APN 7% profit increase but Sydney and Auckland radio markets down

APN News & Media Limited has just announced a record net profit after tax for the 2006 Financial Year of $159.5 million, a 7% increase on the prior year. Earnings Per Share during the period grew 10%. The company’s radio division generated earnings of $82.9 million, up from $82.0 million last equivalent period.

APN Chief Executive Brendan Hopkins says the year was a “challenging” one: “Queensland recorded good growth, while the markets of Auckland, Sydney and Melbourne were flat to negative. Despite this we have recorded a satisfactory trading result and, with effective capital management, have delivered an acceptable outcome for shareholders.”

Radio recorded a “satisfactory result in difficult trading conditions” according to Hopkins, particularly in Sydney and Auckland.

The Sydney radio market was down by over 5% and Auckland was also negative.

In Radio, tight cost control in the second half produced a full year growth in EBIT of 1%. Adjusting for currency, EBIT growth was 3%.

“In Australian radio, ongoing work on programming was rewarded with good ratings results which in turn drove market share growth in agency advertising sales. Since 2002, the Australian Radio Network has grown agency revenue by 87% and increased its overall agency market share by 37%. In 2006, new retail business initiatives targeting non-traditional users of radio advertising grew revenue in this category by 14%.

“In New Zealand, The Radio Network continued as market leader, operating four of the top five stations in the Auckland market. Radio brands were extended into Gisborne, Blenheim and Tokoroa and regional audience shares reached record highs in the important markets of Hawke’s Bay, Southland, Tauranga and Taranaki.”

Hopkins says a current priority is the online division: “Continued investment in new product initiatives was concentrated mainly in the newly formed Online division, where we initiated a number of exciting new projects including joint ventures with Finda (Auckland Directory), ACP (free classified listings) as well as establishing search4jobs as the clear number two in the Online jobs market in Auckland. Together with a number of non-daily publications acquired in Queensland, investments totalled $22m.”

Tony O’Reilly’s current bid to acquire all of its shares at A$6.10 per share by way of a Scheme of Arrangement, is yet to be voted on by shareholders. An independent sub-committee of the Board of APN News & Media has recommended the offer in the absence of a superior proposal.

Hopkins told shareholders a meeting is expected to be held in late April, where they will be asked to vote on the proposed Scheme.

Chairman of the independent sub-committee Ted Harris told the results meeting: “The results announced today confirm the information available to the independent sub-committee in reaching its view about the merits of the offer. We remain of the view that the offer is in shareholders’ best interests and we recommend all shareholders vote in favour of the proposal.”

As the offer to shareholders is inclusive of any final dividend, no dividend will be paid to shareholders, pending the outcome of the Scheme meeting.