Communications Fiji Ltd has recorded an operating profit of $1.42million for the first half of the year.
For the same period last year, the company recorded a profit of $1.1m.
A statement to the South Pacific Stock Exchange, however, said the company has also had to make a one-off negative provision of $684,293 to account for pre-operating expenses relating to their investment in Paradise Cinemas in Papua New Guinea.
This resulted in a group after tax profit of $358,380 (2011:$755,220) for the first six months to June 30th 2012. As a result of the strong operating result, the company has decided to increase the interim dividend to six cents per share (2011: 5 cents).
"Assuming results go to plan in the second half of the year, we will look to deliver a similar final dividend. "We are delighted with this result as it comes after a challenging first six months in Fiji and Papua New Guinea," CFL managing director, William Parkinson said.
"In Fiji, CFM delivered a net profit after tax of $353,886 (2011: $345,011) despite the negative impact of the floods that impacted on results on the first quarter."
Communications Fiji Ltd's Papua New Guinean subsidiary PNG FM's core broadcasting operations boosted operating profits by 25 per cent compared to 2011. Following the successful completion of elections and a quick transition to a new government, the company expects a very strong second half of the year.
The big impact on the result has come from PNG FM's investment (33.3 per cent) in Paradise Cinemas. "The cinemas opened in late February and operations are developing strongly but construction did take longer than expected resulting in the accumulation of substantial pre-operating expenditure (K1.3 million)," Mr Parkinson said.
"On the advice of our auditors, this pre-operating expenditure has been taken up as current expenditure resulting in a loss for the first six months and we have decided to provision for our share in this half year report ($684,293). It needs to be noted that is an estimate based on management accounts and will be reviewed when the year-end audit takes place but we have been deliberately cautious with this provision.
"Like with any pioneering venture, Paradise Cinemas going through a period of learning and development as it adjusts to market tastes and streamlines operations. In July, we recorded a operating surplus and revenue from tickets sales and concessions is growing strongly along with cinema advertising revenues that will have a positive effect on both Paradise Cinemas and PNG FM Ltd via CinemADs PNG."
Mr Parkinson said despite this one off provision, CFM still expected to deliver a record result of the year to December 31st 2012.
"In an earlier stakeholders briefing, we had forecast a potential profit after tax of around $2.4 million( this did not include Paradise Cinemas). We still believe we are on track to deliver this type of result minus the Paradise provision. This would mean a final result close to $1.6 million after tax (2011: $876,558)."