SYDNEY — Driven by a 65% leap in its television output, Australian producer/distrib and manufacturing group Southern Star posted a 10.3% increase in profits before tax to $A16.1 million ($10.4 million) in the financial year ending March 31.
The surge in TV production from 241 hours in 1996-97 to 419 helped propel sale revenues by 40.4% to $87.6 million.
Exec chairman Neil Balnaves said the new programs were sold to local networks at comparatively low profit margins, and the majority of their revenues will kick in from international sales in ensuing years.
Balnaves said the acquisition of U.K. producer-distrib Circle Communications for $15.2 million last year had contributed to earnings. The sales arms of Southern Star and Circle have been combined to improve sales and margins.
Favorable cash flow
Operating cash flow before any further investment is running at about $6.8 million a year, he said, which compares favorably with net borrowings of $16.2 million at March 31.
The company shuttered its interactive publishing operation in N.Y. for an abnormal cost of $533,000.
On a cautionary note, Balnaves said the growth in overseas sales has slowed following the Asian crisis and tighter market conditions in Europe. However, Southern Star signaled its confidence in the 1998-99 period by increasing its dividend by 17% over last year to 3.5¢ (Australian) a share.