APN Interim Results: ‘Our decision to back radio was right’

77% profit increase.

APN News & Media Limited today released its results for the six months ended 30 June 2014. Statutory net profit after tax was up 77% to $22.6m.

APN’s acquisition of the remaining 50% of Australian Ratio Network (ARN) and The Radio Network (TRN) in February contributed significantly to this profit growth.

Revenue from continuing operations was up 3% to $405.9m (down 4% on a constant currency basis), with earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations and before exceptional items up 1% to $70.7m (down 6% on a constant currency basis). 

ARN delivered strong revenue growth in Q2 following significant audience gains, which were largely attributable to major investments in the KIIS 1065 station and the Classic Hits Pure Gold network. 

TRN also produced a strong revenue result and held share, with direct revenue a key driver. 

The company’s net profit after tax was $24.3 million. 

APN Chief Executive Officer, Michael Miller said:

“Radio continues to grow as a medium in both countries. TRN held revenue share in a strong market and for the first time ever, ARN is the leading FM network in Australia. These results are ahead of our expectations, affirming that out decision to back these businesses, and radio as a segment, was the right one.”

“iHeartRadio has been well-recieved, with over 650,000 app downloads and 480,000 registered users across Australian and New Zealand. Exclusive live events hosted in both countries have helped to grow user registrations and expand the platform to new audiences. There are more of these to come in the second half.”

The Radio Network’s local currency revenue is up 6% and The Australian Radio Network’s is up 8% making them – after Outdoor – APN’s two biggest successes in this report. 

ARN is now the number one FM radio network in Australia, a position that it has held for all four surveys in 2014. Revenue was up 8% to $81.2m, compared to overall radio market growth of 0.6%. EBITDA was up 6% to $29.0m. For segment reporting purposes, the H1 results of iNC Digital Media, which is now 100% owned by APN, have been consolidated with ARN.

ARN’s investment in talent, content and marketing has driven its four years of continual growth and recent ratings success. The business has consolidated its position in all markets and taken share from its competitors. While the launch of station KIIS 1065 and the rebrand of the Classic Hits Pure Gold network have been standout successes, all stations across ARN’s markets have contributed to overall ratings growth. As a result, ARN currently has the #1 FM and #2 FM stations in Sydney, the equal #1 FM station in Melbourne and the #1 stations overall in Brisbane and Adelaide. 

iHeartRadio continues to gain momentum in Australia. The platform has now secured over 400,000 app downloads and around 270,000 registered users. As in New Zealand, exclusive live events, such as performances by Kylie Minogue, Lily Allen and Ed Sheeran, have helped to drive registrations and downloads.

TRN experienced growth in line with the New Zealand radio market, with revenue up to $56.9m. The revenue growth was primarily from direct sales, with agency revenue relatively soft, consistent with the broader advertising market. EBITDA was up 2% on a local currency basis to $10.1m. 

Audience was a major focus for TRN throughout H1. Significant changes were made to two key stations, The Hits (previously Classic Hits) and ZM, targeting audience growth in the key 18-39 and 25-54 demographics. The ZM brand has been extended to television, with a daily show on Sky TV’s Juice channel. TRN expects to see ratings growth at both stations from 2015.

TRN’s other major focus for H1 was on digital products and iHeartRadio. Total digital audience across station websites is up 71% and ZM is now the number one radio brand online in New Zealand. iHeartRadio is performing particularly well in New Zealand and now has almost 250,000 app downloads and over 210,000 registered users. Exclusive live music events have helped to drive downloads and registrations and iHeartRadio will be launcing in-store radio opportunities in H2.

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