APN first half profit climbs 77% as year earlier charges wash through

APN News & Media [ASX: APN], publisher of the New Zealand Herald newspaper, boosted first half profit 77 percent as year-earlier charges washed through, buoyed by Australian and radio operations.

Net profit rose to A$27.2 million, or 2.4 cents per share, in the six months ended June 30, from A$24.6 million, or 1.7 cents, a year earlier, the Sydney-based company said in a statement. Earnings before interest, tax, depreciation and amortisation from its continuing operations and before one-off charges increased 1 percent to A$70.7 million, with revenue from continuing operations up 3 percent to A$405.9 million.

"Although advertising markets remain challenging, APN's second quarter performed better than the first," chief executive Michael Miller said. "Much of the positive revenue momentum that we have seen towards the end of the half and in more months is due to investments that we have made across APN's business."

The media group bought out US partner Clear Channel in Australian Radio Network and TRN in New Zealand for A$246.5 million this year, rounding out an overhaul of its portfolio to ditch underperforming assets and shore up its balance sheet.

APN also announced plans to redeem $100 million of NZX-listed bonds in September after refinancing a new banking facility of A$630 million with a syndicate of lenders. The new facility means the company's next major maturity will come in January 2018, with lower interest costs than previous arrangements.

The group will incur a one-off pre-tax cost of between A$4 million and A$5 million for the early redemption of the bonds, which were set to mature in March 2016. The bonds pay annual interest of 7.86 percent and last traded on the NZX debt market at a yield of 7.5 percent.

APN had net debt of A$482.6 million as at June 30, up from A$436.9 million a year earlier to help fund its acquisition of the ARN and TRN radio assets along with a rights issue. The company's net debt-to-equity ratio rose to 94 percent from 72 percent a year earlier. Operating cashflow dropped 46 percent to A$15.6 million.

The group's New Zealand media unit reported a 1 percent decline in revenue to A$135.6 million, though that was down 13 percent in New Zealand dollar terms, and a 1 percent fall in Ebitda to A$22.7 million, also down 13 percent in local currency terms, reflecting the sale of South Island and Wellington newspapers and several magazine titles, including the weekly Listener magazine, to Germany's Bauer Media.

The Radio Network lifted revenue 20 percent to A$56.9 million for a 15 percent increase in Ebitda to A$10.1 million. Sales were up 6 percent and earnings 2 percent in New Zealand dollar terms.

Its GrabOne digital business lifted sales 10 percent to A$9 million and earnings rose 32 percent to A$2.5 million, though they were down 3 percent and 16 percent respectively in local currency terms, reflecting lower email opening rates and an increasing shift to mobile platforms by consumers.

The Australian Radio Network lifted sales 8 percent to A$81.2 million and earnings 6 percent to A$29 million, while the Australian region media segment reported an 8 percent fall in revenue to A$99 million and a 17 percent drop in Ebitda to A$10.5 million.

The outdoor segment increased revenue 24 percent to A$24.1 million and Ebitda 1 percent to A$4.6 million.

APN said second-half advertising markets were still volatile with soft agency revenues. Publishing revenue was in line with the first half and group Ebitda was slightly ahead of a year earlier.

The media group anticipates cost savings from its publishing unit of more than A$20 million for the year, building on the A$40 million stripped out in 2013. In June, APN and rival Fairfax Media agreed to share printing facilities in New Zealand.

The board didn't declare an interim dividend.

The dual-listed shares were unchanged at 80 cents on the NZX and last traded at 77.5 Australian cents on the ASX.

(BusinessDesk)