Pacific Star report revenue jump

The Pacific Star Network (PNW) has released its annual report to the market overnight, showing a small improvement in revenue and EBITDA, although a decline in net profits.

PNW operates Melbourne AM stations, SEN and MyMP, and the magazine 'Inside Football'.

Consolidated revenue is up 3.5% on FY12 to 15.06m, with EBITDA improving to $1.54m from $1.37m in FY12; however net profit was down 8.1% to $1.06m. 

Chairman Andrew Moffat said;

'In a relatively flat advertising market, the radio division delivered a good result with SEN continuing to perform strongly against forecast.'

'Whilst MyMP also delivered a result in line with forecast, it continues to generate trading losses after allocation of shared management costs compared to a breakeven position for the comparative period last year. As a result, the radio division segment result was down 8% on the comparative period last year.'

Amongst some positive news, Moffat identified some challenges in the PNW business. 

Firstly, MyMP after group costs is loss-making, referring to this, he stated; 

'The board intends to implement a strategy to leverage improved returns from this asset. Our initial objective will be to return it to a break even position this financial year with a view to further increasing returns beyond that period.

Secondly, agency revenue is signficantly down across the business;

Digital revenue improved by 30%, direct by 6.5%, whilst agency revenue fell by 11%. Moffat explained this decline as being due to 'resourcing issues with Sydney agency representation'.

And finally the performance of their recently acquired Inside Football magazine was slightly under forecasts, Moffat said;

'Whilst the trading result was below budget due to higher than anticipated operating costs, I am confident that a range of measures due to be implemented later in the calendar year will generate increased profitability.' 

Inside Football wrote 980k in revenue for an EBITDA position of 64k in it's first full year under the Pacific Star ownership.

Interestingly, Pacific Star also suggested that they may be looking for acquisitions, although they did not elaborate on whether that is in the radio sector or in bolt-on synergistic businesses (like Inside Football). They commented;

'With cash reserves of $3.4 million and continually strong operating cash flows, your board is well positioned to consider acquisition opportunities.'

The company has declared a dividend of 1cps, taking the full year dividend to 1.59cps.

On yesterdays closing share price of 20c, this is an (unfranked) dividend yield of just under 8%.