APN has taken a rain check on plans to float the New Zealand arm of its operation, NZME., which has the New Zealand Herald among its publishing stable.
The announcement that APN would defer making a decision on the IPO for 12 months, until the effects of restructuring became apparent, came after NZME reported overall revenues down on last year but APN chiefs have expressed confidence in the business with several initiatives showing some promise.
Following the integration of APN’s New Zealand businesses and the brand launch of NZME, APN reported on the performance of its combined New Zealand businesses for the first time. For New Zealand, the company saw overall revenues down six per cent year on year on A$410.2m ($427.5m) and EBITDA down 11 per cent to A$75.1m, both results slightly above the NZME Business Update forecast provided to the market in November 2014. Revenue trends improved during the year; with second half revenue flat on the prior year on a like for like basis. APN says that reported second half earnings reflect investment in new initiatives and integration costs.
Michael Miller, chief executive at APN, says, “This year’s result has continued APN’s positive momentum and reflects strong
Michael Miller, CEO of APN
market performances in what have been increasingly competitive conditions. “During 2014, our focus was on delivering enhanced earnings through investing in our growth assets of radio and outdoor, identifying synergies, generating cash flow and managing costs across all APN businesses. We also continued with the integration of our businesses and diversification of our revenue streams, with a particular focus on digital revenues.
“The full acquisition of ARN, TRN and our Hong Kong Outdoor businesses, as well as our acquisition of 96FM, reflect our confidence in outdoor and radio as growth mediums and our belief in the leadership of our business units to further maximise these now wholly owned companies. This approach has proved fruitful with these businesses recording strong revenue and EBITDA growth year on year.
“Through the formation of NZME, we have identified significant new revenue and cost saving opportunities. We are encouraged by the progress NZME’s newly installed management team, led by Jane Hastings, has made and are confident in its ability to accelerate the benefits from thisintegration process.”
NZME. Publishing (formerly APN New Zealand Publishing) saw a revenue decline of four per cent (after adjusting for the impact of the sale of the South Island and Wellington newspaper titles) with an improved second half that saw revenue down two per cent. EBITDA was down 15 per cent for the year. Looking at the bigger Australasian picture, APN profits more than tripled in 2014 on the back of its radio acquisitions. while print assets continue to lag. The company says its flat year on year newspaper circulation revenue comes as a satisfying result that reverses declines from previous years. The New Zealand Herald and several regional titles showed good circulation improvements. Investment in the printing agreement with Fairfax Media partially offset cost reductions of $7m. The agreement commenced in August, and continues to deliver ongoing synergies and new revenues for the company. The company expects to launch the first stage of its paid on line content model this year, which should result in new earnings.
NZME. Radio delivered a good performance with revenue up five per cent to $116.8m and EBITDA up seven per cent on a local currency basis. This growth was driven by strong direct revenues which grew eight per cent year on year. In December 2014, New Zealand government auctioned a number of radio licences. NZME invested $7m in securing some of these licences. This impacted the cash generation target for the year but the company saw it as essential to ensure transmission to all major cities in the country. Its e-commerce line GrabOne saw revenue decline four per cent, with EBITDA down 22 per cent. It has recently reversed this downward trend owing to the staged release of an upgraded operating platform making deals more accessible across platforms.
Across the NZME business, digital and new ventures revenue grew by 14 per cent. Already this year, NZME has launched two initiatives, NZME. Events and NZME. Experiential, providing new revenue opportunities and expanding its customer offering. In November 2014, APN disclosed information related to NZME’s integrated business strategy and financial performance, with the goal of enhancing the market’s understanding of the business. It says it received positive feedback on the integration plans and resulting business strategies from shareholders and investors. It sees benefits in both Australia and New Zealand. For example, the combined sales offering and access to a large, combined audience base has resonated well with advertisers. The growth in digital audiences and cross promotional benefits have also shown encouraging results. It has plans in development to co-locate the three business units in 2015, opening up more synergistic opportunities across NZME. Management has expressed confidence in achieving the 2015 forecast released to investors in December.
Miller concludes, “In 2014, we continued to evolve APN. We are well positioned to continue providing large, defined and engaged audiences; as well as unique and effective business solutions for our advertisers. We are committed to delivering value for our shareholders through integration, collaboration and diversification across our businesses.”
