23 August 2006

The Web
Business Today

L-Istrina 2004 cost PBS Lm85,000

The Public Broadcasting Services’ financial statements published last week list the costs of charity telethon l-Istrina as forming part of the station’s cash flow, with expenses related to the event going as high as 10 per cent of the cash handed over to charitable institutions.
In its financial statements, PBS lists Lm413,512 cash receipts for l-Istrina 2003 and another Lm880,551 for the 2004 edition up to the end of September 2005, with cash handed over to charitable institutions being Lm840,000 and Lm626,000 respectively. This means that while PBS passed all funds received and in hand to the beneficiaries of the 2003 edition, it passed only around 71 per cent of the amounts collected in the 2004 edition.
Even more curious is the fact that the 2004 edition is listed as having cost the station Lm85,625, almost 10 per cent of the money donated to charities despite the voluntary nature of the event, with roughly the same percentage of expenses involved in the 2003 edition in relation to donations, where the costs are listed as totalling Lm44,500.
Equally strange is how the charitable activity that is organised and administered by PBS has its funds reflected in its financial reporting, obscuring the distinction between the station’s commercial ventures from its annual charity drive.
Among its core operations, PBS lists a decrease in turnover in 2005 but this was not reflected in a corresponding decrease in the cost of sales, with profits reaching Lm479,000, compared to the Lm789,000 profits made in nine months in 2004, even before the restructuring exercise had started.
PBS also experienced an increase in the distribution expenses and a minor decrease in administrative expenses, but not much to report about.
The real savings were carried out in operating expenses. In 2004, PBS succeeded in earning nearly Lm0.5 million from disposing of property held for resale. The balance sheet for 2005 shows that PBS revalued its tangible assets by doubling its value, while the government as the shareholder changed to capital the amounts it was owed. Both these transactions improved the company’s balance sheet, as well as the utilisation of its deferred tax asset that turned its operating loss into a profit, proving that the PBS restructuring is happening not only in its operations but also through financial reengineering.

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