PBS making 'substantial' losses, auditor reports

PBS made pre-tax losses of €954,285 and €1,378,912 in the years ending in September of 2013 and 2014 and according to the latest management accounts, up to 31 March 2015, the loss had already reached €1,164,858, the National Audit Office reported in parliament today.

Due to such losses, working capital has been deteriorating over the years,
recording a negative amount of €757,022 on  30 September 2013, deteriorating to €2,851,188) by the end of the following financial year.

Furthermore, the management accounts for the first six months of the succeeding period also indicated a critical working capital of (€2,626,652).

The overall deficit of €481,8991, incurred on the organisation of Junior Eurovision Song Contest and the Malta Eurovision Song Contest, contributed further to expose PBS to liquidity problems and payments to service providers and/or suppliers with regard to both song contests were not being made in a timely manner.

It was observed that petty cash float balance was kept substantially high, at one point reaching €48,347 on 22 November 2014. The amount of €22,600 was subsequently utilised to pay three foreign individuals providing their respective
services during JESC and MESC.

Whilst PBS generates revenue from attracting sponsorships and airtime sales, the Government annually also provides a grant of around €3 million, in view of its Public Service Obligation.

Following Malta’s win at the 2013 edition of the Junior Eurovision Song Contest (JESC), a further subvention of approximately €1.4 million was granted to organise such event on the island, as the host country.

The Auditor said that the PBS Management made reservations on three issues of its report. 

It was remarked that, from a commercial point of view, the Eurovision Song Contest is to be taken into consideration to justify the overall deficit.

It also maintained that barter activity is to be excluded as this will have a nil effect on the bottom line of the company’s funds.

During the past years, PBS also held a number of meetings with the Ministry
for Finance to increase the Public Service Obligation funds. Moreover, Management was successfully adopting a more aggressive advertising strategy year after year.