FAIRFAX MEDIA REPORTS NET PROFIT AFTER TAX OF $187.7 M
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Fairfax New Zealand Finance Limited (FXFFA) | 10:34 am, Thursday 21 February 2008
FAIRFAX MEDIA REPORTS NET PROFIT AFTER TAX OF $187.7 MILLION, UP 39.4%
FOR THE SIX MONTHS TO 30 DECEMBER 2007
UNDERLYING NPAT OF $196.3 MILLION, UP 61.7%
(PRE NON-RECURRING ITEMS AND AFTER SPS DIVIDEND)
UNDERLYING EARNINGS PER SHARE OF 13.1 CENTS, UP 8.6%
FAIRFAX DIGITAL EBITDA UP 41.2% AND
TRADE ME EARNINGS (in NZ$) UP 39.9%
INTERIM DIVIDEND OF 10.0 CENTS PER SHARE
KEY FINANCIAL RESULTS
Statutory
- Revenue increased 39.5% to $1,437.7 million.
- EBITDA grew 43.0% to $406.1 million.
- Net Profit After Tax $187.7(post SPS), up 39.4%
Underlying Like-for-Like Performance
2008 (A$M)
2007 (A$M)
Growth %
* Adjusted growth %
Revenue
1,398.3
1,325.1
5.5
5.7
Earnings before Interest, tax and depreciation (EBITDA)
409.7
376.9
8.7
10.0
Earnings before interest and tax (EBIT)
357.0
325.2
9.8
11.3
o Underlying Earnings Per Share 13.11 cents, up 8.6%
* Adjusted % growth takes into consideration the additional weekend of
trading which occurred in 2007 as well as other publishing acquisitions and
disposals during the current period.
NOTE: With the merger of Fairfax Media and Rural Press occurring on the 9 May
2007 and the acquisition of the Southern Cross radio and television
production assets not occurring until 9 November 2007, the comparative
statutory numbers do not include the results of these two businesses. To
provide a more meaningful comparison of the results, the above table provides
like-for-like comparison on the merged Fairfax Media and Rural Press
businesses. It excludes non-recurring items and the results of Southern Cross
and Southern Star but includes the results of Rural Press for the six months
ended 31 December 2006.
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David Kirk, CEO
"Our first half results, marked by substantial earnings growth, reflect the
benefits of our strategy of growth and diversification, and the initial
results we have achieved from the successful integration of our publishing,
digital and electronic media assets.
We are committed to delivering on the investments we have made, with a clear
focus on EPS growth. We are reporting strong EPS growth, even after a
significant increase in the number of shares on issue following the merger
with Rural Press. We expect strong EPS growth to continue.
Fairfax Media is growing across all fronts. Digital earnings continue to
enjoy explosive growth both in Australia and from Trade Me in New Zealand.
Australian publishing is stronger, notwithstanding continuing weakness in the
Sydney market. Regional and rural publishing had solid gains in the face of
the worst drought in a century. New Zealand publishing has recovered. The AFR
and Fairfax Magazines both had good growth.
We are continuing to secure synergies with Rural Press and the new Fairfax
Media Radio Group, and these efforts are yielding excellent results.
These overall results reflect the continuing success of our strategy of (1)
defending and growing our newspapers, (2) delivering high growth online, and
(3) becoming a digital media company for the 21st century.
The first half has been marked by significant achievements across all three
strategic priorities:
- The integration with Rural Press has delivered synergies of $9.5 million
and the Company is on target to achieve $45 million by the end of the next
financial year.
- Circulation and readership growth for our major newspaper mastheads is
continuing, with gains in market share against key competitors.
- Continuing strong growth in regional and rural publishing.
- Fairfax Business Media, led by the AFR, had substantial revenue growth
driven by circulation increases and strong advertising markets. The re-launch
of afr.com has been a success.
- The Fairfax Media radio stations are being successfully integrated with
personnel restructuring completed and rebranding of the stations and news
network implemented. The regional Rural Press radio stations enjoyed strong
revenue growth. Back office integration is virtually complete.
- Southern Star has had continuing revenue and earnings growth in program
production and distribution.
- Fairfax Digital in Australia continues its leadership position in online
news and information with revenue growth in excess of the overall online
advertising market, and audience growth of nearly 80% year-on-year. The
diversification of Fairfax Digital's businesses, such as the acquisition of
InvestSMART, is generating significant new transaction revenues.
- Trade Me in New Zealand continues to exceed revenue and earnings targets
with its successful expansion into travel and new car sales.
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- Revenue growth across Fairfax Magazines.
- Continuing strong cost management across the group.
- Renewed growth in New Zealand publishing
- Successful completion of our move to One Darling Island and improved
editorial processes through the benefits of the Newsroom of Today for Herald
Publications.
These are positive and promising times for our staff, our shareholders and
our company's future."
Ronald Walker, Chairman
"Our Board is very pleased to report significant earnings growth and
excellent returns for our shareholders.
Our commitment is to deliver on the expansion and growth undertaken over the
past year, and for all the media assets under our management - new as well as
old - to continue to add wealth to our shareholders.
Fairfax Media has emerged as the largest and most diversified media company
in Australasia, and Fairfax Media is more competitive and successful than
ever before.
Fairfax Media and its shareholders greatly benefit from the efforts of our
dynamic people and the commitment of our Board of Directors.
As always, I want to pay tribute to our staff - our greatest asset. Their
dedication across all aspects of the business, from wherever they serve us
around the globe, makes Fairfax Media one of the most pre-eminent media
companies in the world. They are the key to our future, and I thank them for
their efforts."
NON-RECURRING ITEMS
As previously foreshadowed, non-recurring items totalling $8.6 million after
tax are included in the results for the current period. These items relate to
property costs associated with the relocation from Darling Park to the new
facility at One Darling Island, Pyrmont NSW ($1.5 million after tax) and
restructuring and redundancy charges ($7.1 million after tax).
INTERIM DIVIDEND
An interim dividend of 10.0 cents, 75% franked (2007: 10.0 cents) has been
declared by the Board.
Record date for the interim ordinary dividend is 3 March 2008 and the
dividend will be payable on 31 March 2008.
As part of the Company's ongoing commitment to shareholders, the Company will
offer a Dividend Reinvestment Plan (DRP), with no discount. The pricing
period for the DRP will be 5 March to 18 March 2008 inclusive. Shares to be
allocated to participants under the DRP will be provided by on-market
purchases.
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DEBT PROFILE
The Company is in a strong financial position with a strong Balance Sheet and
excellent cash flows.
All debt ratios such as Interest to EBITDA and Net Debt to EBITDA have
improved and are within investment grade criteria. No refinancing is required
to be undertaken until at least mid 2010 and the Company has a diverse source
of committed debt facilities.
KEY AREAS OF ACTIVITY
AUSTRALIAN PUBLISHING AND PRINTING
Like for Like
(Takes into consideration the additional weekend of trading which occurred in
2007 as well as other publishing acquisitions and disposals during the
current period.)
- Revenue grew 2.3%
- EBITDA increased 5.1%
- EBIT increased 7.4%
- Costs were well under control, increasing only 1.3%
Reported
- Revenue grew 3.0% to $986.2 million
- EBITDA increased 4.2% to $268.0 million
- EBIT increased 6.2% to $225.6 million
Metropolitan publishing revenues were soft with revenues, particularly in
NSW, down due to weak economic conditions in the Sydney market. Trading
performance was more favourable in Melbourne.
Regional and Community Newspapers had solid growth in Canberra, Newcastle,
Illawarra and community newspapers in NSW, across Queensland, and in
Victoria, Tasmania and Western Australia.
Fairfax Business Media enjoyed earnings and revenue growth driven by
intensified interest in financial news and information, and notwithstanding
the effects of the Federal election period.
Fairfax Magazines had revenue growth across its weekly and monthly titles.
Printing operations enjoyed improved operating margins as the benefits of the
Rural Press merger are realised.
Regional Radio Broadcasting had good revenue growth and audience reach.
Australian Agricultural publications performed well with both revenues and
profits increasing notwithstanding the drought.
FAIRFAX DIGITAL
Fairfax Digital's revenue was $85.4 million, up 39.5%, with a profit at the
EBITDA level of $24 million, up 41.2% over the previous corresponding period.
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Fairfax Digital continues its #1 leadership position in news and information,
and had excellent growth - marked by market share gains - across classified
and display advertising.
Transaction revenues have emerged as a significant, and accelerating, part of
the division's overall growth.
FAIRFAX MEDIA NEW ZEALAND
In NZ dollars:
- Revenue increased 3.9% to NZ$301.8 million.
- Costs increased 3.2%
- Like-for-like EBITDA up 7.8%, with reported EBITDA up 5.1% to NZ$94.9
million.
Improving economic conditions led to a recovery in revenues and margins, with
continued strength in real estate and a rebound in employment, and display
growth in entertainment, travel and retail. The New Zealand mastheads had
solid circulation and readership performance.
TRADE ME
For the half year, Trade Me contributed NZ$32.6 million in EBITDA, up 39.9%.
All aspects of the business are performing strongly.
Trade Me remains firmly entrenched as the number 1 auctions, real estate and
cars website in the country and has a very strong position in employment.
FAIRFAX RADIO NETWORK, SOUTHERN STAR TELEVISION PRODUCTION AND DISTRIBUTION,
AND ASSOCIATED BUSINESSES
Fairfax Media completed its acquisition of the radio, television production
and distribution, and associated businesses of Southern Cross Broadcasting on
9 November 2007. From that date through 30 December 2007, those businesses
contributed $41.4 million in revenue, with EBITDA of $8.7 million.
OUTLOOK
Trading performance to date in the second half has seen a continuation of the
trends reported for the first half.
-- ENDS --
