APN offsets A$45mln FY loss with A$190mln from sale of outdoor stake

Thursday 23rd February 2012

APN News & Media has posted an A$45.1 million annual net loss and sold half its outdoor advertising business to Quadrant Private Equity for cash proceeds of about A$190 million.

APN, which publishes The New Zealand Herald, said its net loss included the previously announced A$159 million writedown in the value of its assets, mainly its New Zealand metropolitan newspapers.

Before such one-off writedowns, including restructuring costs, net profit fell 24 percent to A$78.2 million for calendar 2011 compared with A$103.1 million in 2010.

“Over the past year, I made a number of commitments to the market about the performance of the business and our immediate goals. I am pleased to report that we have delivered on those commitments,” said chief executive Brett Chenoweth.

“In challenging market conditions, including the impact of natural disasters, we grew revenue by 3 percent in local currency terms,” Chenoweth said.

“This emphasises the resilience of our assets and the product innovations that we have introduced. Trading in the second half showed a marked improvement on the first six months, notwithstanding a weak New Zealand dollar/Australian dollar exchange rate.”

The outdoor advertising joint venture will retain the name APN Outdoor as well as its current management team. It will include all the company's wholly-owned outdoor businesses in Australia and New Zealand as well as its 50 percent stake in Rainbow Premium Outdoor in Indonesia.

APN said the transaction values APN Outdoor at A$272 million on an enterprise basis. The venture won't include its 50 percent stake in the Adshel street furniture advertising business or its Hong Kong-based Buspak and Cody operations.

The joint venture will target growth in Australia, New Zealand and Asia and will actively pursue digital roll-out initiatives, APN said. “APN intends to reinvest part of the transaction proceeds to fund a range of growth opportunities,” it said.

Chenoweth said the partnership “is a unique opportunity for APN to fast-track growth in the outdoor advertising segment, one of APN's most successful businesses.”

The outdoor business had contributed “an enviable result” with local currency revenue up 13 percent and local currency earnings before interest and tax (EBIT) up 33 percent.

APN also owns other newspapers and magazines in New Zealand including The Listener and New Zealand Woman's Weekly, and The Radio Network, which claims a little over 48% of New Zealand's radio market.

Chenoweth said he had promised to deliver annualised cost savings of A$15 million and has achieved more than A$25 million with more to come. He is committed to rejuvenating APN's publishing business model.

“The New Zealand Herald titles have delivered market leading circulation and readership growth,” he said.

APN will pay a final dividend of 5 Australian cents per share, of which 1.5 cents will be franked, down from last year's partly franked 7 cents payout. The annual payout fell to 8.5 Australian cents per share from 12 cents last year.

Chenoweth said the advertising markets in Australia and New Zealand remain mixed and New Zealand remains behind on prior-year comparisons which preceded the impact of the Christchurch earthquakes.

APN shares, which are listed on both the NZX and ASX exchanges but which are mostly traded on the ASX, closed at 82 Australian cents yesterday. The shares are off their recent low at 69.5 Australian cents but have been trending lower from A$2.50 in May 2010.

(BusinessDesk)

BusinessDesk.co.nz

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