NZME chief executive Michael Boggs. Photo / Dean Purcell
NZME chief executive Michael Boggs. Photo / Dean Purcell
NZME chief executive Michael Boggs says the hard work in reducing debt has paid off for the media company which now has enviable options for further investment while also returning good money to shareholders.
The company, which owns the NZ Herald, reported full-year earnings of $66 million, in line withguidance, and a net profit of $34.4m, more than double the previous year because of a $15.4m gain on the sale of GrabOne. Operating profit was $23.6m, up 6 per cent on the previous year.
The board declared a 5c per share fully franked final dividend (taking total dividends for the year to 8c) and said a previously announced $30m share buyback programme would commence next month.
The shares leapt 13c, or 11.4 per cent, to $1.27 following the announcement and are now up nearly 25 per cent over the past 12 months.
"We are really pleased with the result we have delivered," Boggs said.
"Obviously it was a really difficult year, a difficult trading environment and we're operating in difficult conditions. But we continued to put out fabulous content that advertisers wanted to be around and that delivered the financial results in the end for our shareholders."
One major milestone Boggs was keen to emphasise was the company's zero debt position and the fact it now has $13.5m of cash on hand compared to 2018 when the market was concerned about NZME's high debt levels.
"It gives us options for further investments into the future," he said, noting the company's recent purchase of online publication BusinessDesk.
"I think we are in a really strong position not only because we are delivering results but our strategy is paying off across the three pillars of publishing, audio and OneRoof."
Boggs was guarded about the outlook due to uncertainty but noted that first quarter advertising bookings were up 4 per cent on the same period a year ago.
"Customers are uncertain so that means they are making decisions a little later and being very cautious about them, but at the end of the day we are still winning and winning market share.
"So even though there are pressures and uncertainties in the market we are still able to grow our revenue at this stage."
Operating revenue came in at $349.2m, up from $331.2m the previous year. Total digital revenue grew 37 per cent to $79.5m in 2021, with overall audience increasing from 3.3m to 3.5m in 2022.
NZME owns the New Zealand Herald, Newstalk ZB, the OneRoof property website and a suite of entertainment radio stations including ZM, The Hits and Hauraki.
The company is in the process of transformation into a digitally focused media business. It is rolling out this strategy across three core segments: audio, publishing and real estate platform OneRoof.
The NZ Herald now has over 191,000 subscribers across print and digital and now includes 83,000 paid digital-only subscribers, driving a 75 per cent increase in digital subscription revenue, the company said.
"We are new at this and we will continue to get better," Boggs said when asked about controlling subscriber churn.
"We continue to have people sign up every day and continue to win back those that tried us and left us, and that's our challenge to continue to do a better job of it. We are well on our way and well ahead of where we thought we'd be."
Boggs said the business was making progress in its digital transformation, and he was pleased with the 37 per cent increase in total digital revenue compared with the 2020 financial year.
Advertising revenue remained resilient against Covid-19 headwinds in 2021, in which there were eight months affected by lockdown. Despite this, advertising revenue had grown 13 per cent over the year.
Print advertising revenue increased 3.7 per cent, audio advertising was up 11 per cent and digital soared by 49.1 per cent.
Outlook and strategy update
Chairwoman Barbara Chapman said despite the disruptions and challenges of 2021, NZME's strategic priorities remained relevant and robust.
"In 2022, the board continues to focus on delivering shareholder value through dividends and the on-market share buyback, but we also remain in a strong position to make investments that align with our strategic priorities and fuel NZME for growth," she said.
NZME chair Barbara Chapman. Photo/Michael Stephen
Boggs said the company's capital management strategy was clear:
"We expect to return to shareholders about half our operating cashflows in dividends each year. So that still leaves the other half to be reinvested back into the business for future growth opportunities so that's a really nice balance to start with."
He said there was also plenty of headroom to take on new debt if needed.
"At the moment we have no debt. So that's why we announced we'd do the $30m buyback and we expect to announce more on that after the first week in March."
