31/12/09

(966) Pf/() pi ibb qiy (18,004) 1,083

(81) Foreign crrency transation dierences 738 138

37 Eective portion o changes in air vae o cashfow hedges 642 1,231

(15) Ta eect o the eective portion o changes in the air vae o

cashfow hedges

(193) (369)

(59) o piv i pi 1,187 1,000

(1,025) t piv i pi (16,817) 2,083




8/18

P.7

STATEmEnT oF CHAnGES

in EqUiTYFor the sIx months ended 31 decemBer 2010 (unaudIted)

In thosands o New Zeaand doarss

cpirieig

Figcy

tirv

chg

r v t

B 1 Jy 2010 87,696 10,198 1,065 (2,988) 95,971

Net oss or the period - (18,004) - - (18,004)

o piv i

Foreign crrency transationdierences

- - 738 - 738

Eective portion o changes in airvae o cashfow hedges, net o ta

- - - 466 466

Fair vae o cashfow hedgestranserred to income statement,net o ta

- - - (17) (17)

Tota other comprehensive income - - 738 449 1,187

t piv i pi

(18,004) 738 449 (16,817)

B 31 db 2010 87,696 (7,806) 1,803 (2,539) 79,154

For the sIx months ended 31 decemBer 2009 (unaudIted)


cpirieig

Figcy

tirv

chg

rv t

B 1 Jy 2009 87,696 11,164 1,146 (3,010) 96,996

Net prot or the period - 1,083 - - 1,083

o piv i


- - 138 - 138


- - - 983 983


- - - (121) (121)

Tota other comprehensive income - - 138 862 1,000

t piv i pi

- 1,083 138 862 2,083

B 31 db 2009 87,696 12,247 1,284 (2,148) 99,079


9/18

P.8

InterIm rePort

STATEmEnT oF CHAnGES

in EqUiTYFor the Year ended 30 June 2010 (audIted)


cpirieig

Figcy

tirv

chg

r v t

B 1 Jy 2009 87,696 11,164 1,146 (3,010) 96,996

Net oss or the year - (966) - - (966)

o piv i


- - (81) - (81)


- - - 113 113


- - - (91) (91)

Tota other comprehensive income - - (81) 22 (59)

t piv i y

- (966) (81) 22 (1,025)

B 30 J 2010 87,696 10,198 1,065 (2,988) 95,971

ConTinUEd


10/18

P.9

STATEmEnT oF

FinAnCiAL poSiTionas at 31 decemBer 2010

Adited ui

30/6/10 In thosands o New Zeaand doars Note 31/12/10 31/12/09

a

148,785 Property, pant and eqipment 113,803 154,144

54,501 Intangibe assets 59,879 55,735

- Derivative assets 151 13

4,310 Deerred ta assets 3,821 4,156

635 loan to associate 721 1,335

208,231 t - 178,375 215,383

3,942 Cash 5,746 4,673

42,168 Trade and other receivabes and contract work inprogress

44,226 44,017

1,091 Taation receivabes 415 1,794

- Derivative assets 15 20

1,635 Inventories 1,397 1,83148,836 t 51,799 52,335

257,067 t 230,174 267,718

eqiy libiii

87,696 Share capita 87,696 87,696

1,065 Foreign crrency transation reserve 1,803 1,284

(2,988) Cashfow hedge reserve (2,539) (2,148)

10,198 Retained earnings (7,806) 12,247

95,971 t qiy ibb qiy 79,154 99,079

4,078 Payabes and deerred income 3,992 2,971

4,322 Derivative iabiities 3,486 3,102

5,690 Provisions 7,484 4,010

286 Finance ease iabiity 270 779

80,000 loans and advances 3 70,466 100,657

8,036 Deerred taation - 5,031

102,412 t - ibiii 85,698 116,550

43,495 Payabes and deerred income 47,937 45,251

1,312 Taation payabe - 857

25 Derivative iabiities 450 101

1,104 Provisions 1,306 1,562

1,012 Finance ease iabiity 629 1,06211,736 loans and advances 3 15,000 3,256

58,684 t ibiii 65,322 52,089

161,096 t ibiii 151,020 168,639

257,067 t qiy ibiii 230,174 267,718




11/18

P.10

InterIm rePort

STATEmEnT oF CASH FLowSFor the sIx months ended 31 decemBer 2010

Adited ui

30/6/10 In thosands o New Zeaand doars 31/12/10 31/12/09

c pig ivii

257,830 Receipts rom cstomers 139,539 133,887

(203,736) Payments to sppiers and empoyees (111,401) (109,080)

54,094 28,138 24,807

4 Dividends received 4 4

179 Interest received 288 204

(8,962) Interest paid - other (3,771) (4,936)

(73) Interest paid - nance ease (22) (41)

(5,431) Taes (paid)/rended (1,887) (5,389)

39,811 Net cash rom/(sed in) operating activities 22,750 14,649

c ivig ivii

119 Proceeds rom sae o property, pant and eqipment 98 24

(20,632) Acqisition o property, pant and eqipment (8,501) (9,195)

(1,823) Acqisition o intangibes and reqency icences (1,843) (547)- Acqisition o assets o a company, net o cash acqired (2,509) -

(1,102) loan to associate (324) (306)

(23,438) Net cash rom/(sed in) investing activities (13,079) (10,024)

c fig ivii

(23,066) Proceeds rom/(repayment o) oans and advances (7,612) (11,382)

(1,040) Repayment o nance ease iabiities (504) (510)

(24,106) Net cash rom/(sed in) nancing activities (8,116) (11,892)

(7,733) n i/() i qiv 1,555 (7,267)

11,818 c qiv bgiig pi 3,942 11,818

(143) Eect o echange rate fctations on cash 249 122

3,942 c qiv pi 5,746 4,673




12/18

P.11

STATEmEnT oF CASH FLowSFor the sIx months ended 31 decemBer 2010

Adited Note ui


riii p pi i pig ivii

(966) n p/(fi) p i (18,004) 1,083

Add/(dedct) non cash items:

32,142 Depreciation 15,291 15,547

3,908 Amortisation and write o o icences and intangibes 642 1,915

595 unreaised oreign crrency osses/(gains) 45 179

2,762 Change in deerred ta/(tre income ta benet) (7,462) (413)

(430) Movement in provision or dobt and bad debts 89 188

- Eqity acconted earnings o associate - 152

1,513 Impairment o advance to associate 116 -

620 Movement in other provisions 129 306

- Impairment o a cash-generating nit 4 29,043 -

40,144 19,889 18,957

Items cassied as investing activities:

628 loss/(gain) on disposa o property, pant andeqipment

88 (11)

- Working capita acqired on the acqisition o assetso a company

873 -

628 961 (11)

Movements in working capita:

845 Receivabes and prepayments (1,382) (3,210)

232 Inventories 238 36

(2,038) Payabes 3,044 (1,123)

(961) 1,900 (4,297)

39,811 Net cash fows rom operating activities 22,750 14,649



ConTinUEd


13/18

P.12

InterIm rePort

noTES To THE inTERim

FinAnCiAL STATEmEnTSFor the sIx months ended 31 decemBer 2010

1. rePortIn entItY

Kordia Grop limited (the Company) is a imited iabiity company incorporated and domicied inNew Zeaand nder the Companies Act 1993 and is whoy owned by the Crown. The registered oceo the Company is leve 4, Fideity Hose, 81 Carton Gore Road, Newmarket, Ackand, New Zeaand.

The consoidated nancia statements presented here are or the reporting entity Kordia Groplimited comprising the Company, its sbsidiaries and the Grops interest in associates.

The nancia statements o the Grop have been prepared in accordance with the reqirements o the

Companies Act 1993, the Financia Reporting Act 1993 and the State Owned Enterprises Act 1986.

statement oF comPlIance

The Interim Financia Statements have been prepared in accordance with NZ IAS 34, Interim FinanciaStatements. The consoidated nancia statements do not incde a o the inormation reqired or anna nancia statements and shod be read in conjnction with the consoidated nanciastatements o the Grop as at and or the year ended 30 Jne 2010.

The nancia statements were athorised or isse by the directors on 22 Febrary 2010.

The nancia statements have been prepared on the basis o historica cost ness otherwise notedwithin the specic acconting poicies.

These nancia statements are presented in New Zeaand doars ($), which is the Companysnctiona crrency. A nancia inormation presented in New Zeaand doars has been ronded tothe nearest thosand.

estImates and Judements

The preparation o nancia statements reqires management to make jdgements, estimates andassmptions that aect the appication o acconting poicies and the reported amonts o assets,iabiities, income and epenses. Estimates and nderying assmptions are reviewed on an ongoingbasis. Revisions to acconting estimates are recognised in the period in which the estimate is revised

and in any tre periods aected.In particar, inormation abot signicant areas o estimation o ncertainty and critica jdgementsin appying acconting poicies that have the most signicant eect on the amont recognised in thenancia statements are described in note 4 reating to measrement o the recoverabe amont o acash-generating nit.

In the opinion o management, a adjstments necessary or a air presentation o the rests ooperations, nancia position and cash fows have been refected.

2. statement oF accountIn PolIcIes

The Interim Financia Statements presented here are the consoidated nancia statements o theGrop comprising Kordia Grop limited and its sbsidiaries, or the si months ended 31 December2010 and 2009. Both periods are nadited. The adited anna rests or the year ended 30 Jne2010 are aso presented.

The acconting poicies sed in the preparation o the Interim Financia Statements are consistentwith those sed or the year ended 30 Jne 2010 and the si months ended 31 December 2009.The Grop has not appied any standards, amendments to standards and interpretations that are notyet eective .


14/18

P.13



3. loans and adances

Adited ui


91,736 Bank oans (nsecred) 85,466 103,913

loan aciities are repayabe as oows:11,736 Within one year 15,000 3,256

- One to two years - 100,657

80,000 Two to or years 70,466 -

91,736 85,466 103,913

4.7% Weighted average interest rate o bank oans 5.0% 4.45%

The eective weighted average interest rate amended or derivatives, ine ees and margin is 9%(2009: 8.5%).

The oan aciities comprise a syndicated revoving cash advance aciity, dated 30 Jne 2010,committed to a maimm amont o $120 miion (2009: $135 miion). The aciities reported as at31 December 2009 were to epire Janary 2011. With the improvement in the trading position andgood progress with repayment o debt, the bank aciities were renewed eary to provide onger term,three year aciities throgh to Jne 2013.

The renewed aciity is spit into three tranches:

TrancheAfor$20m

TrancheBfor$90m

TrancheCfor$10m

Tranche A is renewabe by agreement between Kordia and the members o the syndicate annayand has a ower ee and margin strctre than the three year Tranche B and C aciities. Tranche Band C are committed to $90m or one year and this redces by $10m in May 2011 to $80m or theremainder o the term to Jne 2013.

As $15m was drawn as crrent nder Tranche A, crrent iabiities eceed crrent assets by $13.5mat 31 December 2010. Contrasting this, at 31 December 2009, crrent assets eceeded crrentiabiities by $0.2m.

The Board is o the opinion, there is minima iqidity risk becase:

Thesplitoffundingbetweencurrentandnon-currentwasaconsciousdecisiontobeinlinewiththe Grops treasry poicy which stipates progressive epiry/renewa dates or debt aciities.The aciity dated 30 Jne 2010 has a portion o one year debt to take advantage o ower bankmargins and commitment ees.

TheGroupexpectstorequestanextensionofTrancheAbyafurtheryearasprovidedforintheaciity.

Duringthesixmonthsended31December2010,theGrouppaidbacknetdebtof$7.6m.TheBoard orecasts a rther debt redction in the 2011 nancia year and the grop contines totrade with strong EBITDAs.

The aciity is spported by a negative pedge by the Company and its garanteeing sbsidiariesover their assets and ndertakings. The negative pedge restricts the disposa o assets other than inthe ordinary corse o bsiness or within certain materiaity threshods. under the negative pedge,each garanteeing sbsidiary may be iabe or indebtedness incrred by the Company and othergaranteeing sbsidiaries.

The aciity is sbject to varios covenants sch as imitations on gearing, interest cover, minimmsharehoders nds and coverage (the proportion o the consoidated grop that orms thegaranteeing grop nder the negative pedge). The minimm sharehoders nds covenant wasamended by the Banking Syndicate to aow or the (non cash) impairment entry. The Grop was incompiance with a covenants or the interim periods ended 31 December 2010 and 2009 and the

year ended 30 Jne 2010.

ConTinUEd


15/18

P.14

InterIm rePort



ConTinUEd

4. recoeraBle amount oF cash-eneratIn unIt

On 16 September 2010, the Government annonced that the date or switch-over to digita teevisionhas been broght orward rom the earier discssed date o 2015 to now commence September2012, with competion by ate 2013. This annoncement cased the Grop to reassess therecoverabe amont o its Networks cash-generating nit.

The Networks cash-generating nit ndertakes transmission services incding inking oteecommnications and broadcasting signas.

The recoverabe amont o the Networks cash-generating nit is based on a vae in se cacationsing a disconted cashfow mode or seven years rom 2010. The cashfow projections werebased on the 2011 nancia bdgets approved by management, adjsted or impact o earier thananticipated digita switch-over. The assmptions regarding revene growth and cost increasesare based on past eperiences and managements epectations o changes in the market andperormance o new prodcts. Management considers the bdgets to be reasonabe in the crrenttrading environment. Beyond year seven, a rea growth rate o 0% (2009: 0%) was assmed. Adiscont rate o 8.6% (2009: 8.4%) was appied.

The year on year change in discont rates refect an increase in the risk ree rate and changes inassets betas which have been assessed by way o comparabe companies in the respective bsinesssectors. Bancorp Corporate Finance limited worked with the Grop in determining the weighted

average cost o capita.

Based on the assessment at 16 September 2010, the carrying amont o the Network property, pantand eqipment and intangibe assets was determined to be $27.7 miion higher than its recoverabeamont. This estimate is sensitive to the oowing assmptions:

Anincreaseof1percentagepointinthediscountrateusedwouldhaveincreasedtheimpairmentoss by $9.3 miion.

Adecreaseof1percentagepointintheterminalgrowthratewouldhaveincreasedtheimpairmentoss by $6 miion.

A pre-ta impairment oss o $29 miion has been recognised in the interim acconts or the si

months ended 31 December 2010 and aocated to the property, pant and eqipment assetsconstitting the cash-generating nit.

5. commItments

Adited ui


94,473 Operating ease commitments 83,366 98,616

1,484 Capita commitments 3,734 1,533

Operating ease commitments comprise property reated commitments or oce space andoperationa sites, and commitments to Opts or sateite transponder capacity throgh to 2022.

6. contInent lIaBIlItIes

As part o its contracta obigations with cients, the Company has an ndertaking to provide servicesat a certain eve and shod this not be achieved, the Company may be iabe or contract penaties.It is not possibe to qantiy what these may be nti an event has occrred. The Directors do notepect any iabiities to occr as a rest o these contracta obigations.

The Company makes advances to its sbsidiary companies. The Companys oan aciity comprises a

syndicated revoving cash advance aciity committed to a maimm amont o $120 miion (2009:$135 miion). The aciity is spported by a negative pedge by the Company and its garanteeingsbsidiaries over their assets and ndertakings. under the negative pedge, each garanteeingsbsidiary may be iabe or indebtedness incrred by the Company and other garanteeingsbsidiaries. The Company considers the negative pedge in the individa sbsidiaries nanciastatements to be an insrance contract. Sch contracts and cross garantees are treated as acontingent iabiity and ony recognised as a iabiity i a payment becomes probabe.

7. eents suBseuent to Balance date

There are no other events sbseqent to baance date which have a signicant eect on the nancia

statements.


16/18

P.15

noTES


17/18

P.16

InterIm rePort

diRECToRYKordia has harmonised its bsiness to deiver what cstomers want. With a weath oeperience in broadcast and teecommnications sotions, and speciaised networks, weare poised to everage that eperience, and deiver what peope want rom technoogy. Orprodcts and or inrastrctre are a vaabe asset bt not as precios to s as or peope.

Or peope are who we are, what we stand or and how we deiver. Yo can contact s onine atwww.kordia.co.nz or at any o the oowing ocations:

new Zealand

akLevel 4Fidelity House81 Carlton Gore Road

NewmarketPO Box 2495Aucklandt: +64 9 916 6400Fax: +64 9 916 6402

ci348 Manchester StreetPO Box 21200Christchurch 8143t: +64 3 961 8790

Fax: +64 3 961 8798

di182 Albany StreetPO Box 6080Dunedin 9059t: +64 3 474 2800Fax: +64 3 474 2810

hi

14 Aztec PlaceFranktonHamilton 3204t: +64 7 957 6290Fax: +64 7 957 6295

wigLevel 12Kordia House109-125 Willis StreetPO Box 98

Wellington 6140t: +64 4 914 8000Fax: +64 4 914 8151

Level 6Avalon Business CentrePercy Cameron StreetP O Box 31642Lower Hutt 5040t: +64 4 914 8335Fax: +64 4 914 8377

australIa

actLevel 282 Northbourne AvenueBraddon

ACT 2612t: +61 2 6279 5773Fax: +61 2 6230 7462

n s wLevel 24 Drake AvenueMacquarie ParkNSW 2113t: +61 2 9856 2600F.ax: +61 2 9856 2695

Unit 6, 21 Kangoo RoadSomersbyNSW 2250t: +61 2 4340 1399F.ax: +61 2 4340 1426

23 Uhrig RoadHomebushNSW 2140t: +61 2 9856 2600

Fax: +61 2 9648 3170

11 Ashtan PlaceBanyoQLD 4014t: +61 7 3907 1400Fax: +61 7 3267 7321

s ai29 Walsh Street

ThebartonSA 5031t: +61 8 8159 8304Fax: +61 8 8234 2227

iiUnit 11181 Rooks RoadVermontVIC 3133t: +61 3 9837 3201

Fax: +61 3 9873 5012

Unit 1B4 Rocklea DrivePort MelbourneVIC 3207t: +61 2 9856 2600Fax: +61 3 8359 0350

w ai1/21 Tulloch Way

Canning ValeWA 6155t: +61 8 6253 5000Fax: +61 8 9456 2130

thaIland

ti60/1 Monririn Building(Room A105)Soi Phaholyothin

8 Phaholyothin RoadSamsennai PhayathaiBangkok 10400t: +66 2 270 1520Fax: +66 2 271 2225

orconnew Zealand

akBuilding B28 The Warehouse WayAkoranga Business ParkNorthcoteAucklandt: 0800 55 2000Fax: 0800 19 99 99

BanKers

Bank o New Zeaand /Nationa Astraia Bank

Commonweath Banko Astraia

Astraia New ZeaandBanking Grop

audItors

KPMG on beha o theAditor-Genera

solIcItors

Simpson Grierson(New Zeaand)

Bake Dawson(Astraia)


18/18

WWW.KORDIASOLUTIONS.COM

kordia interim report 2011

Documents