23rd Feb 2006 07:01
Independent News & Media PLC23 February 2006 INDEPENDENT NEWS & MEDIA PLC APN NEWS & MEDIA LIMITED - RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005 APN Delivers a Record Net Profit After Tax of A$149.7 million, up 16% APN News & Media Ltd ('APN'), in which Independent News & Media PLC ('INM') hasa 40.50% shareholding, today announced a record Net Profit After Tax for the 12months ended 31 December 2005 of A$149.7 million, a 16% increase on the prioryear. GROUP RESULT FY 2005 FY 2004* % var Revenue A$1,364.1m A$1,274.2m 7% EBIT (Pre NPI) A$322.1m A$294.9m 9% EBIT A$309.4m A$285.1m 9% Net Profit After Tax A$149.7m A$129.4m 16% Basic Earnings Per Share (cents) 31.1 27.1 15% Dividends per share (cents) 24.2 22.0 10% * Adjusted for A-IFRS APN Chief Executive Brendan Hopkins said: "This has been a strong year for APN,recording yet another record profit with EBIT growing 9% to A$309.4 million.Total revenues grew 7% to A$1.364 billion. "APN continues its expansion and development into a diverse multimedia companywith market leading brands in a number of high growth geographic locations. "The results are after expensing significant investment in a range of newproduct initiatives (NPIs) totalling almost A$13 million, including the majorinitiatives of The Aucklander and the Herald on Sunday, launched in 2003 and2004, which are expected to move into profit in 2006 and 2007 respectively. "In recent years at the time of releasing the annual results, the Board hasoutlined its double digit earnings ambition. It is pleasing to report that thestrength of APN's businesses has enabled that ambition to be achieved in each ofthe last four years. "The Board of APN believes that our diverse portfolio of market leading brandswill continue to produce attractive returns and that 2006 will be no exception. "Whilst it is too early to predict a fifth consecutive year of double digitearnings growth, the early part of the year is trading in line with ourexpectations and, given a ontinuation of current conditions, the Board believesthat further significant earnings growth of at least five percent looks likelyto be achieved." Group earnings lifted 7% in the second half on top of the strong growthexperienced in the previous year. Mr Hopkins said: "Our market leading brands in New Zealand performed well in thesecond half in slowing market conditions foreshadowed at the Interim Resultspresentation. We remain pleased with current trading in New Zealand, which isabove the prior year and in line with expectations." The second half trading performance was influenced by a number of factors thatlook likely to underpin growth in 2006: • The regional newspaper division continued to enjoy the benefits ofoperating in high growth markets. In the second half regional publishingrevenues were up 8% and divisional EBIT grew 9%. • Outdoor EBIT grew 22% in the second half with this division poised todeliver strong growth in 2006. • The cost of investment in our range of new products, principally in NewZealand is beginning to moderate on a year on year basis with A$5.5m beingexpensed in the second half compared to A$8.2m in the same period in the prioryear. Costs were well contained, with overall cost growth in the second half up just2% before NPIs, contributing to further growth in margins. DIVISIONAL ANALYSIS APN Group EBIT (AUD million) FY2005 FY2004* % var.Publishing 222.4 203.0 10% New Zealand National Publishing 110.1 103.0 7% Regional Newspapers 112.3 100.0 12%Radio 82.0 71.6 15%Outdoor 22.4 19.1 17%Print & Specialist 5.5 9.9 (44%)Corporate (10.2) (8.7) 16%EBIT before NPIs 322.1 294.9 9%New Product Initiatives (12.7) (9.8)EBIT before non-recurring items 309.4 285.1 9% * Adjusted for A-IFRS NEW ZEALAND NATIONAL PUBLISHING The New Zealand National Publishing Division includes The New Zealand Herald,the Herald on Sunday, The Aucklander and New Zealand Magazines. The Division increased overall revenue (pre NPI) by 5% and EBIT (pre NPI) by 7%over the prior year. The New Zealand Herald is the mainstay of our Auckland strategy and remains byfar the country's largest and most important metropolitan daily with an averagedaily readership of 575,000 and over one million readers every week. Week daycover price was increased to NZ$1.50 from NZ$1.30 on 5 September. Advertising revenues grew in all major revenue categories with market sharesmaintained. A new quarterly demand driven rate card was introduced and newsections such as Superwheels and Heraldhomes were introduced. Overall tight cost controls and enhanced productivity, together with improvedyields resulted in an increased operating margin. The Weekend Herald continues to be the country's most read weekend paper with656,000 readers every Saturday. The Weekend Herald is read by almost one in twoAucklanders every weekend and reaches almost twice as many Auckland readers asany other weekend newspaper. The cover price was not increased in 2005. The Herald on Sunday has exceeded expectations in readership and circulationsince its launch 18 months ago, and has already become Auckland's best-readSunday newspaper with a readership of 217,000. The introduction of the Heraldon Sunday into the market has grown Sunday newspaper readership in Auckland by30%. In its latest audit, the Herald on Sunday had a circulation of 91,076,well above expectation. Overall Sunday trading circulations have grown by 21% inNew Zealand since the launch of the Herald on Sunday. Advertising volumesincreased significantly over the year, with the Herald on Sunday doubling itsvolume share of the Sunday market to 40%. Cover price was increased to NZ$2from NZ$1.80 on 4 September. The Aucklander has grown its share of Auckland advertising volumes from 4% to 7%and is well placed to capitalise on strong readership figures, with 453,000people reading the total household coverage "newszine" each week. The New Zealand Woman's Weekly increased its circulation by 5% and was onceagain, the best-read magazine in New Zealand with a readership of 950,000 perweek. The New Zealand Listener extended its lead in the current affairs sectorwith a readership of 323,000 per week. Colour capacity at the Ellerslie print plant was doubled and the work completedon schedule in October. REGIONAL NEWSPAPERS In Australia and New Zealand, APN operates 23 regional daily newspapers and inexcess of 100 non-daily titles concentrated in high growth markets across SouthEast and Central Queensland, Northern New South Wales and the north part of theNorth Island in New Zealand. These markets have again delivered excellentgrowth with divisional revenues (pre NPI) increasing by 8% to A$400.9 millionand EBIT (pre NPI) by 12% to A$112.3 million. In Australia, employment and real estate recorded exceptional growth of 29% and13% respectively. Growth in the high yielding employment pillar has been drivenby the strategy of bringing together employment sections across our regionalnewspapers under the "Worksearch" brand in both print and online. A growing part of our publishing strategy is the launch of new gloss lifestylemagazines. Magazines under the brand Revive have been launched in four of ourlargest regional markets. These high quality gloss publications targetimportant market segments through a single umbrella brand, making them moreattractive to national advertisers. APN's regional titles have led circulation growth over the last three years,with increases in thirteen out of the last fourteen circulation audits inAustralia. Circulation figures to December 2005 were stable compared toSeptember 2005 as a result of cover price increases introduced over the period. The New Zealand titles experienced a strong year, with real estate andemployment pillars growing 27% and 23% respectively. National revenues in the44 community titles doubled in 2005, following the setting up of a nationalsales team reflecting strong advertiser interest in total market coveragecommunity titles. APN's daily titles in the north of the North Island have continued theirimpressive growth, driven by steady population increases and strong economicactivity. APN publishes the two fastest growing regional daily newspapers inNew Zealand, the Bay of Plenty Times and the Wanganui Chronicle. The ongoing masthead and content development programme benefited Hawke's BayToday and the Wanganui Chronicle. In Christchurch our six community titles wereconsolidated into four, under the single masthead of The Star. RADIO Radio operations in both Australia and New Zealand had another strong yeargrowing divisional revenue by 7% to A$264.1 million and EBIT by 15% to A$82.0million. In Australia, the Australian Radio Network (ARN) had an outstanding year growingaudience share through its two key brands MIX and Classic Hits and finishing theyear in its strongest position ever, with number one FM stations in Sydney,Melbourne and Adelaide. In Sydney, the largest radio market in Australia, ARNis the number one network among its core demographic target group, listenersaged 25 to 54. ARN successfully leveraged this improved ratings position intoadvertising market share gains. ARN's advertising market share increased to26%, the 4th consecutive year of growth. The Government announced its policy guidelines for the introduction of digitalradio in October 2005. The plans will result in a phased rollout of digitalradio and a six-year moratorium on the introduction of any new licences from thecommencement of digital rollout. ARN increased revenue by 8% and EBIT by 18% during the year. The Radio Network's (TRN) audience share in the Auckland market has grown to 53%and across New Zealand as a whole to 47% confirming the company's position asthe clear market leader and number one radio group in New Zealand. TRN has NewZealand's top talk and music networks: Newstalk ZB and Classic Hits and eachweek 54.9% of New Zealanders aged 10 and over listen to a TRN station. TRN hasthe top rating radio stations in Auckland and Christchurch. In April the EasyListening I format was re-branded Viva, with a new format of talk and musicaimed at the 40+ female audience. TRN has launched eight new stations duringthe year extending the reach of existing networks, taking the total number ofstations at the end of 2005 to 117. The two new formats introduced in 2004, Flava and Coast have continued to buildon their impressive debuts and Coast stations have been launched into four newmarkets, Wellington, Taranaki, Manawatu and Southland. Agreement was reached between the radio industry and the New Zealand Governmentover radio licence extensions during 2005. Radio licences in New Zealand areallocated through 20-year management rights with the current rights expiring in2011. As part of the process the renewal will be offered to incumbentbroadcasters at valuations to be determined. The total cost to TRN has however,been capped at a range between NZ$45 and NZ$50 million. TRN in New Zealand increased revenue by 7% and EBIT by 10% during the year. OUTDOOR APN Outdoor has continued to take advantage of an integrated management model,established two years ago, to extract valuable synergies from a diversifiedportfolio of all the major Outdoor formats in five countries. Growth hasoccurred in all markets through a combination of site development,infrastructure asset tender wins and acquisition. Revenues (pre NPI) have increased by 6% to A$232.7 million and EBIT (pre NPI) by17% to A$22.4 million. In Australia, APN Outdoor was successful in securing the prestigious Railcorp(NSW Rail assets), PTA (Perth rail assets - preferred tenderer) and SydneyAirport. In addition, APN Outdoor renewed Sydney Buses (preferred tenderer).Other contract gains included Yarra Trams and Adelaide Transport. Thesecontracts represent the premium Outdoor assets in Australia and their tenurewill enable a platform for broadened scope and revenue growth. During 2005 two strategic acquisitions, Adspace in Melbourne and the remaining50% of Look Outdoor in New Zealand were completed. The outdoor market for 2005 in Australia performed strongly with an 8% increasein media revenue. APN Outdoor's products outstripped market revenue growth andcontinued to lead the market. Asia provided improved market conditions for each of our businesses in Malaysia,Indonesia and Hong Kong. Again growth was achieved by a combination of yieldimprovement and volume growth. The final two transit contracts were secured in Hong Kong, ensuring Buspak nowhas total market coverage. This is expected to contribute positively in 2006. APN ONLINE Though not separately reported in 2005, APN has developed a significant onlinepresence. In New Zealand nzherald.co.nz is the most popular news web site and the 3rd mostpopular web site, whilst The Aucklander has introduced business to consumeronline auctions with bidnsave. Online classifieds verticals have beenestablished and are growing. The acquisition of the 2nd ranked Netcheckemployment web site has been completed and the site is being fully integratedinto the new Search4jobs brand. The UBD (business directories) and Wises(mapping) sites generate significant traffic providing an excellent platforminto online directories. These existing New Zealand businesses are expected to generate online revenuesin excess of NZA$10m in 2006. The formation of the APN Online division will build on APN's existing Internetassets. The objective is to grow an online business of appropriate size andscale for a diverse multimedia company such as APN. CAPITAL MANAGEMENT The Company has been active in capital management during the period. In June weannounced the Company's intention to buy-back up to 47 million shares over a12-month period in anticipation of conversion of convertible notes. To date theCompany has bought back 31.8 million shares for an aggregate price of A$156.3million at an average price of A$4.93 per share. Shares on issue currently total473.1 million. We expect the buy-back to remain earnings per share accretive. To date, 18.8 million convertible notes, with a face value of A$74.3 millionhave been converted into ordinary shares. This change means the face value ofthe notes on issue has fallen to A$175.7 million. INTERNATIONAL FINANCIAL REPORTING STANDARDS These full year results are reported under International Financial ReportingStandards ("A-IFRS") for the first time. As part of the changes, comparativefinancial information has been restated in accordance with the transitionalarrangements governing the introduction of A-IFRS. Whilst the first time adoption of A-IFRS results in some changes to the group'sbalance sheet it is important to appreciate that A-IFRS will not impact thegroup's cash flows or its capacity to pay dividends. DIVIDENDS Directors have declared a final dividend of 15.4 cents per share, an increase of10% on the previous year. This results in total dividends for the yearamounting to 24.2 cents per share compared to 22 cents in the previous year.The final dividend, which will once again be 30% franked, is payable on 24 April2006. Registrable transfers received by the Company up to the close of businesson 6 April 2006 will be registered before entitlements to dividends aredetermined. OUTLOOK In recent years at the time of releasing the annual results, the Board hasoutlined its double digit earnings ambition for the following year. It ispleasing to report that the strength of APN's markets and assets has enabledthat ambition to be achieved each year. The Board of APN believes that our portfolio of market leading brands in highgrowth markets will continue to produce good returns and that 2006 will be noexception. Whilst it is too early to predict a fifth consecutive year of double digitearnings growth, the early part of the year is trading in line with ourexpectations and, given a continuation of current conditions, the Board believesthat further significant earnings growth of at least five percent looks likelyto be achieved. 23rd February 2006 -- ENDS -- For further information:Gavin O'Reilly Donal BuggyChief Operating Officer Chief Financial OfficerIndependent News & Media PLC Independent News & Media PLCTel: +353 (0)1 466 3200 Tel: +353 (0)1 466 3200 Mark Kenny/Jonathan Neilan Pat WalshK Capital Source Murray ConsultantsTel: +353 (0)1 631 550 Tel: +353 (0)1 498 0300Email: [email protected] Rory GodsonPowerscourt MediaTel: +44 207 236 5619 About APN APN News & Media Limited (ASX,NZX:APN) is the publisher of The New ZealandHerald and is the largest operator of regional newspapers, radio broadcastingand outdoor advertising in Australasia. APN has been listed on the AustralianStock Exchange since 1992, and on the New Zealand Exchange since June 2004. APN NEWS & MEDIA LIMITED PRELIMINARY PROFITS ANNOUNCEMENT A$000 A$000 €000 €000 31 December 31 December 31 December 31 December 2005 2004 2005 2004 Turnover - Continuing Operations 1,270,219 1,197,208 778,464 708,533 Operating Profit- Continuing Operations 296,428 276,753 181,668 163,788- Exceptional Items 79 (1,868) 48 (1,106) Profit from Continuing Operations 296,507 274,885 181,716 162,682 Net Finance Charge (64,927) (62,477) (39,791) (36,975) Share of Profit of Associates 12,947 8,406 7,935 4,975 Profit on Ordinary Activities before Taxation 244,527 220,814 149,860 130,682 Taxation (58,638) (58,270) (35,937) (34,485) Profit on Ordinary Activities after Taxation 185,889 162,544 113,923 96,197 Minority Interests (36,229) (33,133) (22,203) (19,609) Profit Attributable to Members of the Parent Entity 149,660 129,411 91,720 76,588 Basic Earnings per Share (cents) 31.1 27.1 19.1 16.0Diluted Earnings Per Share (cents) 30.3 26.2 18.6 15.5 Profit & Loss Accounts translated at Average RatesAverage Exchange Rate 2004 €1 = A$1.6897Average Exchange Rate 2005 €1 = A$1.6317 APN NEWS & MEDIA LIMITED GROUP BALANCE SHEET A$000 A$000 €000 €000 31 December 31 December 2004 31 December 2005 31 December 2004 2005Current AssetsCash and Cash Equivalents 68,934 108,292 42,737 61,917Receivables 235,909 244,836 146,255 139,986Inventories 30,193 23,813 18,719 13,615Tax Assets 26,532 15,094 16,449 8,630Other 25,144 33,413 15,587 19,104Total Current Assets 386,712 425,448 239,747 243,252 Non-Current AssetsReceivables 8,047 20,130 4,989 11,509Other Financial Assets 17,296 22,392 10,723 12,803Investments Accounted for Using the Equity Method 21,014 13,164 13,028 7,527Property, Plant and Equipment 288,937 284,733 179,130 162,798Intangible Assets 1,784,717 1,748,578 1,106,458 999,759Deferred Tax Assets 33,377 60,331 20,692 34,495Other - 9,273 - 5,301Total Non-Current Assets 2,153,388 2,158,601 1,335,020 1,234,192 Total Assets 2,540,100 2,584,049 1,574,767 1,477,444 Current LiabilitiesPayables 198,828 181,105 123,265 103,548Derivative Financial Instruments 4,280 - 2,653 -Interest Bearing Liabilities 87,232 23,284 54,081 13,313Current Tax Provisions 4,371 7,225 2,710 4,131Provisions 12,220 18,300 7,576 10,463Total Current Liabilities 306,931 229,914 190,285 131,455 Non-Current LiabilitiesInterest Bearing Liabilities 752,356 874,684 466,433 500,105Deferred Tax Liabilities 214,188 217,009 132,789 124,076Provisions 2,320 2,216 1,438 1,267Total Non-Current Liabilities 968,864 1,093,909 600,660 625,448 Total Liabilities 1,275,795 1,323,823 790,945 756,903 Net Assets 1,264,305 1,260,226 783,822 720,541 EquityContributed Equity 918,155 963,565 569,222 550,923Other Reserves 42,647 30,845 26,439 17,636Retained Profits 51,201 15,270 31,743 8,731Total Parent Entity Interest 1,012,003 1,009,680 627,404 577,290Minority Interests 252,302 250,546 156,418 143,251 Total Equity 1,264,305 1,260,226 783,822 720,541 Balance Sheets translated at Closing RatesClosing Exchange Rate December 2004 €1 = A$1.7490Closing Exchange Rate December 2005 €1 = A$1.6130 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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