MTR squeezes MRN’s profits
The Macquarie Radio Network has released it half-year results for the 6 months ending 31 December 2011, and if you are a shareholder it is a tough read.
Whilst MRN have booked a revenue increase of 3 % on pcp (previous calendar period) to $31.2m, the groups expenditure has increased by 29 % on pcp to $27.4m. Reported EBITDA has decreased by 53 % on pcp to $4.5m, resulting in a 62 % on pcp fall in NPAT (net profit after tax) to $2.3m.
MRN's increase in expenses were driven largely by three factors:
- $1.1m in costs from the failed Fairfax Radio Network bid, and from the successful Smart Radio acquisition in Queensland.
- MRN's share of the operating loss from MTR Melbourne was $1.7m.
- An impairment charge of $1.4m relating to amounts owing from MTR.
The key issue MRN face is addressing the losses that continue through their MTR joint venture with Pacific Star, a challenge made more difficult by what appears to be an increasingly combative relationship. MRN Executive Chairman, Russell Tate, has noted that MTR’s performance was unacceptable and unsustainable:
‘on February 3, 2012, MRN issued to Pacific Star a notice of what we believe to be a material breach by them of their obligations under the Owners and Contributors Deed relating to the joint venture company. A response is required of them by 2 March 2012 and we are hopeful that we will be able to agree an operating plan and budget which will substantially reduce the current level of operating losses’
With MRN booking 26 % of the Sydney radio advertising revenue, shareholders will be expecting a swift resolution to the Melbourne situation from the company in order to grow EBITDA from the groups complete group of assets. The company's tough year has been reflected in it's performance on the ASX over the past six months.
(chart courtesy of asx.com.au)