MARKET ANNOUNCEMENT
Decline in publishing offset by solid performances in radio and outdoor
o Net debt reduced by $180m
o Net Profit After Tax before exceptional items of $54m in line with
guidance
o Weak markets offset publishing improvements. Cost initiatives
delivered $25m of savings in 2012 with another $25m reduction expected in
2013
o Australian Radio Network outperforms with market share up 7%
o Adshel EBITDA up 29% with strong gains in market share
o GrabOne doubles revenue, increases EBITDA by 7 times and leads market
with 75% share
o Non-cash impairment drives post exceptional loss of $456m
SYDNEY, 21 February 2013 - APN News & Media [ASX, NZX: APN] today released
its results for the twelve months ending 31 December 2012. Revenue was down
13% to $929m and Earnings Before Interest, Tax, Depreciation and Amortisation
(EBITDA) was down 25% to $156m. Net Profit After Tax (NPAT) before
exceptional items was $54m in line with guidance.
The revenue decline comes from deconsolidation of APN Outdoor following the
formation of the joint venture with Quadrant Private Equity. Revenue from
continuing operations was up 2% to $857m and EBITDA from continuing
operations was down 14%. As advised in the Company''s trading update in
December 2012, NPAT was diluted by $8m by the joint venture.
APN today announced a non-cash impairment charge of $151m, associated with
APN''s publishing assets in Australia and New Zealand. This impairment is in
addition to the $485m announced in August 2012. Taking these factors into
account, the Company reported a Net Loss After Tax of $456m.
APN FINANCIAL RESULT 2012
AUD million 2012 2011
Revenue 928.6 1,072.4
EBITDA* 156.0 208.9
EBIT* 122.5 171.4
Net profit after tax pre-exceptionals 54.4 78.2
Exceptional items (including impairment) (510.2) (123.3)
Statutory net loss after tax (455.8) (45.1)
*Before exceptional items based on segment reporting
The Company reduced its debt by $180m during 2012. This was achieved through
asset sales, the formation of the APN Outdoor joint venture and a focus on
cash management. Reducing APN''s debt levels is an ongoing objective.
APN will reduce debt by a further $40-$50m in 2013. This will be delivered
by organic earnings including the cost reduction program in publishing, as
well as small asset and property sales.
The Board has decided not to pay a final dividend for 2012.
APN Chairman, Peter Cosgrove said: "The structural changes to media together
with the weak advertising markets have impacted the results. Work has been
done to reposition the business and we are seeing encouraging improvements.
We have also been disciplined in reducing costs while investing in growth
where appropriate.
"Australian Radio Network, Adshel and GrabOne all delivered good performances
in 2012, with strong increases in revenue, earnings and market share. These
results have been achieved in a difficult environment.
"Our publishing divisions are pushing through extensive change agendas which
have been well received by our audiences and are gaining traction with
advertisers. Cost reduction programs delivered $25m in savings in 2012 with
another $25m reduction expected this year."
APN SEGMENT RESULT 2012
AUD million (YoY growth %) Revenue EBITDA
2012 Local currency As reported 2012 Local currency As
reported
Australian Regional Media 248.8 (10%) (10%) 38.7 (30%) (30%)
New Zealand Media 287.4 (7%) (5%) 47.8 (24%) (23%)
Australian Radio Network 140.0 5% 5% 50.8 7% 7%
The Radio Network (NZ) 86.7 (2%) (0%) 15.1 (12%) (11%)
Outdoor group 110.5 (58%) (58%) 19.6 (57%) (57%)
Digital group 55.3 367% 374% (0.8) 82% 82%
Corporate - - - (15.2) (7%) (7%)
Total 928.6 (14%) (13%) 156.0 (26%) (25%)
* Outdoor group consists of a 48% interest in APN Outdoor and 50% interest in
Adshel and Hong Kong Outdoor.
** 2012 result has been impacted by the formation of the APN Outdoor Joint
Venture and the brandsExclusive acquisition. Further detail is provided in
APN''s 2012 results presentation available on www.apn.com.au.
Publishing
Australian Regional Media (ARM) advertising revenue was substantially
impacted by the slowdown in the mining sector in Queensland and the decline
of federal and state government advertising. ARM reduced its cost base and
delivered a range of product initiatives, however the overall result was
down.
During the year, ARM overhauled its management structure, transformed the
approach of its editorial and sales teams and relaunched its network of 30
news websites. The digital first sites in Coffs Harbour and Tweed Heads
delivered an EBITDA improvement of $2m on a lower revenue base.
ARM had a solid start to 2013 with revenue run rates stabilising. However,
Cyclone Oswald and the floods in January have caused significant disruption
across much of the region. The immediate impact on ARM''s operations has been
less significant than the floods of 2011. However, the full financial impact
is still being assessed.
New Zealand Media (NZM) was also affected by the weak markets. Advertising
revenue declined 8% mainly in display and employment advertising. NZM
continued to deliver substantial cost savings during the year.
NZM has successfully delivered its rejuvenation program. The relaunch of the
weekday New Zealand Herald as compact, as well as the relaunch of regional
titles, have been positively received by readers and advertisers as has the
new multimedia sales approach. Further product rejuvenation will take place
in 2013, which started with the relaunch of the Herald on Sunday earlier this
month.
In relation to 2013, NZM has a major cost reduction program underway and is
progressing with the sale of its publishing businesses in Christchurch,
Oamaru and Wellington.
Radio
Australian Radio Network (ARN) had a very successful year increasing market
share by 7%. While the Australian radio market was down 1%, ARN revenue was
up 5% to $140m and EBITDA up 7% to $51m. As at January 2013, ARN has
exceeded market revenue growth for 19 consecutive months.
In 2012, ARN achieved the highest ratings for its target audience, aged
25-54, in five years.
In 2013 to date, ARN has maintained its strong revenue growth. Mix has just
launched a new breakfast show in Sydney and new drive shows in Sydney and
Melbourne. ARN and The Radio Network (TRN) will launch leading digital
platform iHeartRadio in Q2.
In New Zealand the radio market was flat. TRN''s revenue was $87m, down 2%
and EBITDA was $15m, down 12%. The results reflect, in part, closing the
Easy Mix network, investment in digital content and capabilities as well as
marketing. Newstalk ZB remains #1 station nationally and Coast moved to #1
music station nationally.
New CEO Jane Hastings started in September and is driving a program of change
to rebuild TRN. A restructure of the management team and sales team is
already complete. 2013 has had a strong start to the year with revenue and
bookings more than 10% ahead of this time last year. Content, sales strategy
and iHeartRadio are all high priorities for the year ahead.
Outdoor
In Australia, the outdoor market was up 2% while the New Zealand market was
down 19% accentuated by strong Rugby World Cup comparisons for billboards in
particular.
Adshel delivered an outstanding performance with revenue of $143m, up 17% and
EBITDA of $35m, up 29%. It also made strong gains in market share. Adshel''s
success was driven by a number of strategic contract wins in 2011 as well as
improved sales strategy and market proposition. Adshel delivered a number of
innovative interactive campaigns for clients including Qantas, Expedia and
Emirates. Revenue and bookings for 2013 to date are ahead of last year and
Adshel relaunched its brand in February 2013.
APN Outdoor was established as a joint venture with the sale of 50% to
Quadrant Private Equity in May. Full year revenue was $208m, down 3% and
EBITDA was $30m, down 19%. During 2012, APN Outdoor strengthened its senior
team and created a new digital team. It continued its digital rollout,
establishing Brisbane''s first premium large format digital billboard and
receiving approval for another two. APN Outdoor renewed several exclusive
transit advertising contracts and secured advertising rights to Virgin
Australia''s Brisbane terminal, APN Outdoor''s fifth airport contract. In
January 2013, APN Outdoor''s revenue was up year on year, but the market
remains short.
Revenue for Hong Kong Outdoor was A$39m, up 17% and EBITDA was A$4m, down
16%. Hong Kong Outdoor''s billboard business performed well. In transit,
investment to deliver new offerings introducing wifi and multimedia on buses
increased revenue but decreased EBITDA.
Digital
APN strengthened its digital ventures portfolio in 2012, increasing equity in
GrabOne from 75% to 100% and acquiring 82% of brandsExclusive in June.
GrabOne achieved exceptional results with revenue of $14.8m, up 93% and
EBITDA of $4.4m, up 7 times. GrabOne continues to lead the market with
approximately 75% market share. Membership is now more than 1m, a 40%
increase on last year. GrabOne continues to trade strongly in 2013 and is
expected to continue its EBITDA trajectory this year.
brandsExclusive has been investing for growth. Since acquisition,
brandsExclusive has increased its membership by 500,000 to 2.4m and launched
in New Zealand. Full year revenue was $57.0m, up 13% and EBITDA was a $4.2m
loss which includes $3.0m investment in growth initiatives. There has been a
focus on increasing the conversion of membership to sales and stronger
revenue growth is expected in 2013 as a result.
CC Media produced solid results with revenue of $5.2m, up 7% and EBITDA of
$1.5m, up 52%.
Outlook
Trading has been positive in the early part of 2013. Revenue declines have
moderated in publishing, and the identified cost reduction programme is being
implemented. The impact of the recent Queensland floods is still being
assessed but is expected to be lower than in 2011. Revenue in all other
divisions is ahead of prior year.
-- ENDS -
Investor Inquiries: Jeff Howard, APN CFO, 02 9333 4915
Media Inquiries: Peter Brookes, Citadel, 02 9290 3033
End CA:00233257 For:APN Type:FLLYR Time:2013-02-21 11:30:12