APN News & Media was hit by a 24% fall in profits as it announced a joint venture to expand its outdoor advertising business with equity firm Quadrant.
Taking into account the impairment charges of $159m announced in August, the company reported a net loss after tax of $45m. That loss compared to a $93.8m net profit after tax in the first half of 2010.
Group revenue was up 1% to $1.07bn and earnings before interest were down 17% to $171m. Net profit after tax before exceptions was down 24% to $78m, which was in line with guidance given.
The standout performer for the company was the outdoor division, with the earnings before interest for the division up 33%.
"We undertook a strategic review of our outdoor division and today we announce a joint venture with Quadrant Private Equity to capitalise on the strong growth prospects in this sector. APN Outdoor produced an enviable result," said CEO Brett Chenoweth (pictured).
"The business continues to outperform the market across all of the major outdoor categories. Local currency revenue grew 13%, and local currency EBIT was up 33%."
The transaction announced will see Quadrant take a 50% stake in APN Outdoor which will become a 50-50 joint venture between the two companies, but will retain its current name.
The transaction valued APN Outdoor at $272m, which is a multiple of 7.7 times current earnings. It will generate gross cash proceeds of around $190m for APN.
"We have looked at the market in great detail and Quadrant is the right partner for us. Along with digital, it is one of the two fastest growing sectors media. There is a surprising amount of product innovation, and audiences are engaged. We think outdoor is a really compelling investment opportunity."
The current management team will be retained and APN said current employees will remain with the new venture.
The development came as APN board director Pierce Cody resigned following the most recent board meeting which considered the Quadrant deal. He cited ongoing issues with governance at the company as his reason for leaving.