NZ Herald owner NZME reports solid EBITDA of $66.2m and full-year profit of $20.9m after split from parent APN

NZME has reported a solid $66.2 million EBITDA and a full-year profit of almost $21 million after its split from Australian parent, APN News and Media.

The result is ahead of market expectations, with the company revealing its radio revenue had returned to growth in quarter four and its combined radio, digital and print audience had grown to 3.2 million.

NZME is owner of the NZ Herald, Newstalk ZB and a suite of entertainment radio stations including ZM and The Hits.

NZME said its net profit of $20.9 million, compared with the previous year's net profit of $74.5 million, was affected by the separation from HT&E Limited - formerly APN News & Media - and discontinued businesses.

Earnings before interest, tax, depreciation and amortisation (EBITDA) came to $66.2m, down just 2 per cent from the previous year, and benefitting from a 5 per cent reduction in costs.

Trading revenue declined 4 per cent to $387.7m.

NZME said its integrated media and entertainment business featured continued digital revenue growth from its digital business, a slowing rate of decline in print advertising revenue and an improvement in radio revenue trends over the year.

NZME's strong focus on cost control and business integration assisted earnings.
The company declared an imputed final dividend of 6.0 cents, bringing full year dividends to 9.5 cents.

NZME chairman Peter Cullinane said the company's strategy and the ongoing benefits of integration continued to deliver value for shareholders in the 2017 financial year.

He said NZME's print audience has been stable since 2015, and strong growth in digital audience continued with monthly unique audience to nzherald.co.nz up 12 per cent.

Chief executive Michael Boggs said 2017 included a difficult third quarter, partly because of the national election but continued focus on cost management provided some offset.

"We are pleased to see the decline in print advertising revenue slow a little given stable print readership and the success of our integrated sales strategies," he said.

NZME's radio revenue returned to growth in the fourth quarter, supported by operational and content initiatives over the past 12 months. These included the completion of a nationwide sales team transformation, and the implementation of a new CRM system and tools to support integrated sales and enhance customer understanding, both in the second half.

"Print subscriber revenues were stable for the year and we are happy to have outperformed the market in both print advertising revenue and circulation volume trends," he said.

NZME and Fairfax this month announced their intention to appeal the High Court's declining the NZME merger with Stuff Ltd (formerly Fairfax New Zealand).

Subject to a final decision on the scope of the appeal, it is expected that the matter will be heard in the Court of Appeal in the second quarter. A judgment is expected in the second half.

There is a further right of appeal to the Supreme Court with leave on points of general public interest. "The transaction remains subject to finance and shareholder approval," NZME said.

"Merging with Stuff Ltd remains a priority to underwrite the competitiveness of New Zealand content generation and delivery," it said.

NZME said traditional advertising markets have continued to face headwinds in 2017, and a similar climate is expected this year.

"While operational efficiency remains a focus, the rate of improvement in cost-out is slowing, consistent with FY 2017, and therefore EBITDA is likely to continue to be pressured in the near term," the company said.