NZME pushes pause on capital return to shareholders because of Delta

Tuesday, 24 August 2021

NZME has postponed consideration of a capital return to shareholders but in the meantime it has resumed paying dividends after a three-year suspension to pay down debt.

Media business NZME has reported an 85 per cent rise in its net profit to $5.6 million for the six months to June 30 and announced a conditional deal to sell its daily deals site GrabOne for $17.5m.

But it has put a proposal to return capital to shareholders on pause because of the Delta outbreak.

Chairman Barbara Chapman said “we should all be under no illusions that ongoing Covid related issues, such as the nationwide lockdown currently in place, will continue to impact the recovery”.

“Our commercial partners remain wary of Covid cases, uncertainty over international travel bubbles and the more recent challenges of labour force shortages and inflationary pressures on their cost bases.

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“However, it is in this environment that the NZME business has proven it has the resilience and agility to perform well,” she said.

The company, which owns The New Zealand Herald and about half the country’s commercial radio stations, has resumed paying dividends.

It agreed to pay a dividend of 3 cents a share, after suspending payments in 2018 to pay down debt.

NZME chief executive Michael Boggs said the company’s advertising revenues were approaching levels achieved in 2019, before the Covid pandemic struck.

Australian company Global Marketplace has agreed to buy GrabOne and said it would take on all of GrabOne’s staff.

The sale is conditional on there being “no material adverse change” to GrabOne’s performance before the deal is completed by October 31 and Global Marketplace completing funding arrangements.

The company’s operating earnings (Ebitda) for the six month period were up 4 per cent on the same Covid-impacted period last year at $30m and revenues were up 9 per cent at $173m.

NZME said it would update shareholders on its capital management position once market conditions become clearer and the sale of GrabOne had been completed.

It said it “would expect” profit growth over the full year to the end of December but warned that could become challenging depending on the duration of the lockdowns.