NZME will start paying dividends again after years of cutting costs to get on top of its debt, and it has shored up the balance sheet further by selling online voucher business GrabOne for $17.5 million.
The media group has agreed to sell GrabOne to Global Marketplace, which has been looking to expand beyond Australia for some time, subject to funding being in place by Oct 15.
The sale will further improve NZME’s balance sheet, which has seen net debt almost halved to $18.6m in the first six months of 2021, falling below the firm’s target ratio and freeing up the board to resume dividend payments.
NZME reported a net profit of $5.6m in the six months ended June 30 from $3m a year earlier, with operating revenue up 9% at $172.5m. Operating earnings before interest, tax, depreciation and amortisation increased 4% to $30.1m.
“A rigorous commercial discipline and a continual focus on managing the cost base as business activity recovers has improved NZME’s ongoing capital management performance and has supported the continued strengthening of NZME’s balance sheet,” chair Barbara Chapman said in a statement.
The board declared a dividend of 3 cents per share, payable on Sept 22, its first payout since October 2018.
The publisher of the NZ Herald newspaper and operator of The Radio Network has been stripping out costs in recent years as it looked to mitigate the impact of declining print revenues falling at a faster pace than new digital incomes could replace them.
That prompted it to focus on repaying debt rather than paying dividends to its shareholders, a key pitch to investors when the New Zealand unit was spun out of Australia’s APN News & Media.
Chapman said the board had also considered announcing a capital return to shareholders, but put that on hold given the recent outbreak of the delta strain of covid-19, with lockdowns keenly felt in the advertising market.
“We should all be under no illusions that ongoing covid-19 related issues, such as the nationwide lockdown currently in place, will continue to impact the recovery,” she said.