APN announces joint outdoor venture off the back of a $45m net loss

The Christchurch earthquake and New Zealand’s subdued economy are being blamed for Australian media beast APN News & Media’s full-year earnings sinking $45m into the red. The results come at the same time as APN announces an outdoor advertising joint venture with Quadrant Private Equity, allowing it to expand further into Australasia.

APN News & Media has released its interim result for the year ending 31 December 2011. Revenue was up one percent to $1,072m, earnings before interest and tax (EBIT) was down 17 percent to $171m, and net profit after tax (NPAT) was down nearly a quarter to $78m. As well as restructuring costs, the company took a A$159.5m hit to its intangible value, mainly due to a $159.5m write-down of its New Zealand metro and regional mastheads.

But it’s not all doom and gloom. APN News & Media Limited has also announced it has formed a joint venture with Quadrant Private Equity to expand its outdoor advertising segment in Australia, New Zealand and Asia. The outdoor joint venture retains the name APN Outdoor, and incorporates all of APN’s outdoor businesses in Australia and New Zealand, as well as APN’s 50 percent interests in Rainbow Premium Outdoor, in Indonesia. This now values APN Outdoor at $272m on an Enterprise Value basis and will generate approximately $190m gross for APN upon completion. APN’s 50 percent ownership in Adshel (street furniture) and Hong Kong (Buspak and Cody) operations will stay outside the venture.

APN Outdoor will pursue digital roll-out and expansion initiatives in Australia and New Zealand and invest in selected Asian-growth markets. APN intends to re-invest part of the transaction proceeds to fund new growth opportunities.

Brett Chenoweth, chief executive of APN says the partnership is a unique opportunity for APN to fast-track growth in the Outdoor advertising segment, one of APN’s most successful businesses and a market leader in Australia and New Zealand.

“Quadrant is a leading Australian private equity firm and will bring additional strategic and operational focus together with capital to drive growth and profitability for the Outdoor business. We have already identified a number of opportunities that fit with APN Outdoor’s growth objectives.”

Chris Hadley, managing director, Quadrant Private Equity says outdoor advertising is one of the fastest growing media sectors, benefiting form the raft of technical changes in the media landscape.

“We believe a well capitalised business will be able to further drive innovation and capitalise on growth opportunities to thrive in the evolving media landscape. APN’s market leading position makes them the ideal partner,” says Hadley.

APN Outdoor will continue to be led by the current APN Outdoor management team – Richard Herring, chief executive of APN Outdoor since 2003, says APN Outdoor has had an exceptional 2011.

“We were successful in winning a number of major contracts, including Perth Airport and Brisbane City Council Buses and acquired OGGI Billboards in New Zealand. Advertisers continue to turn to the Outdoor advertising segment to reach a broad cross-section of consumers. APN remains at the forefront of digital roll-out in Australia, a position which will be augmented through the formation of this joint venture.

“Our goal to aggressively grow the business will be strengthened by this arrangement. The prospects for the industry are very positive with increasing audiences, panel quality improvements and a unique ability to enhance the connection of consumers with smart phone interactivity,” says Herring.

The transaction is subject to customary completion conditions. Click on the links below for more information both on the joint venture and APN’s annual interim report.

FINAL – Market Release

Market Announcement – Final

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