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APN triples 1H loss as it writes down NZ publishing by A$485M

Friday 17th August 2012

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APN New & Media, the publisher of the New Zealand Herald, Listener and New Zealand Woman's Weekly, tripled its first-half loss after writing down the value of its New Zealand publishing assets unit by A$485 million as part of an ongoing review.

The net loss widened to A$319.4 million, or 49.9 cents per share, in the six months ended June 30 from a loss of A$98.3 million, or 16.1 cents per share, a year earlier, the Sydney-based company said in a statement. Revenue from continuing operations rose 1 percent to A$405.5 million.

Earnings before interest, tax, depreciation and amortisation fell 12 percent to A$74.9 million.

APN warned its second-half profit may be impacted by deteriorating publishing revenues on both sides of the Tasman, and the partial sale of its outdoor advertising unit.

The bulk of the impairment charge was on New Zealand mastheads, with kiwi metros written down by A$370.3 million, NZ regionals by A$83.7 million, and New Zealand magazines by A$31 million. That leaves the carrying value of intangible assets in New Zealand at $200.4 million.

"It has been a tough first half for our publishing businesses, particularly in New Zealand," chief executive Brett Chenoweth said. "Our publishing divisions have undertaken substantial work to reduce our cost base and to rejuvenate our products to adapt to a changing media context. We have accelerated these reforms."

APN's board declared a partially franked first-half dividend of 1.5 Australian cents per share, down from 5 Australian cents a year earlier. The dual-listed shares were unchanged at 60 cents on the NZX, having shed 35 percent this year.

At its May annual meeting, the media group told shareholders it had appointed Deutsche Bank to undertake a strategic review of the New Zealand media assets after receiving approaches from parties interested to buy. The review is still underway, APN said today.

The media group flagged more cuts for the New Zealand media unit, with another 100 jobs to go this year on top of the 400 eliminated in the past three years, along with more centralised and outsourced production models.

Other cost-cutting measures under review include cutting the number of publishing days for some regional New Zealand titles, which include the Hawkes Bay Today, the Bay of Plenty Times, Wanganui Chronicle and Christchurch Star.

The company said it is in dispute with Inland Revenue over $41 million of tax for 2011. IRD is seeking to impose penalties of 10 percent to 50 percent of the tax in dispute in addition to the tax claimed, according to the notes for APN's accounts.

APN's Australian regional media business reported a 7 percent fall in first-half sales to A$125.2 million, for a 9 percent fall in ebitda to A$21.12 million, while the NZ media group saw a 3 percent fall in revenue to A$141 million with a 20 percent decline in earnings to A$21.7 million.

Australian Radio Network lifted sales 8 percent to A$68.1 million with an 11 percent boost to ebitda of A$23.8 million, while the Radio Network unit in New Zealand, whose stable includes NewstalkZB and 91ZM, increased sales 3 percent to A$41.7 million while ebitda fell 6 percent to A$6.5 million.

APN Outdoor sales fell 26 percent to A$89.8 million with a 29 percent fall in earnings to A$11.5 million, reflecting the group's decision to sell half of the advertising business to Quadrant Private Equity.

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