Half Year Statement
|
|
APN News & Media Limited (APN) | 10:46 am, Tuesday 12 August 2008 | APN | 3.240 |
 0 |
(+0.00%) |
MARKET ANNOUNCEMENT
APN Interim Results in line with Prior Year Australian Businesses continue to
show growth
Dividend maintained
SYDNEY, August 12, 2008 - APN News & Media Limited [ASX,NZX:APN] today
released its Interim Result for the period ending 30 June 2008.
Trading revenues for the period on a constant currency basis were up 2.5% to
$624.5m. Earnings Before Interest and Taxation (EBIT) before non-recurring
items (NRIs) for the period was $139.0m
compared with $142.4m last year and Net Profit After Tax (before NRIs) was
broadly in line with the prior year at $72.3m (last year $73.2m).
The Directors today declared an unfranked dividend of 10.5 cents per share,
maintaining the dividend at the same level as the prior year.
A geographic breakdown of the trading result on a constant currency basis is
set out below:
Trading Result (constant currency)
Revenue
% growth EBIT
% growth
Australia +5.7% +6.4%
Asia +20.9% +75.1%
NZ -2.4% -10.3%
Total +2.5% -0.1%
APN Chief Executive Brendan Hopkins said: "These are a good set of results
against the background of the global credit crisis. Our Australian and Asian
businesses have performed well during the period, with in particular our
Outdoor business being the standout performer. Our New Zealand businesses
have been affected throughout the period by the economic slowdown, with a
number of our major advertisers cutting back advertising plans.
"Significant progress is being made in our Online business. We have a number
of exciting organic Online opportunities, particularly in our Regional
markets.
"We are also announcing today the acquisition of Media1, New Zealand's third
largest Outdoor Advertising business, cementing our position as the largest
Outdoor operator in that market.
"The Group has now substantially completed the significant business
re-engineering programme announced two years ago. Whilst we have undoubtedly
seen some 'project creep' during the half,
particularly in relation to our Australian Publishing business, all projects
are now fully operational.
"APN is covered by ten media analysts, eight of whom have circulated full
year forecasts to the market in the last six weeks. The Board is comfortable
with their consensus full year forecast of $162m Net Profit After Tax but
notes that its achievement will largely depend on the performance in the
final
quarter, where 33% of EBIT traditionally occurs, and there being no further
deterioration in the New Zealand trading environment. Continued solid
performances from our Australian and Asian businesses give the Board
confidence that APN is well placed to take advantage of improvements in
underlying trading conditions in each of our major markets."
Divisional Results
Revenue EBIT
AUD millions June 30 2008 CC
growth Reported
growth June 30 2008 CC
growth Reported
growth
Publishing 375.7 0% (3%) 91.8 (7%) (10%)
- Regional Publishing 213.4 2% 1% 54.1 (8%) (9%)
- NZ National Publishing 154.3 (5%) (10%) 42.4 (5%) (10%)
- Online 8.0 78% 70% (4.7) 2% 4%
Radio 117.6 (4%) (6%) 33.8 (6%) (7%)
Outdoor 127.3 14% 9% 16.0 79% 74%
Corporate & other 9.9 123% 123% (2.6) N/A N/A
Total 630.5 2% 0% 139.0 0% (2%)
Constant currency - restated to convert prior year international currencies
to 2008 rates
Regional Publishing
APN publishes 23 regional daily newspapers and more than 100 non-daily and
community titles across Australia and New Zealand.
In Australia, the continued strong resources sector in our Queensland markets
and good growth in rural commodities provided solid trading conditions. In
particular, classified advertising in Real Estate and Employment again
returned double-digit growth, continuing a long trend of expansion in these
core advertising pillars. The unemployment rate in Queensland remains well
below the national level and net population growth is the highest in the
country, which bodes well for continued growth in APN's key
newspaper markets. Advertising growth was affected by a reduction in core
Government advertising spending in the period; however, forward bookings from
Government into the second half are encouraging.
The result in Australia was affected by widespread floods in the first
quarter, which impacted on operations and local markets in Mackay, Emerald,
Rockhampton and across Central Queensland.
The introduction of a number of re-engineering projects designed to improve
production and sales efficiencies has now concluded and benefits will begin
to flow in the second half. New press centres in Toowoomba, Rockhampton and
Ballina are now fully operational and, together with the state of the art
facility at Yandina on the Sunshine Coast, are producing high quality colour
publications that have been well supported by advertisers and readers.
In New Zealand, economic conditions remained subdued in local markets. While
there was some softness in classified advertising in Real Estate and
Employment, reflecting the general nature of
economic conditions in the country, there were good results in Retail
advertising, which grew over the period.
APN News & Media Limited ABN 95 008 637 643 Level 4, 100 William Street
Sydney NSW 2011 Australia
- 3 -
Cost management is a key focus for the Division and it remains well placed to
take advantage of any improvements in local economic conditions.
New Zealand National Publishing (NZNP)
NZNP comprises The New Zealand Herald, Herald on Sunday, The Aucklander and
New Zealand Magazines. The Division leads the Auckland market with more than
7 out of 10 Aucklanders aged 15+
reading at least one APN title each week.
Conditions remain challenging as we trade through the cycle; however, a
number of innovations and new sections across the publications have gained
support from advertisers. Equally, previous work on re-engineering production
proceses and improving efficiency has reduced the cost base and further
benefits will flow in the second half.
The advertising environment was competitive, with national advertising
continuing to perform well but other pillars experiencing some softness.
Ongoing tightness in the market for commercial printing accounted for half of
the reduction in the Division's revenue, pointing to the resilience of the
publishing
assets. New Zealand Magazines experienced good advertising growth with the
addition of new titles to its portfolio.
Paid circulation in The New Zealand Herald was stable and there were good
circulation gains for the Herald on Sunday. There was also strong growth in
readership, with The New Zealand Herald and the Herald on Sunday the fastest
growing paid newspapers in the country. In the most recent survey period
(April 2007 - March 2008), the Herald's readership grew by 34,000 to 593,000
readers on a typical day, while the Herald on Sunday was up 43,000 to 371,000
readers. Readership for the Herald has grown steadily over the last four
readership surveys and the Monday, Wednesday, Thursday and Weekend Herald
editions now have significantly higher readership than any other newspaper in
New Zealand. The
Herald on Sunday is now the clear leader in Sunday readership in the
commercially-important northern region of New Zealand. The strong growth in
readership was reflected at the Qantas Media Awards, where The New Zealand
Herald was recognised as the best daily newspaper and the Herald on Sunday as
the best weekly newspaper as well as the overall newspaper of the year.
New Zealand Magazines were also recognised as market leaders at the Magazine
Publishers Association Awards for 2008, with the New Zealand Woman's Weekly
being named magazine of the year. Equally, Cr?me was named lifestyle magazine
of the year and the New Zealand Listener was the best news-stand magazine in
the Qantas Media Awards. Readership trends have been positive and are
expected to continue.
Online
APN continues to invest in its Online Division, which is achieving good
organic growth. Its flagship property nzherald.co.nz was named best news
website at the Qantas Media Awards. The site is profitable, with revenue in
the first half up 28% on the prior period. More than 11 million page
impressions are delivered each week to more than 720,000 unique browsers.
This result, seen in combination with the continued strong readership growth
of The New Zealand Herald in print format,
shows the online version is building and extending the valuable Herald brand
into new and profitable markets.
The Division's regional strategy was launched with the community-based finda
websites in Toowoomba and the Sunshine Coast. The sites integrate existing
online newspaper content with events, mapping and local business listings to
build omprehensive local web resources, supported by local and national
advertising. The investment phase in this strategy will continue for the next
two years as finda sites are rolled out in each of APN's regional markets.
APN News & Media Limited ABN 95 008 637 643 Level 4, 100 William Street
Sydney NSW 2011 Australia
- 4 -
In New Zealand, the finda online business directory continues to generate
record traffic levels, up 37% in the first half. Combined with the Wises Maps
website, the APN directory attracts more than 900,000 unique browsers a
month, making it the most popular online business directory in the country.
The finda
distribution arrangement with Google continues to deliver good site traffic
growth. Work is continuing to leverage the directory data to build
industry-focused 'vertical' sites, opening new revenue opportunities for the
business. A number of enhanced features for listed companies on the finda
site, including the
addition of video, coupons and internal links, have become important revenue
drivers. Additional features will be rolled out in the second half.
Radio
The Radio Division comprises the Australian Radio Network (ARN) and The Radio
Network (TRN) in New Zealand, which together reach almost 6 million listeners
each week - the largest radio audience in Australasia.
In Australia, ARN has invested in a more streamlined and sophisticated sales
process to better serve agency and direct clients, producing some solid
commercial outcomes. New senior managers have been appointed to deliver a
more integrated approach to programming, sales and online. Good gains have
been made in the second quarter in terms of commercial market share. The
network's two music streams of Classic Hits and Mix continue to focus on
their core demographic of 25-54.
In New Zealand, TRN remains the market leader in New Zealand radio, with the
number 1 talk station in Auckland, Wellington and Christchurch. TRN has a
combined audience share of almost 47% of all audiences aged 10+, well ahead
of its nearest competitor. Challenging market conditions continue but the
acquisition of 21 additional licences at auction in May for NZ$1.3 million
will further extend the reach of TRN's eight networks across the country.
Outdoor
APN Outdoor is the market leader in each of the main outdoor advertising
categories in Australia and New Zealand, as well as a major player in large
format in Indonesia and Malaysia and in transit and large format in Hong
Kong. The Division delivered a strong result, with particularly good growth
in Australia and Asia, lifting overall EBIT by 74%. Outdoor in New Zealand
performed in line with the rest of the local media market, but investment in
new contracts such as Christchurch airport and the
rationalistion of some sites has led to improved inventory and good growth.
In Australia, small and large format billboards are the fastest growing
categories, driven by APN Outdoor's market leading businesses. The Division
also continues to innovate, with building approval now granted for the
construction of Australia's largest digital billboard, to be erected on the
historic Young and Jackson building opposite Flinders Street station in
Melbourne. Rated as one of the best Outdoor sites in the country, the almost
90m2 billboard will feature animated slides and has the potential to display
video.
Outdoor in Australia will also benefit from the introduction of the audience
measurement system MOVE - Measurement of Outdoor Visibility and Exposure. The
system will provide advertisers and agencies with reliable data on a
'likelihood to see' measure, enabling them to accurately assess the
effectiveness of their campaigns. The system is due for introduction at the
end of the year, with benefits to flow from 2009.
In Asia, Outdoor has performed particularly well, with local economies
avoiding the full impact of the credit crisis that has flowed from the United
States. Stable conditions have allowed good revenue growth and strong
increases in EBIT. In Hong Kong, Buspak is the Beijing 2008 Olympic Games
Equestrian Events Official Transit Advertising Agent. With Hong Kong a major
gateway to mainland China, the Outdoor operation is experiencing some revenue
improvement due to the Olympic effect.
APN News & Media Limited ABN 95 008 637 643 Level 4, 100 William Street
Sydney NSW 2011 Australia
- 5 -
Acquisition
The Company announces today that it has acquired the operations of Media 1,
the third largest billboard company in New Zealand. The acquisition will add
130 premium sites to APN Outdoor's existing national portfolio of 500
billboard sites, covering all major markets in the country. This will further
cement APN's
position as the leading Outdoor operator in New Zealand.
Dividend Reinvestment Plan
The Company has decided to reinstate the Dividend Reinvestment Plan (DRP) in
response to requests from small shareholders in particular. The DRP had been
suspended for the last three years whilst the share buy-back to offset the
conversion of 63 million Convertible Notes originally issued in 2001 was
completed. Shares issued under the DRP will not attract any discount.
Shareholders will receive full details in the next few days.
Funding
APN remains well served by the terms of its credit facilities, despite the
difficult prevailing credit conditions. The company has no material debt
facilities maturing until 2010 with some maturities extending to 2012.
Overall leverage levels remain satisfactory.
Non-Recurring Items
The results include net Non-Recurring losses of $0.3 million (after tax).
Non-Recurring costs include costs of our growing suite of Online businesses
which have been developed largely organically rather than through
acquisition, as well as costs associated with the significant business
re-engineering programme which is almost complete. In addition, costs
associated with various redundancies actioned during the period have been
treated as non-recurring. The Board remains of the view that these charges
are not related to ongoing trading and therefore are appropriately classified
as Non-Recurring Items.
Outlook
APN is covered by ten media analysts, eight of whom have circulated full year
forecasts to the market in the last six weeks. The Board is comfortable with
their consensus full year forecast of $162m Net Profit After Tax but notes
that its achievement will largely depend on the performance in the final
quarter, where 33% of EBIT traditionally occurs, and there being no further
deterioration in the New Zealand trading environment. Continued solid
performances from our Australian and Asian businesses give the Board
confidence that APN is well placed to take advantage of improvements in
underlying trading conditions in each of our major markets.
