John Fairfax Holdings Limited
ACN 008 663 161

 Highlights

• Profit after tax up 48.2% to $79 million.

• EBIT on continuing business up 26.1% to $136.1 million.

• Continuing business revenues up 9.6%.

• Underlying continuing business costs up 5.3% made up entirely of increased newsprint costs and different treatment of abnormals. Staff costs fell by $1.3 million, or just under 1%.

• Earnings per share pre-abnormals 8.9 cents, up 16%.

• Disposal of non-core assets, including Australian Geographic, Artist Services, and a portion of Fairfax’s stake in AAPT.

• 10% share buyback of Brierley Investments Limited stake to be concluded on 19 February 1999.

• Fairfax online site visits exceed 100,000 daily—highest of any Australian related content sites.

• Interim dividend increased from 3.5 to 4 cents per share; dividend now fully franked.

 

Mr. Fred Hilmer, Chief Executive Officer of Fairfax, said:

"This is a strong result for the company. All of our four major mastheads, The Age, The Sydney Morning Herald, The Australian Financial Review and The Sun-Herald achieved substantially improved EBIT. At the same time, Fairfax continued its tradition of journalistic excellence evidenced by winning 12 of the 13 print Walkleys, our best showing ever.

Revenues on Fairfax’s continuing businesses, on a like-for-like basis, were up 9.6% over last year. Both circulation and advertising revenues showed solid gains due to pricing and our focus on yields. Classifieds were strong, and magazines achieved an outstanding improvement, with revenues up over 20%.

For our continuing businesses, operating costs were up by $20 million, due entirely to two factors. Newsprint increased by $9 million, or 11.4%, reflecting both price and volume increases coming from full year publication of The Australian Financial Review – Weekend Edition and SundayLife! Magazine. We are also treating as operating costs, in these results, items previously regarded as abnormal, which in the prior year amounted to $11 million. Staff costs fell despite contracted award increases of some $6 million and increased on-line spending.

We are determined to maintain a stringent balance between revenues and costs at Fairfax. We are pleased with what has been accomplished so far and are continuing our focus on this key element.

Even with our emphasis on operating costs, the quality of our journalism is a central goal. It is the quality of journalism at Fairfax that makes its publications the leaders that they are. This critical corporate goal will be pursued on a sustained basis, within a cost structure that is appropriate to our revenue base.

Circulation remained steady at The Sydney Morning Herald, The Sun-Herald, The Australian Financial Review and BRW. The decision to end uneconomic discounting and focus on the quality as well as size of our readership affected circulation at The Age. The strong advertising revenue growth achieved by The Age and an improvement in its share of advertising revenue in Melbourne over the period is evidence of advertisers’ appreciation of this strategy.

As a media company, we will continue to develop our online business. We have three goals: to enhance our mastheads; to add new revenue streams; and to build an online franchise in new areas where we have competitive advantage. We want to leverage our distinctive content into the online environment. We already have an excellent position on the Internet, with Fairfax sites having more traffic than any other Australian related content sites. We intend to keep growing revenues, and ultimately ensure profitability of our operations on the net. As we build our sites and their services, we are assessing strategic options, alliances, and financing alternatives. In addition, Fairfax intends to be a significant participant in digital datacasting services.

With regard to overall trading conditions, while it is still early in the calendar year, trading continues to be good.

The Board is particularly pleased to announce an increase in the interim dividend, payable on 31 March (books close 17 March), from 3.5 to 4 cents per share, with the dividend now fully franked. This is tangible evidence of the benefit to shareholders of the asset disposals and share buyback programs, as well as a strong result."

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John Greaves (02) 9282 2970

Ashley Fenton (02) 9282 3069

John Fairfax [ASX:FXJ] is Australia’s leading publishing group. Its mastheads include The Sydney Morning Herald, The Australian Financial Review, The Age, The Sun-Herald and BRW. In addition, the Company publishes financial and consumer magazines and provides online services. In 1998, the Company had revenues of over $1.1 billion. Fairfax is Australia’s leading content provider on the Internet, with more than 20 million page views per month, and 100,000 site visits per day.

Fairfax > Corporate Affairs & Media Releases > Announcements > RESULTS 31 DECEMBER 1998