2014 Annual Report and Shareholder Review May Australia
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20 AnnualAPN NEWS & MEDIA LIMITED Report ABN 95 008 637 643 14 In 2014, APN continued to evolve its business through integration, diversification and investment in growth categories. Our goal for 2015 is to outperform in each of the markets that our businesses operate in. We have identified the regions, the audiences and the businesses where we want to invest. CONTENTS Highlights 2 Senior Management Team 24 Financial Statements 55 About APN 4 Board of Directors 26 Directors’ Declaration 107 Chairman’s Report 6 Corporate Governance Statement 29 Independent Auditor’s Report 108 CEO’s Report 8 Directors’ Report 36 Shareholder Information 110 Operating and Financial Review 10 Remuneration Report 40 Five Year Financial History 112 Corporate Social Responsibility 22 Auditor’s Independence Declaration 54 Corporate Directory IBC APN NEWS & MEDIA LIMITED AND CONTROLLED ENTITIES 1 ANNUAL REPORT 20 14 AGM Notice is hereby given that the Annual General Meeting of members of APN News & Media Limited will be held at the Four Seasons Hotel Sydney, 199 George Street, Sydney NSW 2000 on Wednesday, 6 May 2015 at 11am. APN NEWS & MEDIA LIMITED ABN 95 008 637 643 2 ANNUAL REPORT 2014 Highlights APN News & Media is a growth oriented media, entertainment and technology company with assets in Australia, New Zealand and Hong Kong. Australian Radio Network LARGEST AUDIENCE Hong Kong Outdoor OF ANY METROPOLITAN Buspak and Cody RADIO NETWORK IN AUSTRALIA FM SYDNEY #1 STATION iHeartRadio 1,700 ADELAIDE HONG KONG #1 STATION IsLAND BUSES 632,052 BRIsbANE REGISTERED USERS #1 STATION 60 IN AUSTRALIA in 7/8 surveys Signature buses AND NEW ZEALAND with integrated media offerings 1,200 864,473 buzplay multimedia MOBILE DOWNLOAds installations OVER 160 BILLBOARDS SIX prime locations APN NEWS & MEDIA LIMITED AND CONTROLLED ENTITIES 3 New Zealand Media and Entertainment NZME. 3.1 MILLION NEW ZEALANDERS EAch MONTH The New Zealand Herald is the country’s Australian Regional NEwsPAPER Media ADSHEL #1 PUBLISHER Newstalk ZB is the country’s RADIO 1.5 MILLION Largest STATION PEOPLE EAch WEEK scALABLE DIGITAL #1 Radio Sport is the country’s NETWORK IN DEDICATED 12 THE COUNTRY #1 SPORTS daily newspapers STATION Coast is the country’s 92% 60community of Australians MUSIC and non-daily each fortnight #1 STATION publications media 83% #1 brands of the New Zealand LEADING in the regional Queensland population and northern New South DEALS SITE Wales markets they ALMOST (GRABONE) operate in 20,000 ADVERtisinG panels 4 ANNUAL REPORT 2014 About APN APN evolve APN today In 2014, APN continued to evolve its business Today, APN has assets in Australia, New Zealand through integration, diversification and investment and Hong Kong. in growth categories. In Australia, APN owns leading radio business ARN From wholly owning three out of nine businesses – home to the KIIS and Pure Gold networks; as well at the end of 2013, today APN wholly owns six out as regional media company Australian Regional of seven businesses. Media (ARM). During the year, APN completed a number of key APN also owns NZME, New Zealand’s premier transactions to move into this position including: media and entertainment company which operates some of the country’s leading publishing, - the divestment of eCommerce business radio and eCommerce brands including The New brandsExclusive Zealand Herald, Newstalk ZB and GrabOne. - the sale of our remaining 50% interest in APN APN’s Hong Kong businesses, Buspak and Cody, Outdoor specialise in outdoor, billboard and transit media - the acquisition of the remaining 50% interest advertising. in The Radio Network (TRN) in New Zealand Australian and New Zealand outdoor advertising and the Australian Radio Network (ARN) in business Adshel continues to be operated as a Australia that we did not own joint venture with Clear Channel, our partner of - the acquisition of the remaining 50% interest over 10 years which has extensive outdoor assets in the Hong Kong Outdoor businesses, Buspak around the world. and Cody, that we did not own APN provides relevance and connectivity with - the acquisition of 96FM in Perth which gives large-scale, quality audiences through brand, ARN a five capital city presence content and technology channels. In May 2014, APN combined its market-leading Operating in the growth markets of music, New Zealand businesses, APN NZ Publishing, TRN entertainment, community news and information, and GrabOne, into one operation. In September APN offers advertisers and audiences a 2014, the combined entity was launched as New combination of assets no other media company Zealand Media and Entertainment or, NZME. can offer. “ This year’s result has continued APN’s positive momentum and reflects strong market performances in what have been increasingly challenging conditions. “ Michael Miller Chief Executive Officer APN full year results market announcement 12 February 2015 APN NEWS & MEDIA LIMITED AND CONTROLLED ENTITIES 5 Results highlights ↑ ↑ 25% 342% Net profit after tax Statutory net profit before exceptional after tax up 342% APN’s strategy items up 25% Our strategy is underpinned by our strongest assets — our brands and people. We connect large, quality audiences through our brands, content and technology and engage advertisers with these large audiences by providing integrated and customised business solutions. Having strong relationships and creating an environment that enables great results is central to our success. ↑ Strong earnings % growth and market share gains in 11 Australian radio Increase in digital revenue Statutory net profit after tax $11.5m EBITDA* $164.1m NPAT** $74.7m * From continuing operations and before exceptional items ** Before exceptional items BRANDS & PEOPLE We will continue to grow audience engagement by responding to the changing needs of our consumers and advertisers. We will continue to diversify our revenues, creating new commercial opportunities and building market share through expanding operations. We will continue to optimise integration that results in revenue growth, cost savings and operational synergies. We will continue to invest for growth in initiatives and opportunities that enable us to increase share and outperform the markets we operate in. 6 ANNUAL REPORT 2014 Chairman’S Report Today, APN is well positioned to achieve its transformation goals. We have a very capable management team that has demonstrated their ability to deliver. Peter Cosgrove Chairman APN News & Media In 2014, we continued to make good progress to Strong management team reposition APN for growth. There is still a lot to do and the Board has continued Investing in growth assets confidence in APN’s management team under the Together with the equity raising of $132m and the leadership of Michael Miller as CEO of the Group, sale of APN Outdoor, the Company acquired the ably supported by Jeff Howard as APN’s CFO, 50 per cent of the Australian Radio Network (ARN) Ciaran Davis heading our Australian radio division, and The Radio Network (TRN) in New Zealand that Jane Hastings leading our New Zealand operations, we did not already own. Subsequently, we Rob Atkinson running Adshel and Neil Monaghan acquired 96FM in Perth which, when integrated overseeing our regional publishing business in into ARN, completed our five capital city FM radio Queensland, who are aligned in our vision to offering. continue APN’s growth strategy. One of our next growth opportunities will be in It is pleasing to see that our share price is South East Asia. We have started on that journey reflecting the changes the Company is adopting. by acquiring all of the Buspak and Cody outdoor Emphasis will continue to focus on generating cash operations in Hong Kong. This is a business and flows and investing in growth assets so we can country we have more than 10 years’ experience deliver value for our shareholders. in. In addition, the iHeartRadio platform is growing The media business remains subject to many very fast and has a number of opportunities in challenges and continues to undergo change at a Asia. fast rate. Given this environment, the Company These transactions confirm the Board’s strategy to must and will embrace transformation. invest in radio and outdoor as growth businesses. Financial result As a result of those changes to our business I am encouraged by the result APN delivered in portfolio, our radio and outdoor assets now 2014 with NPAT attributable to shareholders up represent just over 60 per cent of our 25 per cent on the prior year to $74.7m (before proportionate earnings, which in turn has reduced exceptionals and non-recurring items). This is an publishing to under 40 per cent. improvement on 2013’s performance which was in itself, a solid result. In New Zealand, we are well advanced in merging all of our media assets into one integrated The Board has decided not to pay a dividend at business under the brand NZME, which will this time in line with the Company’s commitment operate primarily from a single location in each of to reducing debt and improving the balance sheet. its local markets. This will enable us to capture In September, the refinancing of APN’s debt facilities both revenue and cost synergies with a strong was completed a year ahead of the scheduled expiry investment in the business’ digital future. date with the new facility in place until 2018. APN NEWS & MEDIA LIMITED AND CONTROLLED ENTITIES 7 Given the pace of change we are seeing in media, we must and will continue to embrace transformation. Audit tender Earlier in 2015, APN conducted an audit tender. Consistent with the Board’s strategy to deliver strong corporate governance, the purpose of the tender was to ensure that the Board can continue to provide shareholders with an independent and quality audit of management and the organisation’s finanacial operations. We are pleased to retain PwC as APN’s audit firm.