APN cuts debt by $180m, revenue falls 13pc

Sections of the New Zealand Herald, which is owned by APN News & Media, being printed in Auckland. Photo / Peter Meecham
Sections of the New Zealand Herald, which is owned by APN News & Media, being printed in Auckland. Photo / Peter Meecham

APN News & Media says it reduced net debt by A$180 million in its last financial year, while posting a net profit of A$54 million before exceptional items, which was in line with market guidance.

The transtasman firm, which publishes the New Zealand Herald and went through a major boardroom bust-up this week, said revenue fell 13 per cent to A$929 million in the 12 months to December 2012 and earnings before interest, tax, depreciation and amortisation (ebitda) dropped 25 per cent to A$156 million.

APN announced a non-cash impairment charge of A$151 million associated with write-downs on good will value and its newspaper mastheads.

Read more from the APN announcement to the stock exchange here.

"This impairment is in addition to the A$485 million announced in August 2012," the company said. "Taking these factors into account the company reported a [full-year] net loss after tax of A$456 million."

APN said the reduction in debt had been achieved through asset sales, the formation of the APN Outdoor joint venture with Quadrant Private Equity and a focus on cash management.

Net debt stood at A$465.2 million in December, down from A$645.6 a year earlier, the firm said.

APN would reduce debt by another A$40 million to A$50 million in 2013 through "organic earnings including the cost reduction programme in publishing, as well as small asset and property sales", the company said.

No final dividend will be paid for 2012.

Peter Cosgrove - APN's new chairman who took over the role this week after former chairman Peter Hunt, chief executive Brett Chenoweth and three directors resigned from the company following a disagreement with major shareholders over a planned capital raising - said structural changes to the media together with weak markets had impacted the result.

"Work has been done to reposition the business and we are seeing encouraging improvements," Cosgrove said. "We have also been disciplined in reducing costs while investing in growth where appropriate."

APN said it had not appointed an acting chief executive and had engaged consultancy firm Heidrick & Struggles to assist with the selection of a new CEO and additional board members.

Following the mass resignation, the company was being overseen by a leadership team comprised of the chairman, deputy chairman and chief financial officer, the firm said.

APN said it had strong chief executives in each of its operating businesses.

Cosgrove said the Australian Radio Network, Adshel and GrabOne - the New Zealand daily deal website APN increased its stake to 100 per cent in last year - all delivered good performances in 2012.

GrabOne's revenue rose 93 per cent to A$14.8 million in the year to December, while ebitda increased seven-fold to A$4.4 million, the company said.

BrandsExclusive, an internet shopping club in which APN acquired an 82 per cent stake in June, was investing for growth and increased its membership from 500,000 to 2.4 million and launched in New Zealand, APN said.

The company said brandsExclusive's full year revenue rose 13 per cent to A$57 million, while ebitda was a A$4.2 million loss which included A$3 million for investment in growth initiatives.

New Zealand media posted a revenue of A$287.4 million, down 5 per cent on the previous year, and a 23 per cent drop in ebitda to A$47.8 million, the company said. APN also revealed that the relaunch of the New Zealand Herald to a compact format cost A$2.9 million.

APN said trading had been positive in the early part of 2013 and revenue declines in publishing had moderated.

"The impact of the recent Queensland floods is still being assessed but is expected to be lower than in 2011," the company said. "Revenue in all other divisions is ahead of prior year."

Chenoweth, Hunt and the outgoing directors were pushing for a capital raising aimed at reducing debt levels but Ireland's Independent News and Media and Australian fund manager Allan Gray - which together control 51 per cent of the stock - were vehemently opposed and forced their resignation.

Analysts said Allan Gray had lost faith in the management of the company when it last year paid A$66 million for brandsExclusive at a time when it was supposed to be paying down debt.

Shares fell 5.7 per cent to 33c on the NZX following the result.

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