APN SHAAnnUAL REPORT APN News & Media Annual Report 2010 2010 90.0 FM 89.4 FM 1503 AM 91.0 FM 97.4 FM 89.4 FM 774 AM 96.8 FM 90.5 FM 90.9 FM 93.8 FM 1584 AM 93.3FM 95.6 FM APN OUTDooR & ADSHEL / BALLIna SHIRE ADVOCATE / BALonnE BEACon / BAY NEWS / BAY OF PLENTY TIMES / BEST OF TIMES / BIG RIGS / BLACKWATER HERALD / BRIBIE WEEKLY / BUDERIM CHRonICLE / BUSH TELEGRapH / BUSpaK (HonG KonG) / BYRon SHIRE NEWS / CabooLTURE NEWS / CaLOUNDRA WEEKLY / CapRICORN CoaST MIRROR / CENTRAL & NORTH BURNETT TIMES / CENTRAL QUEENSLanD NEWS / CENTRAL TELEGRapH / CHB MaIL / CHINCHILLA NEWS anD MURILLA ADVERTISER / CITYLIFE / CLASSIC HITS / CoaSTAL NEWS / CoaSTAL VIEWS / CoDY (HonG KonG) / CooK STRAIT NEWS / CooLooLA ADVERTISER / CooLUM & NORTH SHORE NEWS / CoUNTRY NEWS / CREME / CRUISE / DaILY MERCURY / DaILY POST / DaILY POST WEEKENDER / DaLBY HERALD / DannEVIRKE EVENING NEWS / EaSTERN BAY NEWS / EaSYMIX / FINDA / FLAVA / FRASER CoaST CHRonICLE / GaTTon, LoCKYER anD BRISbanE VaLLEY STAR / GIRLFRIEND / GISboRNE HERALD / GoLD CoaST MaIL / GRabONE / GUARDIan / GUARDIan PALMERSTon NORTH / HaMILTon THIS WEEK / HaSTINGS LEADER / HaWKE’S BAY ToDAY / HERVEY BAY OBSERVER / HoROWHENUA CHRonICLE / InDEPENDENT HERALD / InSITE / ISIS ToWN & CoUNTRY / ISLanD & MaINLanD NEWS / JET MaGAZINE / KapITI NEWS / KaTIKATI ADVERTISER / KaWana WEEKLY / MaCKAY & SaRIna MIDWEEK / MaRooCHY WEEKLY / MINERS MIDWEEK / MIX / NAMboUR WEEKLY / NapIER CoURIER RETUrn TO GROWTH / NEW IDEA / NEW ZEALanD LISTENER / NEW ZEALanD WoMan’S WEEKLY / NEWS ADVERTISER / NEWS-MaIL / NEWSTALKZB / NooSA NEWS / NORTH CanTERBURY NEWS / NORTHERN ADVOCATE / NORTHERN DoWNS NEWS / NORTHLanD 2010 AGE / NZ EDUCATIon GaZETTE / NZ EDUCATIon REVIEW / NZ NURSING REVIEW / OAMARU MaIL / OAMARU MaIL EXTRA / PEGASUS POST / PORIRUA NEWS / RaDIO HaURAKI / RaDIO SpoRT / RaInboW / RoCKHAMPTon anD FITZROY NEWS / RURAL WEEKLY / SELLA / SELWYN TIMES / SHORE VIEW / SIMPLY YoU / SIMPLY YoU LIVING / SoUTH BURNETT TIMES / STRATFORD PRESS / STUDY IN NEW ZEALanD SERIES / STYLE / SUNSHINE CoaST DaILY / SUNSHINE CoaST SUNDAY / SURAT BASIN NEWS / TaUpo WEEKENDER / TE AWAMUTU CoURIER / TE PUKE TIMES / THAT’S LIFE / THE ADVERTISER / THE AUCKLanDER / THE CHRonICLE / THE CoFFS CoaST ADVOCATE / THE CoMMUNITY ADVOCATE / THE DaILY EXAMINER / THE EDGE / THE GYMPIE TIMES / THE HERALD on SUNDAY / THE IpSWICH ADVERTISER / THE KoLan RECORDER / THE LINK / THE MaRYboROUGH HERALD / THE MoRNING BULLETIN / THE NEW ZEALanD HERALD / THE NORTHERN RIVERS ECHO / THE NORTHERN STAR / THE OBSERVER / THE QUEENSLanD TIMES / THE RanGE NEWS / THE REpoRTER / THE RICHMonD RIVER EXPRESS EXAMINER / THE RIVERTOWN TIMES / THE SaTELLITE / THE STanTHORPE BORDER POST / THE STAR / THE WESTERN STAR / THERMAL AIR / TooWooMba’S MaIL / TURanGI CHRonICLE / TWEED DaILY NEWS / TWEED/BORDER MaIL / VILLAGE PRESS / WaIHI LEADER / WaINUIOMATA NEWS / WaIRARapa MIDWEEK / WaIRARapa TIMES AGE / WaIRoa STAR / WanGanUI CHRonICLE / WanGanUI MIDWEEK / WaRWICK & SoUTHERN DoWNS WEEKLY / WaRWICK DaILY NEWS / WESTERN NEWS / WESTERN TIMES / WHanGAREI REpoRT / WHITSUNDAY TIMES /ZM APN News & Media Limited CONTENTS ABN 95 008 637 643 Chairman’s Review 2 Chief Executive’s Review 4 Divisional Reviews 6 Corporate Social Responsibility 14 Corporate Governance 15 Directors’ Report 20 Remuneration Report 27 Auditor’s Independence Declaration 40 Financial Statements 41 Directors’ Declaration 90 Independent Auditor’s Report 91 Information on Shareholders 93 Shareholder Information 95 Five Year Financial History 96 2011 FInanCIAL CalENDAR 2010 Annual Result announced 25 February 2011 Record date for Final Dividend 10 March 2011 Final Dividend payable 31 March 2011 Annual General Meeting 3 May 2011 2011 Half Year Result announced 18 August 2011* Interim Dividend payable 28 September 2011* * Dates are indicative only and are subject to change. active earnings positioned development improvement for growth agenda strong cash positive flow second half new chief executive APN Annual Report 2010 / 1 chairman’s review The Board and management team of APN News & Media APN recorded another strong cost performance, building are pleased to report a return to growth in the 2010 result for on significant productivity gains achieved in previous years. your Company and an improved dividend for our shareholders. As our local economies continue to strengthen, the trading momentum we have built in each of our markets places us After enduring some of the most challenging trading conditions well to benefit from recovering market conditions. ever experienced in the media industry in recent years, APN’s markets bounced back in 2010, reflecting the efforts of our Management staff, the underlying strength of our market leading businesses In July 2010, it was agreed that the secondment agreement and the economies in which they operate. That is not to say between APN, Independent News & Media (INM) and Chief that all of our business units and territories have returned to the Executive Brendan Hopkins would end and that Mr Hopkins record trading levels experienced prior to the Global Financial would leave APN on 31 December 2010. Mr Hopkins led the Crisis (GFC), but the diversity and underlying durability of our Company with energy and skill for eight years and, on behalf assets should give shareholders some encouragement. of all shareholders, I wish to thank him for his contribution over that time. We have recently announced that the results for the first quarter of 2011 will be significantly impacted by the natural An extensive search process was undertaken and in October disasters that have occurred recently and the associated the Board announced the appointment of Brett Chenoweth delay to the recovery of the New Zealand economy. Despite as Chief Executive Officer. Mr Chenoweth is a senior media, the tough start, the underlying strength of both APN’s brands communications and technology executive. He brings just the and APN’s leading market positions remains unchanged. right blend of operational, digital and strategic experience to lead your Company through its next exciting phase of growth Financial results in the rapidly developing multimedia environment. Net Profit After Tax (NPAT) of $103.1 million (before exceptional items and discontinued operations) was up 9.5% on the prior Under the leadership of Mr Chenoweth and his senior year, and was achieved on an increase in Revenue of 2.8% to management team, the Company is well poised to respond $1,059.1 million. Earnings Before Interest and Taxation (EBIT) rapidly and decisively to the many new opportunities as they were $205.4 million, up 8.7%. arise and to drive growth from existing and new markets. A Final Dividend of 7 cents per share, when combined with Governance the Interim Dividend of 5 cents per share, represents a 200% At the Annual General Meeting of the Company in April increase on the total per share dividend paid for 2009. 2010, I addressed some perceived issues that a number of shareholders held regarding the governance of your Company. Shareholders should take comfort in the fact that your Board is composed of very able, independently-minded Directors who act always in the best interests of all APN shareholders. Building on that, the Board made a commitment to accelerate its program of Board renewal in a structured, professional and methodical way. As a consequence, the composition of your Board has changed and it now comprises a smaller Board of nine members, with a majority of independent non-executive Directors. 2 / APN Annual Report 2010 The Board and management team of APN News & Media are pleased to report a return to growth in the 2010 result for your Company and an improved dividend for our shareholders. FINANCIAL HIGHLIGHTS FY 2010 – UNDERlying* AUD millions 2010 Δ% as reported Revenue 1,059.1 3% EBITDA 244.3 6% EBIT 205.4 9% NPAT 103.1 9% Final Dividend per share: 7 cents (2 cents franked) * Pre exceptional items and discontinued operations. On behalf of all shareholders, I want to particularly thank The future retiring Directors Cameron O’Reilly and Donal Buggy. Cameron If 2010 was a year of recovery for our markets from the has been associated with APN since its humble beginnings assault of the Global Financial Crisis, then 2011 will be a year as Provincial Newspapers Queensland, and led the Company of renewal and reinvigoration. Under the strategic leadership as Chief Executive from May 1996 to July 2000, expanding of our new Chief Executive Brett Chenoweth, APN will the business into both radio and outdoor advertising – two actively explore and develop fresh avenues for growth in core pillars of APN’s multimedia approach. Both Cameron the rapidly evolving media landscape. As shareholders in and Donal served the Company with great distinction over this fine Company, you should reflect on the fact that APN many years, and we shall miss their invaluable independent has a high quality portfolio of media assets and a team of advice and strategic leadership. Equally, I wish to welcome highly-credentialed, dedicated and talented media John Harvey to the Board and look forward to the Company professionals who run them, and on your behalf, I want to benefiting from his extensive corporate experience, particularly thank all of my APN colleagues for their great efforts in 2010. in the New Zealand market. Finally, I want to especially thank you, the shareholders, for As well as the issue of ongoing Board renewal, the new Board your continued support. Our improved Final Dividend of composition assures a majority of independent non-executive 7 cents per share for 2010 (of which 2 cents per share is Directors and positively responds to the perception that INM franked) and will be paid on 31 March 2011 – while not yet may have had excessive influence on APN. In that, it is perhaps back to historic levels – is, I think, a positive testament to the significant to note that INM (which continues to own 191.5 Board’s view of our prospects going forward. I look forward to million shares in our Company) has confirmed that it will no reporting on the Company’s strategic and operational progress longer consolidate APN’s annual results in its own accounts.