20th Feb 2007 07:00
Independent News & Media PLC20 February 2007 APN NEWS & MEDIA LIMITED - RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 APN Delivers 10% Earnings Per Share Growth and 7% increase in Net Profit After Tax in Record 2006 Result Dublin/London - 20th February 2007: APN News & Media Ltd ('APN'), in whichIndependent News & Media PLC ('INM') has a 41.6% shareholding, today announced arecord Net Profit After Tax for the 2006 Financial Year of A$159.5 million, a 7%increase on the prior year. Earnings Per Share during the period grew 10%. +----------------------------------------+-------------+--------------+--------+| | | Growth | Growth|| | | |Currency|| | | | adj. |+----------------------------------------+-------------+--------------+--------+|Results Summary | A$ million | As reported | |+----------------------------------------+-------------+--------------+--------+|Underlying Trading Revenue | 1,268.6 | (2%)| 2% |+----------------------------------------+-------------+--------------+--------+|EBIT pre Non-Recurring Items ('NRI') | 314.2 | 2% | 5% |+----------------------------------------+-------------+--------------+--------+|NPAT post NRI | 159.5 | 7% | 12% |+----------------------------------------+-------------+--------------+--------+|Earnings Per Share post NRI - Basic | 34.3 cents | 10% | |+----------------------------------------+-------------+--------------+--------+ APN Chief Executive Brendan Hopkins said: "2006 was a challenging year,particularly in the middle two quarters. Queensland recorded good growth, whilethe markets of Auckland, Sydney and Melbourne were flat to negative. Despitethis we have recorded a satisfactory trading result and, with effective capitalmanagement, have delivered an acceptable outcome for shareholders. "We are particularly pleased with our Australian Publishing and Outdoor results,the latter, as foreshadowed, assisted by the end of a number of uneconomiccontracts. "In New Zealand we saw the continued improvement in the Herald on Sunday, whichremains on target to move into profitability by the end of 2007. Readershipnumbers across all major titles performed well, with market share being retainedacross all major advertising categories. In general, the advertising market wassluggish, particularly in retail and employment. "Radio recorded a satisfactory result in difficult trading conditions,particularly in Sydney and Auckland. The Sydney radio market was down by over5% and Auckland was also negative. "Continued investment in new product initiatives was concentrated mainly in thenewly formed Online division, where we initiated a number of exciting newprojects including joint ventures with Finda (Auckland Directory), ACP (freeclassified listings) as well as establishing search4jobs as the clear number twoin the Online jobs market in Auckland. Together with a number of non-dailypublications acquired in Queensland, investments totalled A$22m. "Our capital management programme has allowed us to record a 10% increase in EPSpost-NRI despite the tougher trading conditions. Whilst the A$275m we have spentto date on the share buy back has reduced the reported NPAT, it has been valueaccretive to shareholders." Shareholders would be aware that on February 12 2007 the Company received anoffer by a consortium to acquire all of its shares at A$6.10 per share by way ofa Scheme of Arrangement, to be voted on by shareholders. An independentsub-committee of the Board of APN News & Media has recommended the offer in theabsence of a superior proposal. A meeting is expected to be held in late April,where shareholders will vote on the proposed Scheme. Full particulars of theScheme will be set out in documents expected to be mailed to shareholders inlate March 2007. Chairman of the independent sub-committee Mr Ted Harris said: "The resultsannounced today confirm the information available to the independentsub-committee in reaching its view about the merits of the offer. We remain ofthe view that the offer is in shareholders' best interests and we recommend allshareholders vote in favour of the proposal." As the offer to shareholders is inclusive of any final dividend, no dividendwill be paid to shareholders, pending the outcome of the Scheme meeting. Divisional EBIT results +-----------------------------+---------+---------+-----------+----------------+|(AUD million) | FY2006 | FY2005 | Reported | Local currency |+-----------------------------+---------+---------+-----------+----------------+| | | | Growth % | Growth % |+-----------------------------+---------+---------+-----------+----------------+|Publishing | 215.6 | 215.9 | 0% | 4% |+-----------------------------+---------+---------+-----------+----------------+|- Regional Publishing | 119.1 | 112.3 | 6% | 8% |+-----------------------------+---------+---------+-----------+----------------+|- NZ National Publishing | 96.5 | 103.6 | (7%)| 0% |+-----------------------------+---------+---------+-----------+----------------+|Radio | 82.9 | 82.0 | 1% | 3% |+-----------------------------+---------+---------+-----------+----------------+|Outdoor | 32.9 | 23.4 | 41% | 42% |+-----------------------------+---------+---------+-----------+----------------+|Corporate & Other | (12.5) | (10.7) | | |+-----------------------------+---------+---------+-----------+----------------+|Group EBIT(pre NRI & NPI) | 318.9 | 310.6 | 3% | 7% |+-----------------------------+---------+---------+-----------+----------------+|NPI (New Product Initiatives)| (7.5) | (2.9) | | || | | | | |+-----------------------------+---------+---------+-----------+----------------+|- Online | (4.1) | 0.5 | | |+-----------------------------+---------+---------+-----------+----------------+|- Other | (3.4) | (3.4) | | |+-----------------------------+---------+---------+-----------+----------------+|Businesses disposed/closed | 2.8 | 1.7 | | |+-----------------------------+---------+---------+-----------+----------------+|Group EBIT (pre NRI) | 314.2 | 309.4 | 2% | 5% |+-----------------------------+---------+---------+-----------+----------------+|NRI | (0.7) | 0.1 | | |+-----------------------------+---------+---------+-----------+----------------+|Total EBIT | 313.5 | 309.5 | 1% | 5% |+-----------------------------+---------+---------+-----------+----------------+ Regional Publishing APN publishes 23 regional daily newspapers and more than 100 non-dailypublications across high growth markets in Australia and New Zealand. RegionalPublishing again performed well, growing EBIT by 6% on the back of strong growthin the prior year. Adjusting for currency, EBIT growth was 8%. In Australia, the strong local economies of Queensland continued to deliver goodgrowth. Unemployment continued at 30-year lows across most of APN's regionalmarkets. Strength in resource exports and a long pipeline of government-backedinfrastructure projects across the State indicate positive conditions shouldcontinue for the foreseeable future. A number of strategic acquisitions were completed in 2006 that will extend APNAustralian Publishing's footprint from Coffs Harbour in the south to Cairns inthe north. These include Style magazines (Brisbane), CityLife magazines (Cairns,Townsville and Mackay), The Reporter (Logan City), The Isis Town & Country(Childers), Island and Mainland News (Bribie Island), Buderim Chronicle, TheRange News (Maleny) and City News (Caloundra). The division also extended its employment offering to advertisers with thelaunch of Queensland On Show, a jobs expo aimed at attracting skilled workers tomove to Queensland. The inaugural show, conducted in partnership with theQueensland Government, was held in Sydney in August 2006 and resulted in 1,000job offers being made. Similar expos will be held in Melbourne and Sydney thisyear. In New Zealand, strong property sales in the majority of APN's marketsunderpinned the Regional Publishing performance in 2006. Property advertisinggrew by 14% year on year, the fourth consecutive year of double-digit growth inthis category. Readership and circulation results for the regional newspaperswere also encouraging. Audit Bureau of Circulation figures for the 12 months toMarch 2006 showed that the Bay of Plenty Times and The Northern Advocate atWhangarei were the fastest-growing titles with a circulation of more than10,000. New Zealand National Publishing (NZNP) NZNP comprises The New Zealand Herald, the Herald on Sunday, The Aucklander andNew Zealand Magazines. The division's 2006 outcome was adversely affected by the inclusion ofcommercial printing in the final result. Excluding commercial printing, tradingby the publishing assets recorded a 3% increase in EBIT on a local currencybasis, despite a 3% fall in revenue over the prior year. Readership figures for all titles were encouraging, with the New Zealand Heraldand the Herald on Sunday in particular growing reader numbers following theintroduction of innovative new sections. The Weekend Herald remains the mostread newspaper in New Zealand, with a readership of 631,000 and the Herald onSunday is the best read Sunday newspaper in Auckland. Over 6 out of 10Aucklanders read The New Zealand Herald every week, by far the highestpenetration of any metropolitan newspaper in New Zealand and one of the largestmetropolitan readership penetrations in the world. The New Zealand Publishing division introduced a new structure to align sales,editorial and marketing teams across the total New Zealand division. Majorprojects included the establishment of a regional call centre in the Bay ofPlenty and the hubbing of pre-press production centres around the Company's fivepress sites - Auckland, Tauranga, Hawke's Bay, Wanganui and Christchurch. Online The investment phase in the newly-formed Online division continued as APNextended its strong brand presence into new media ventures. The New ZealandHerald website continued to be the cornerstone asset for the division, growingonline display advertising by 57%. The site is the most popular news website inNew Zealand, attracting more than 500,000 unique visitors and generating morethan 6.2 million page impressions each week. The division also completed a number of joint ventures into important growthsectors in New Zealand, including the local directory search business apnfindaand, with ACP, the online classifieds business sellmefree. Search4jobs has quickly established itself as the fastest growing jobs websitein New Zealand and is in clear second place in the market, with advertisingvolumes continuing to grow. The search4 brand has also been extended toAustralia, where search4cars and search4stuff were successfully launched duringthe year. Radio The Radio division delivered a solid result in the face of challenging marketconditions, particularly in Sydney and in New Zealand. Tight cost control in thesecond half produced a full year growth in EBIT of 1%. Adjusting for currency,EBIT growth was 3%. In Australia, ongoing work on programming was rewarded withgood ratings results which in turn drove market share growth in agencyadvertising sales. Since 2002, the Australian Radio Network has grown agencyrevenue by 87% and increased its overall agency market share by 37%. In 2006,new retail business initiatives targeting non-traditional users of radioadvertising grew revenue in this category by 14%. In New Zealand, The RadioNetwork continued as market leader, operating four of the top five stations inthe Auckland market. Radio brands were extended into Gisborne, Blenheim andTokoroa and regional audience shares reached record highs in the importantmarkets of Hawke's Bay, Southland, Tauranga and Taranaki. Outdoor The Outdoor division returned a good result, growing EBIT by 41% over the prioryear. The end to a number of uneconomic contracts, the successful retention ofkey contracts and the acquisition of new business combined to produce a verypositive outcome. The Adshel street furniture business increased its marketshare in the fastest growing Outdoor category and expanded its product offeringto advertisers through innovative use of new technology. The Outdoor category inAustralia as a whole grew 6.5% in 2006 and APN maintained its market leadershipin all the main Outdoor categories. Considerable time was invested in preparingfor the introduction of an audience measurement system for the industry, whichshould be in place in 2008. In New Zealand, APN Outdoor enjoyed a positive year despite a slowing nationaleconomy. Centralisation of the Look Outdoor and Buspak operations provided asingle point of contact for advertisers and brought trans-Tasman advantages tothe division. In Asia, local economic growth contributed to strong sales performances in theregion, and the commercial environments provide improved market conditions foreach of APN's businesses in Malaysia, Indonesia and Hong Kong. Profit growth wasgenerated through a combination of yield improvement and increased inventory.Kurnia Outdoor in Malaysia has invested in the supersite market and hasattracted strong advertiser support. Rainbow Indonesia leads its market and,following cost-saving measures, is creating strong revenue growth. In Hong Kong,the Buspak and Cody businesses manage some of the best outdoor assets in theworld. Capital Expenditure Programme The Company is committed to using its capital to maintain modern and efficientsystems that enable business improvement programmes to progress. Over the pasttwo years, the Company has announced a number of capital investment and otherinitiatives that will involve substantial redundancies. The principal element is the upgrading of production facilities in regionalpublishing centres in Australia and New Zealand. New press centres are alreadyoperational at Yandina and Bundaberg and commitments have been made for newcentres in Rockhampton, Toowoomba and Lismore. The existing facility at Mackaywill also be upgraded. In addition, advertising and editorial systems are being upgraded across allpublishing centres in Australia following on from the upgrade already completedin New Zealand. Further developments in centralised advertising services andrevenue call centres are also underway for completion by the end of 2007.Additional production upgrades are planned for regional centres in New Zealandin 2008. In Outdoor, a new integrated advertising system servicing all Australian formatswill be completed by June. Total capital expenditure for 2006 was just over A$60m. The completion of theprogramme is expected to involve capital expenditure of a further A$65m in 2007,in addition to the regular capital replacement spend of A$20m. As with 2006, theCompany expects that additional non capital expenditure costs of the restructureprogramme will be offset by asset disposals. The financial benefits of this programme have had only limited impact on the2006 result and are expected to augment the financial performance of what mightotherwise be a continuation of subdued performance in our markets in 2007. Costs Costs have been well contained during the year, down 1% year on year. Only theRegional Publishing division recorded increases in underlying costs year onyear, which reflects the strong revenue growth enjoyed in the Australianregional markets. Certain costs have been treated as non recurring, including more than A$14m ofredundancy costs associated with the capital expenditure programme and A$6m ofestablishment and launch costs within the Online division. Capital Management The Company's capital management programme has been effective in 2006. A$140mwas spent during the year buying back 27.8m shares, taking the total spent sincethe buy back commenced in June 2005 to A$275m. During the year 6.7m convertible notes, issued in 2001, converted into ordinaryshares. The changes to the Company's capital base added additional interest charges ofA$5m after tax for the year and had the effect of reducing the increase in NPATthat would otherwise have been recorded. On a constant capital basis NPAT wouldhave increased from the reported growth of 7% to 10%. A Notice of Early Redemption Event has been dispatched to note holders followingthe offer for APN shares announced on 12 February 2007. This means theremaining 37.8m notes will be converted by end of April (or else redeemed) whichwill have a dilutive impact on EPS for 2007 if the Scheme does not proceed. Theshare buy back has been suspended pending the outcome of the Scheme proposal. Outlook Following the proposal by the INM-led Consortium to acquire all the shares inAPN, detailed disclosures in a Scheme Booklet and Independent Expert's Reportwill be sent to APN shareholders in late March to enable shareholders to form aview about the offer. APN notes that at the time the offer was announced on 12 February 2007, theaverage of estimated 2007 EBITDA for APN by leading research analysts1 wasA$373m. The Board is mindful of this consensus forecast and does not consider itappropriate to offer any further guidance at this time. For the 2007 year to date, trading is in line with expectations and with theprior year. 1 ABN AMRO, Citigroup, Credit Suisse, Deutsche, JP Morgan, Macquarie,Merrill Lynch, Morgan Stanley, UBS ENDS. Tuesday, 20th February 2007 For further information, please contact: Gavin O'Reilly Chief Operating Officer +353 1 466 3200Donal Buggy Chief Financial Officer +353 1 466 3200 +------------------------------------------------------------------------------+|Media |+-------------------------+------------------------+---------------------------+|Pat Walsh |Rory Godson |Paul Keary ||Murray Consultants |Powerscourt Media |Financial Dynamics (New ||(Dublin) |(London) |York) ||Tel: +353 1 498 0300 |Tel: +44 207 236 5619 |Tel: +1 212 850 5600 |+-------------------------+------------------------+---------------------------+|Investors and Analysts |+------------------------------------------------------------------------------+|Mark Kenny/ Jonathan Neilan ||K Capital Source (Dublin) ||Tel: +353 1 631 5500 ||Email: [email protected] |+------------------------------------------------------------------------------+ 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 2006 2005 2006 2005 Turnover - Continuing 1,236,484 1,270,219 741,609 778,464Operations =========== =========== ========= ========= Operating Profit- Continuing Operations 302,568 296,428 181,472 181,668- Exceptional Items (682) 79 (409) 48 ------- ------------- ------- ------------- Profit from Continuing 301,886 296,507 181,063 181,716Operations Net Finance Charge (65,618) (64,927) (39,356) (39,791) Share of Profit of 11,591 12,947 6,952 7,935Associates -------- -------- ---------- ---------- Profit on Ordinary 247,859 244,527 148,659 149,860Activities beforeTaxation Taxation (49,361) (58,638) (29,605) (35,937) ---------- ---------- ---------- ---------- Profit on Ordinary 198,498 185,889 119,054 113,923Activities afterTaxation Minority Interests (38,975) (36,229) (23,376) (22,203) ---------- ---------- ---------- ---------- Profit Attributable toMembers of the Parent Entity 159,523 149,660 95,678 91,720 ========= ========= ======== ======== Basic Earnings per Share 34.3 31.1 20.6 19.1(cents) Diluted Earnings Per 32.9 30.3 19.7 18.6Share (cents) Profit & Loss Accounts translated at Average Rates Average Exchange Rate 2005 €1 = A$1.6317 Average Exchange Rate 2006 €1 = A$1.6673 APN NEWS & MEDIA LIMITED GROUP BALANCE SHEET A$000 A$000 €000 €000 31 December 31 December 31 December 31 December 2006 2005 2006 2005 Current AssetsCash and Cash 70,681 68,934 42,248 42,737EquivalentsReceivables 223,702 235,909 133,713 146,255Inventories 21,939 30,193 13,114 18,719Tax Assets 24,861 26,532 14,860 16,449Other 28,120 25,144 16,807 15,587 ---------- ---------- ---------- ----------Total Current Assets 369,303 386,712 220,742 239,747 --------- --------- --------- --------- Non-Current AssetsReceivables 7,174 8,047 4,288 4,989Other Financial 22,696 17,296 13,566 10,723AssetsInvestments Accountedfor Using the Equity Method 25,703 19,488 15,363 12,082Property, Plant and 292,605 288,937 174,898 179,130EquipmentIntangible Assets 1,740,614 1,784,717 1,040,415 1,106,459Deferred Tax Assets 36,471 35,375 21,799 21,931 -------- -------- -------- --------Total Non-Current 2,125,263 2,153,860 1,270,329 1,335,314Assets ----------- ----------- ----------- ----------- Total Assets 2,494,566 2,540,572 1,491,071 1,575,061 ----------- ----------- ----------- ----------- Current LiabilitiesPayables 197,295 199,546 117,929 123,711Derivative Financial 3,418 4,280 2,043 2,653InstrumentsInterest Bearing 89,414 87,232 53,445 54,081LiabilitiesCurrent Tax 5,299 4,371 3,167 2,710ProvisionsProvisions 14,108 12,220 8,433 7,576 ---------- ---------- ----------- -----------Total Current 309,534 307,649 185,017 190,731Liabilities --------- --------- --------- --------- Non-CurrentLiabilitiesPayables 5,558 6,613 3,322 4,100Interest Bearing 801,593 752,356 479,135 466,433LiabilitiesDeferred Tax 203,380 214,188 121,566 132,789LiabilitiesProvisions 2,159 2,320 1,290 1,438 ----------- ----------- ----------- -----------Total Non-Current 1,012,690 975,477 605,313 604,760Liabilities ----------- --------- --------- --------- Total Liabilities 1,322,224 1,283,126 790,330 795,491 ----------- ----------- --------- --------- Net Assets 1,172,342 1,257,446 700,741 779,570 ----------- ----------- --------- --------- Equity Contributed Equity 817,579 918,155 488,690 569,222Other Reserves 25,497 42,647 15,239 26,440Retained Profits 86,559 44,342 51,739 27,490 ------------- ------------- ---------- ----------Total Parent Entity 929,635 1,005,144 555,668 623,152InterestMinority Interests 242,707 252,302 145,073 156,418 ------------ ------------ --------- --------- Total Equity 1,172,342 1,257,446 700,741 779,570 ----------- ----------- --------- --------- Balance Sheets translated at Closing Rates Closing Exchange Rate December 2005 €1 = A$1.6130 Closing Exchange Rate December 2006 €1 = A$1.6730 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Independent News & Media