Shares of diversified physical media and radio network operator, APN News and Media Limited (ASX: APN) today fell as much as 28% before recovering to trade 14% down.
Shares in Australia's number one radio group went into a nosedive following the release of its 2015 half-year results this morning. The announcement revealed that statutory profit in the period ending 30 June 2015 fell 67% to $7.5 million.
The company said a loss of a contract in Hong Kong forced them to restructure the business, and onerous elements within the Buzplay contract forced them to take significant provisions. These "exceptional items" took $17.7 million away from profit, and would've resulted in a 5.5% rise had they not been incurred.
APN's Chairman, Peter Cosgrove, said, "APN has delivered a solid result in a competitive market with revenue and earnings growth in the first half."
He said the board believes in management's ability to deliver results for shareholders. "The Board is confident in the ability of APN's management team to continue delivering results for advertisers and shareholders through growth and efficiency‐enhancing initiatives planned for the rest of 2015."
APN recently appointed Ciaran Davis to the role of Chief Executive Officer. He commenced in the position today.
The most profitable business line for APN during the period was its Radio Network, which enjoyed a 26% rise in divisional profit. All others were mostly flat or saw decreases in profits year over year.
Following on from softer trading conditions in the second quarter, APN said weaker market conditions prevailed in July, and sales on a like-for-like basis were lower. However, trading conditions across all divisions improved in August.
At reporting date, APN had $526 million in long-term debt which is equivalent to around 89.7% of the total market capitalisation of its shares.
Should I buy APN shares?
Despite their huge falls today, an investment in APN today is far from a definitive bargain. Indeed, the media landscape and advertising market is transitioning away from traditional services and companies which cannot adapt will be left behind.
Already we've witnessed APN shares fall nearly 70% over the past five years. Buyer beware.
