Fairfax Media Limited
ACN 008 663 161
Annual Report 2008
Contents
Chairman’s Report
Chief Executive Officer’s Report
Board of Directors
Directors’ Report
Auditor’s Independence Declaration
Remuneration Report
Corporate Governance
Management Discussion & Analysis Report
Consolidated Income Statements
Consolidated Balance Sheets
Consolidated Statements of Recognised
Income and Expense
Consolidated Cash Flow Statements
1
3
6
8
13
14
22
30
33
34
35
36
Notes to the Financial Statements
Inventories
Income tax expense
37
1. Summary of significant accounting policies
52
2. Revenues
53
3. Expenses
54
4. Significant items
55
5.
56
6. Dividends paid and proposed and finance costs
57
7. Receivables
58
8.
58
9. Assets held for sale
10. Other assets
59
11. Investments accounted for using the equity method 59
61
12. Available for sale investments
62
13. Held to maturity investments
63
14. Intangible assets
67
15. Property, plant and equipment
69
16. Derivative financial instruments
72
17. Pension asset
75
18. Deferred tax assets and liabilities
77
19. Other financial assets
77
20. Payables
77
21. Interest bearing liabilities
79
22. Provisions
80
23. Contributed equity
83
24. Reserves
84
25. Retained profits
85
26. Minority interest
85
27. Earnings per share
86
28. Commitments
87
29. Contingencies
88
30. Controlled entities
94
31. Acquisition and disposal of controlled entities
97
32. Business combinations
99
33. Employee benefits
101
34. Remuneration of auditors
102
35. Director and executive disclosures
104
36. Related party transactions
105
37. Notes to the cash flow statements
106
38. Financial and capital risk management
115
39. Segment reporting
117
40. Events subsequent to balance sheet date
Directors’ Declaration
Independent Audit Report
Shareholder Information
Five Year Performance Summary
Directory
Publications and Websites
118
119
121
123
124
125
Chairman’s Report
Our Board is very pleased to report strong earnings growth as a result of our focus on reaping the benefits of our merger with Rural
Press and acquisition of Southern Cross. We have successfully completed the integration of those businesses into Fairfax Media
and its operations in Australia, New Zealand and the USA. These strategic transactions have completely transformed our company.
As a result of our concerted and dynamic strategy of diversification and growth, the new Fairfax Media is, today, the largest and most
diversified media company in Australasia. By positioning Fairfax Media for the digital age, managing costs, and strengthening our
publishing businesses, we continue to be more competitive and successful than ever before.
The success of our strategy is fully reflected in our reported results for the expanded company for the 2008 financial year:
• Revenue increased 34% to $2.92 billion
• EBITDA grew 46% to $818.3 million
• Net profit after tax of $386.9 million, up 47%
• Earnings per share 24.6 cents, up 8.1%
Of particular note are our underlying earnings per share growth of 8.2%, to 25.2 cents. A final dividend of 10.0 cents, 75% franked
has been declared by the Board. This brings total dividends for the year to 20.0 cents, continuing the company’s payout ratio to
shareholders at nearly 80%.
Fairfax Media has taken decisive steps to ensure that we are better positioned than publishers in the United States and the United
Kingdom to respond to these structural challenges:
• Our newspapers have an excellent record of circulation growth and long-term circulation and readership stability. This is a
result of our investment in colour and other innovations to revitalize our publications.
• We have firm cost disciplines that have been devised so as not to harm the internationally recognised quality journalism for
which we are renowned.
• We have far stronger online positions than our peers overseas, yielding the #1 news and information sites in Australia and a
greater share of online classified and display revenues. We own 100% of our entire portfolio of internet assets.
No other major publishing company in the world has such strength in newspapers and magazines across metro, regional, financial,
community, and agriculture publishing; a comprehensive portfolio of successful online news, classified and transaction businesses;
and a strong radio network.
With over 300 mastheads across Australia, New Zealand and the United States, more than over 50 major websites, and 15 radio
stations, we are one of the largest content generators in Australasia. For Fairfax Media today, our newspapers, news and
information websites, radio stations, magazines, and online businesses reach over 10 million people each week in Australia and New
Zealand.
While Fairfax Media faces the same structural and cyclical issues as other publishing companies worldwide, we are managing those
challenges forthrightly through our strategy of diversification and growth.
As directed by our Board, our media businesses – in print, online and on air – are working together. The company's
publishing operations in regional and rural Australia, agricultural publishing, and financial news and information are performing well.
Our online businesses in Australia and with Trade Me in New Zealand are growing aggressively. Our new radio businesses are
strong. Fairfax New Zealand is carefully managing the difficult economic conditions in that country.
Taken together, our growth in these key areas – which generate 80% of the company’s earnings – helps offset the structural threat to
the classifieds in the metropolitan newspapers in Sydney and Melbourne, and the cyclical weakness in those advertising
markets. Notwithstanding an earnings decline of 9% in the Sydney and Melbourne mastheads, overall earnings were up 8%. This
is a direct result of our strategic reorientation of the company.
This is why we believe Fairfax Media is better positioned than at any other time in its past 175 years to meet the ongoing challenges
we will face this year and continue on a sound strategic course for the future.
With a dynamic Board and management’s leadership, we have completely reshaped our company for the next generation.
1
Chairman’s Report
I am pleased to report that your Board continues to work as a team together. We have an exceptionally capable management team,
led by our CEO, David Kirk, to ensure we deliver to our shareholders the full benefits of the investments and acquisitions we have
made.
We look forward to continued implementation of our strategic vision and the benefits it is delivering to everyone involved in this
exceptional company.
I also want to thank our staff for their continued dedication and commitment to the company and our shareholders.
Ronald J. Walker, AC CBE
Chairman
2
Chief Executive Officer’s Report
For the 2008 financial year, we reported strong earnings growth in the face of difficult economic conditions in Australia’s Sydney and
Melbourne metropolitan markets and in New Zealand.
Fairfax Media continued to grow in the second half of the year as markets tightened with earnings per share up 7.7%. These results
highlight the successful implementation of our strategy of diversification of revenue, investment in digital earnings growth and
constant focus on operational improvement to drive earnings per share growth.
Our highest priority this year was to deliver on what we promised when we undertook substantial investment and expansion – and
we have delivered.
Full year key operating performance highlights include:
•
•
•
•
Australian Regional and Community publications EBITDA up 7.8%
Specialist (financial and agricultural) publishing EBITDA up 15.0%
Fairfax Digital revenues up over 30%, and EBITDA up 46%
Trade Me EBITDA up 39.0% to NZ$70.1 million
• Overall costs up 1.4%
• Continued growth in New Zealand publishing in the second half of the year in tough conditions with EBITDA (local currency)
improving 0.6% on the prior year, and full year earnings up by 3.1% and by 4.3% on a like-for-like basis.
With respect to overall business performance, there were significant achievements in key areas:
•
•
•
•
•
•
•
•
Successful completion of the merger with Rural Press, and the establishment of a new management team for Australian
Publishing and Printing led by Brian McCarthy, with delivery of all synergies.
Successful upgrade and enhancements of the regional masthead websites, and rebranding and rollout of the Domain property
brand across that network.
A range of upgrades and investments to expand our printing business.
A continued program of successful bolt-on acquisitions.
Successful completion of the acquisition of the radio broadcasting and television production and distribution businesses of
Southern Cross, with rebranding completed and cross-promotion with radio and our print and online mastheads in major
markets underway, and cost synergies realised.
Successful launch of WAtoday.com.au, extending our national footprint in news and classifieds, and bringing diversity and
competition to the media market in Western Australia. WAtoday’s initial audience figures have exceeded expectations, and are
already within range of the incumbent newspaper’s website.
Successful completion of our move to One Darling Island in Sydney, with new infrastructure and facilities serving our Sydney
operations, including Herald Publications, Fairfax Business Media, Fairfax Digital, and corporate.
A major reorganisation in Fairfax New Zealand, with new editorial and commercial leadership, growth of our online news and
information sites and continued strong market leadership in newspapers and magazines.
• Commencement of construction of Media House in Melbourne, which will house our Victorian operations.
With respect to the business units and their performance:
AUSTRALIAN PUBLISHING AND PRINTING
Regional and Community Newspapers overall continued to post strong revenue and profit growth in Canberra, Newcastle, and
regional publications across Queensland, Victoria, South Australia, Tasmania and Western Australia. Weaker real estate markets
affected NSW community publications.
Metro publishing revenues were weaker, with total revenues reflecting continued advertising weakness, particularly in Sydney.
Melbourne market conditions were stronger but did weaken in the second half of the year. Circulation was strong with The Age a
particular highlight.
3
Chief Executive Officer’s Report
Fairfax Magazines performed very well, with strong revenue and profit growth.
Agriculture publishing had a strong year, notwithstanding drought conditions in parts of Australia, most notably southern and western
NSW, with solid earnings growth on steady revenues and firm cost controls.
Offshore publishing The US agricultural publishing business continued to enjoy solid gains with an earnings improvement of 38% on
last year in US dollar terms. New Zealand agricultural publishing increased revenue and earnings.
Printing operations benefited from restructuring, consolidation and investment, with good earnings growth.
FAIRFAX BUSINESS MEDIA
Fairfax Business Media had continued strong revenue and profit growth with robust advertising growth in The Australian Financial
Review. Business magazines had a steady performance with stronger profit growth at BRW. Circulation of The Australian Financial
Review, both on weekdays and during the weekend, has grown strongly. Afr.com continues to progress well.
FAIRFAX DIGITAL
Fairfax Digital’s revenue increased over 30%, with a profit at the EBITDA level, up 46.8% over the 2007 financial year. Total traffic
across all the Fairfax sites increased to over 16.5 million unique browsers per month, up 15% on the previous corresponding period.
Fairfax Digital enjoys the absolute leadership position in online news with smh.com.au and theage.com.au, has the leading sites in
online dating (RSVP), and holiday rentals (Stayz), and has strong positions in the employment, real estate and automotive classified
categories. Brisbanetimes.com.au has enjoyed strong growth over the year, and WAtoday has exceeded expectations thus far.
Transaction revenues continue to grow strongly. Revenue and earnings gains were also registered as a result of the upgrade of
Rural Press masthead online sites and their integration into the overall Fairfax Digital network.
TRADE ME
Trade Me contributed NZ$70.1 million in EBITDA to the group result, up 39%. These strong results triggered the payout to the
principals of the earn-out on the acquisition of Trade Me of NZ$45.2 million. During the year:
•
Live to site auction listings passed 1,180,118, an increase of 31%
• Motor Vehicle listings are currently over 59,409, up 37% YOY
• Real Estate listings exceeded 81,796, and were up 111% YOY
•
Jobs listings exceed 10,000, up 31% YOY
FAIRFAX MEDIA NEW ZEALAND
Fairfax Media New Zealand reported earnings growth and a marginal increase in revenues in local currency terms, notwithstanding a
worsening of economic conditions during the second half of the year that affected employment and real estate advertising markets.
In particular, the benefits of cost reduction measures continue to flow through to earnings. Underlying publishing costs were well
contained despite strong inflationary pressures on labour costs. The New Zealand mastheads had solid circulation and readership
performance.
FAIRFAX RADIO
Fairfax Radio Network enjoyed good performance in Melbourne, Perth and Brisbane, with Sydney operations stabilising. Overall
ratings improved as the year progressed. Expected cost synergies have been fully achieved. Regional radio continued to grow
solidly.
SOUTHERN STAR
Southern Star fully delivered on expectations in the first eight months of ownership by Fairfax Media. The Company has announced
the sale of Carnival Film & Television Ltd. in the UK to NBC Universal, which will generate proceeds to the Company of £22.5 million
(or $48.3 million at the current exchange rate).
This is a very satisfactory set of results in the face of declining earnings for our metropolitan newspapers in Australia and tough
trading conditions, particularly in New Zealand.
4
Chief Executive Officer’s Report
BUSINESS IMPROVEMENT PROGRAM
In August we announced implementation during the first half of the 2009 financial year a business improvement program across the
Group’s corporate division, Australian publishing and printing businesses and Fairfax New Zealand. The program will deliver around
$50 million in annualised cost savings. Approximately $25 million of the savings will flow into the 2009 financial year result. The
Company will book a one-off charge of approximately $50 million for redundancy and associated costs during this half.
This is the third wave of business improvement initiatives we have undertaken over the past three years. Over the course of the 2006
and 2007 financial years we achieved $52 million in ongoing real cost reductions. Cost synergies associated with the merger of
Fairfax Media and Rural Press and the acquisition of Southern Cross radio produced a further $53 million in savings ($45 million
Rural Press, $8 million radio). All of these synergies will be realised by the end of this financial year.
With the new organisation structure in place and line management operating effectively now is the time to launch a third wave of
business improvement. Fairfax Media needs to continue to adapt as media markets here and around the world change. This far-
reaching program will position us well for the next stage of our growth and development.
Fairfax Media is in excellent shape. Our strategy of diversification and growth has enabled us to meet the challenges we face, and to
ensure an even more robust future. I appreciate the support given by the Board for me and my executive team.
David Kirk MBE
Chief Executive Officer
5
Board of Directors
Board of Directors
MR RONALD WALKER, AC CBE
NON-EXECUTIVE CHAIRMAN
Mr Walker has been prominent in public life for more than 40 years. He was founder and chairman of one of Australia’s largest
private chemical companies between 1963 and 1976, was co-founder, director and major shareholder of Hudson Conway Limited,
and was co-founder and major shareholder of Crown Casino Limited, and Scarborough Minerals Limited.
Mr Walker served two terms as Lord Mayor of Melbourne from 1974 to 1976.
Mr Walker has served Australia in many capacities over many years in public life including: Chairman, Cancer Institute; Chairman,
Heart Foundation Appeal; Chairman, Save the Children Fund; Chairman, Aborigines Advancement League; Chairman, Australian
Ballet Foundation; Chairman, Australia Business Arts Foundation; Commissioner, Melbourne 1996 Olympic Games Bid; Member,
Sydney 2000 Olympics Bid; Trustee, National Gallery of Victoria for nine years; Founding Chairman, Victorian Major Events
Company for ten years; Chairman, Melbourne 2006 Commonwealth Games; Chairman, Australian Grand Prix Corporation and
MotoGP; Member, Formula One Commission UK; Director, Football Federation Australia; Chairman, Microsurgery Foundation at St
Vincent’s Hospital; Director, Australian Tissue Engineering Centre at St Vincent’s Hospital.
In 1977 Mr Walker was made a Commander of the Order of the British Empire (CBE) for service to the Commonwealth. He
became an officer of the Order for Australia (AO) for service to the community 1987, and was made a Companion of the Order of
Australia (AC) in 2003 for services to business, arts, tourism and the community.
MR ROGER CORBETT, AO
NON-EXECUTIVE DIRECTOR
Mr Corbett has been involved in the retail industry for more than 40 years. In 1984, Mr Corbett joined the Board of David Jones
Australia as Director of Operations. In 1990, he was appointed to the Board of Woolworths Limited and to the position of Managing
Director of BIG W. On 1 January 1999, Mr Corbett was appointed Chief Executive Officer of Woolworths Limited and retired from that
position at the end of September 2006. Mr Corbett is a Director of the Reserve Bank of Australia, a Director of Wal-Mart Stores, a
Director of PrimeAg and Chairman of ALH Group.
MR DAVID EVANS
NON-EXECUTIVE DIRECTOR
Mr Evans has over three decades of experience in the television industry in Australia, the US and the UK. He is a member of the
senior executive team at RHI Entertainment in New York, in charge of New Media and Channel Development. Mr Evans is also on
the board of directors of Village Roadshow Limited and BSkyB in the UK. Prior to taking up his position at RHI Entertainment, he
was President and CEO of Crown Media Holdings, Inc, the owner of Hallmark Channels in the USA. Mr Evans has also served as
Executive Vice President of News Corporation, and President and Chief Operating Officer of Fox Television.
MR JOHN B FAIRFAX, AM
NON-EXECUTIVE DIRECTOR
Mr John B Fairfax was a board member of Rural Press from 1988 and Chairman from 1990 until the Merger with Fairfax Media
Limited. He has significant experience as a company director and in the media and agricultural industries. He has been Chairman
of Marinya Media Pty Limited since 1988, councillor of the Royal Agricultural Society of New South Wales since 1990, Councillor
since 1979, and President since 1993 of Girls and Boys Brigade Inc. and Trustee of Reuters Founders Share Company Limited
since 2005.
Previously Mr Fairfax was Deputy Chairman of Fairfax (then John Fairfax Limited) from 1985 – 1987 and Director from 1979 – 87,
Director of David Syme & co Ltd 1981 – 87, Chairman of the Media Council of Australia from 1980 – 82, Chairman of the Newspaper
Advertising Bureau 1985 – 87, Chairman of the Australian section of the Commonwealth Press Union 1987 – 92, Director of St
Lukes’ Hospital 1973 – 76 and also 1981-95, Chairman of Cambooya Investments Limited 1991 – 2002, Director of Australian Rural
Leadership Foundation Limited 1992 – 98, Director of Crane Group Limited 1996 – 2003 and a Director of Westpac Banking
Corporation Limited 1996 – 2003.
6
Board of Directors
MR NICHOLAS J FAIRFAX
NON-EXECUTIVE DIRECTOR
Mr Nicholas Fairfax was a Director of Rural Press Limited from August 2005 until 9 May, 2007. He has been a Director of Marinya
Media Pty Ltd since 2005, a Director of Cambooya Pty Ltd since 2002 and a Director of the Vincent Fairfax Family Foundation since
2004. Mr Fairfax is a Director of Tickets Holdings Pty Limited, an alternate Director of Bayard Group Pty Ltd since 2002 and a
member of UTS Faculty of Business Executive Council.
MRS JULIA KING
NON-EXECUTIVE DIRECTOR
Mrs King has had more than 30 years’ experience in media marketing and advertising. She was Chief Executive of the LVMH
fashion group in Oceania and developed the businesses in this area. Prior to joining LVMH she was the Managing Director of Lintas
Advertising. She has been on the Australian Government’s Task Force for the restructure of the Wool Industry, the Council of the
National Library and the Heide Museum of Modern Art. Mrs King is a director of Servcorp Australian Holdings Pty Limited, Opera
Australia and Carla Zampatti Limited.
MR DAVID KIRK, MBE
EXECUTIVE DIRECTOR AND CHIEF EXECUTIVE OFFICER
Mr Kirk commenced as CEO of Fairfax Media in October 2005. Prior to joining Fairfax Media, Mr Kirk was the CEO and Managing
Director of PMP Ltd, the largest magazine and commercial printing and media services company in Australia. Prior to this, he was
Regional President, Australasia for Norske Skog, the world’s largest manufacturer of newsprint and magazine grades of paper. Mr
Kirk previously worked for Fletcher Challenge Paper and Fletcher Challenge Energy in senior executive roles in New Zealand and
Australia.
Prior to joining Fletcher Challenge, Mr Kirk worked for three years as first Executive Assistant and then Chief Policy Advisor to the
Rt. Hon. Jim Bolger, Prime Minister of New Zealand. Apart from the business arena, he represented New Zealand in rugby union
from 1983-1987 and captained the All Blacks in 1986 and 1987. In 1987, under his leadership the All Blacks won the inaugural
Rugby World Cup. In 1987 he was awarded an MBE for services to rugby. In 1987 he took up a Rhodes Scholarship at Oxford
University, studying Philosophy, Politics and Economics. His first degree was in Medicine.
MR BOB SAVAGE
NON-EXECUTIVE DIRECTOR
In addition to his particular expertise in the management of information technology and systems, Mr. Savage brings to the Fairfax
Media board his experience as a senior executive in Australia and the Asian region, including experience in people management and
organisation effectiveness issues and several years experience as a Non Executive director and Chairman across a wide range of
Australian companies. Mr Savage was formerly Chairman and Managing Director of IBM Australia and New Zealand. He is
Chairman of David Jones Limited and Perpetual Limited, was Chair of Mincom Limited until sold in May 2007, and was a director of
Smorgon Steel Group Limited until August, 2007, when it merged with OneSteel Limited.
MR PETER YOUNG, AM
NON-EXECUTIVE DIRECTOR
Over the last thirty years Mr Young has been an investment banking executive in Australia, New Zealand and the U.S.A.
Until recently he served as Chairman of Investment Banking for ABN AMRO in Australia and New Zealand. From 1998 to 2002, Mr
Young was Executive Vice Chairman, ABN AMRO Group (Australia and New Zealand) and Head of Telecommunications, Media &
Technology Client Management for Asia Pacific. He is currently the Chairman of Transfield Services Infrastructure Fund, Chairman
of the AIDA Fund Limited, the Chairman of EFIC, the Federal Government’s Export Agency and Chairman of Delta Electricity. He is
involved in several other community, environmental and artistic activities.
7
Directors’ Report
The Board of directors presents its report together with the financial report of Fairfax
Media Limited (the Company) and of the consolidated entity, being the Company and its
controlled entities for the period ended 29 June 2008 and the auditor’s report thereon.
Directors
The directors of the Company at any time during the financial year or up to the date of this report are as follows. Directors held office
for the entire period unless otherwise stated:
MR RONALD WALKER, AC, CBE
Non-Executive Chair
MR DAVID KIRK, MBE
Executive Director and Chief Executive Officer
MR ROBERT SAVAGE
Non-Executive Director
MR PETER YOUNG, AM
Non-Executive Director
MR ROGER CORBETT, AO
Non-Executive Director
MR DAVID EVANS
Non-Executive Director
MR JOHN B FAIRFAX, AM
Non-Executive Director
MR NICHOLAS FAIRFAX
Non-Executive Director
MRS JULIA KING
Non-Executive Director
Company Secretary
MR MARK BURROWS, AO
Non-Executive Deputy Chair
Resigned from the Board on 31 January, 2008
A profile of each director at the date of this report is included
on pages 6 and 7 of this report.
Mr Patrick Joyce, Investment Director at Marinya Media Pty
Limited, is an alternate director for Messrs John B and
Nicholas Fairfax.
The company secretary, Ms Gail Hambly, was appointed to the position of Group General Counsel and Company Secretary in 1993.
Before joining Fairfax Media Limited she practised as a solicitor at a major law firm. She has extensive experience in commercial,
media and communication law. Ms Hambly is a member of the Media and Communications Committee for the Law Council of
Australia and a member of the Institute of Chartered Secretaries and Administrators and Chartered Secretaries Australia. She holds
degrees in Law, Economics, Science and Arts.
Corporate structure
Fairfax Media Limited is a company limited by shares that is incorporated and domiciled in Australia.
Principal activities
The principal activities of the consolidated entity during the course of the financial year were publishing of news, information and
entertainment, advertising sales in newspaper, magazine and online formats, radio broadcasting and film and television production
and distribution.
There were no significant changes in the nature of the consolidated entity during the year other than the matters set out as significant
changes in the state of affairs below.
Consolidated result
The consolidated profit attributable to the consolidated entity for the financial year was $386,878,000 (2007: $263,510,000).
8
Directors’ Report
Dividends
A final fully franked dividend of 10 cents per ordinary share and debenture in respect of the year ended 1 July, 2007 was paid on 27
September, 2007. This dividend was shown as approved in the previous annual report.
An interim 75% franked dividend of 10 cents per ordinary share and debenture in respect of the year ended 29 June, 2008 was paid
on 31 March 2008.
Since the end of the financial year, the Board has declared a final 75% franked dividend of 10 cents per ordinary share and
debenture in respect of the year ended 29 June, 2008 payable on 2 October, 2008.
Distributions to holders of Stapled Preference Securities (SPS) were paid as follows: $4.0404 per share paid 31 October 2007 and
$4.3341 per share paid 30 April 2008.
Review of operations
Revenue for the Group increased 34% to $2,934 million generating a net profit after tax of $386.9 million, an increase of 46.8%.
Earnings per share increased 8.4% to 24.6 cents. These Group results include the former Southern Cross radio network and
Southern Star television and distribution businesses acquired on 9 November 2007.
Operations which recorded increases in revenues and profits were Australian regional and community publications, specialist
publications, Australian printing, New Zealand publications and the online businesses Fairfax Digital in Australia and Trade Me in
New Zealand. Revenues and profit of the Australian metropolitan publication businesses were lower. Further information is provided
in the Management Discussion and Analysis Report on page 30.
Significant changes in the state of affairs
Significant changes in the state of affairs of the consolidated entity during the financial year were as follows:
• On 9 November 2007, the consolidated entity completed its acquisition of the former Southern Cross Broadcasting’s radio
business, (including metropolitan stations 2UE in Sydney, 3AW and Magic 1278 in Melbourne, 4BC and 4BH in Brisbane
and 6PR and 96FM in Perth) the Southern Star television production and distribution business, Satellite Music Australia
and associated businesses from Macquarie Media Group;
•
The headquarters of the consolidated entity were relocated from Darling Park to One Darling Island, Pyrmont during
December, 2007.
Likely developments and expected results
The consolidated entity’s prospects and strategic direction are discussed in the Chairman’s and the Chief Executive Officer’s reports
on pages 1 - 5 of this report.
Further information about likely developments in the operations of the consolidated entity and the expected results of those
operations in future financial years has not been included in this report because disclosure of the information would be likely to result
in unreasonable prejudice to the consolidated entity.
Environmental regulation and performance
The Company is not subject to any particular and significant environmental regulation under law. Nevertheless, the Company
commissions regular independent expert audits in respect of environmental compliance. Recommendations resulting from these
audits and reports have been, or are being, implemented. No material non-compliance with environmental regulation has been
identified relating to the 2007/08 financial year.
During the year the Company commissioned a measurement of its carbon footprint. Based upon current reporting threshold
requirements the Company does not presently have a CO2 emissions reporting obligation.
In the move of its head office building and the planned relocation of The Age Company in Melbourne, the Company aims to
achieve real improvements in its energy efficiency and CO2 emissions.
9
Directors’ Report
Events after balance date
RESTRUCTURE
Subsequent to year end, the Group announced a business improvement program and initiatives to improve the overall productivity
and performance of the business. The restructure is expected to deliver around $50 million in annualised cost savings with
approximately $25 million flowing in to the 2009 financial year. It is anticipated that there will be a one off cost in the 2009 financial
year of approximately $50 million. This has not been recorded in the current period.
TRADE ME EARN OUT
Subsequent to year end, NZ$45.2 million (A$35.2million) was paid to the former owners of Trade Me Limited as part of the
contractual second year earn out agreement entered into at the time of acquisition of Trade Me Limited on 5 March, 2006. A
provision was recognised as at 29 June 2008.
CARNIVAL FILM & TELEVISION LTD SALE
On 20 August 2008, the Company announced it had agreed to sell, subject to regulatory approvals, Southern Star Group Limited's
75% interest in UK based Carnival Film & Television Ltd together with certain library and distribution rights of Carnival productions
currently held by Southern Star, for a total sale price of approximately £22.3 million. This has not been recorded in the current
period.
Remuneration Report
A remuneration report is set out on pages 14 - 21 and forms part of this Directors’ Report.
Directors’ Interests
The relevant interest of each director in the equity of the Company, as at the date of this report is:
ORDINARY SHARES
Opening
Closing
Year End
Year End
Year End
Balance
Acquisition
Disposals
Balance
Acquisitions
Disposals
Balance
Post
Post
Post
RJ Walker
RC Corbett
D Evans
JB Fairfax
N Fairfax
JM King
DE Kirk
R Savage
P Young
M Burrows *
TOTAL
1,014,300
29,540
13,801
216,501,147
19,530
10,551
38,647
8,135
1,210,113
1,202,238
37,352
8,716
324,405
786,386
-
19,996
12,367
45,712
9,048
8,943
26,500
216,482,782
-
-
-
-
-
-
-
-
-
1,033,830
28,297
40,091
52,448
2,412,351
46,068
3,989
3,547
3,103
3,989
3,325
1,110,791
857,489
19,996
21,415
54,655
3,324
3,768
-
219,188,737
2,112,190
26,500
221,274,427
910,831
-
-
-
-
-
-
-
-
-
-
-
1,062,127
44,080
55,995
216,485,885
2,416,340
49,393
1,968,280
23,320
25,183
54,655
222,185,258
* The closing and post year end balance represents the number of shares held by Mr Burrows at the date he resigned from the
Board.
No director holds options over shares in the Company.
10
Directors’ Report
Directors’ meetings
The following table shows the number of Board and Committee meetings held during the financial year ended 29 June, 2008 and the
number attended by each director or Committee member.
MEETINGS ***
Personnel Policy and
No. Held
No. Attended
No. Held
No. Attended
No. Held
No. Attended
No. Held
No. Attended
Audit & Risk
Nominations
Remuneration
8
8
8
8
8
8
8
8
8
4
8
7
8
7
8
8
8
8
8
4
4
4
-
-
4
-
4
4
4
2
4
4
-
-
4
-
4
3
4
2
2
-
1
-
2
2
2
-
-
-
2
-
1
-
2
2
2
-
-
-
5
6
6
6
-
-
6
-
2
4
5
6
4
5
-
-
6
-
2
3
R J Walker**
R C Corbett
D Evans
JB Fairfax
NJ Fairfax
JM King
DE Kirk*
R Savage
P Young
M Burrows
* Mr Kirk attended Audit & Risk and Personnel Policy and Remuneration Committee meetings as an invitee of the Committees.
** Mr Walker, Chairman, is an ex officio member of all Board committees.
*** The number of meetings held refers to the number of meetings held while the director was a member of the Board or the relevant
Committee.
Options
There are no unissued shares under option as at the date of this report. No options over unissued shares were granted during or
since the end of the financial year. There were no movements in options during the financial year. No shares were issued during or
since the end of the financial year as a result of the exercise of an option.
Indemnification and insurance of officers and auditors
The directors of the Company and such other officers as the directors determine, are entitled to receive the benefit of an indemnity
contained in the Constitution of the Company to the extent allowed by the Corporations Act 2001, including against liabilities incurred
by them in their respective capacities in successfully defending proceedings against them.
During or since the end of the financial year, the Company has paid premiums under contracts insuring the directors and officers of
the Company and its controlled entities against liability incurred in that capacity to the extent allowed by the Corporations Act 2001.
The terms of the policies prohibit disclosure of the details of the liability and the premium paid.
Each director has entered into a Deed of Indemnity and Access which provides for indemnity against liability as a director to the
extent allowed by the law.
There are no indemnities given or insurance premiums paid during or since the end of the financial year for the auditors.
No officers are former auditors
No officer of the consolidated entity has been a partner of an audit firm or a director of an audit company that is the auditor of the
company and the consolidated entity for the financial year.
Non-audit services
Under its Charter of Audit Independence, the Company may employ the auditor to provide services additional to statutory audit
duties where the type of work performed and the fee for services do not impact on the actual or perceived independence of the
auditor.
Details of the amounts paid or payable to the auditor, Ernst & Young for non-audit services provided during the financial year are set
out below. Details of amounts paid or payable for audit services are set out in Note 34 to the financial statements.
11
Directors’ Report
The Board of Directors has received advice from the Audit & Risk Committee and is satisfied that the provision of the non-audit
services did not compromise the auditor independence requirements of the Corporations Act 2001 because none of the services
undermine the general principles relating to auditor independence as set out in Professional Statement F1, including reviewing or
auditing the auditor’s own work, acting in a management or a decision-making capacity for the Company, acting as advocate for the
Company or jointly sharing economic risk and rewards.
A copy of the auditor’s independence declaration under section 307C of the Corporations Act 2001 is on page 13 of this report.
During the financial year, Ernst & Young received or were due to receive the following amounts for the provision of non-audit
services:
Subsidiary company and other audits required by contract or regulatory or other bodies:
•
Australia
$296,000
• Overseas
$230,402
Other assurance and non-assurance services:
•
Australia
$148,707
• Overseas
$41,136
Rounding
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission,
relating to the “rounding off” of amounts in the directors’ report. Amounts contained in the directors’ report have been rounded off in
accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Signed on behalf of the directors in accordance with a resolution of the directors.
Ronald Walker
Chair
26 September, 2008
David Kirk
Chief Executive Officer and Director
12
Remuneration Report
1. Introduction
This report forms part of the Company’s 2008 Directors’ Report and describes the Fairfax remuneration arrangements for directors
and prescribed senior executives. It has been prepared to comply with the requirements of the Corporations Act 2001 and its
Regulations.
The report also contains details of the equity interests of Fairfax directors and certain senior executives.
2. Personnel Policy and Remuneration Committee (PPRC)
The current members of the PPRC are Roger Corbett (Chair), David Evans, John B Fairfax and Peter Young. All members except
John B Fairfax are independent directors. The PPRC met six times during the year.
The Committee’s primary responsibilities are to:
(a) review and approve Fairfax employee remuneration strategies and frameworks and to oversee the development and
implementation of employee remuneration programs, performance management processes and succession planning with the
goal of attracting, motivating and retaining high quality people;
(b) review and recommend to the Board for approval the goals and objectives relevant to the remuneration of the CEO, assist the
Board to evaluate the performance of the CEO in light of those goals and objectives, and to recommend to the Board the CEO’s
remuneration (including incentive payments) based on this evaluation;
(c) review the principles to apply to contractual terms of employment for direct reports to the CEO including base pay, incentives,
superannuation arrangements, retention arrangements, termination payments, performance goals and performance based
evaluation procedures and succession plans;
(d) make recommendations to the Board regarding directors’ fees and review and recommend the aggregate remuneration of non-
executive directors to be approved by shareholders;
(e) review the key parameters for salary movements for the Group as a whole.
The CEO, the IT & Group HR Director and the General Manager, Group HR, regularly attend PPRC meetings but not when their own
remuneration arrangements are being discussed.
The Committee commissions reports from independent remuneration experts on market relativities and other matters relating to
remuneration practices to assist it with setting appropriate remuneration levels and processes.
3. Remuneration of Non-Executive Directors
Under the Company’s Constitution, the aggregate remuneration of non-executive directors is set by resolution of shareholders. The
aggregate was last reviewed by shareholders at the 2007 Annual General Meeting and set at $2,000,000 per annum. Within this
limit, the Board annually reviews directors’ remuneration with advice from the PPRC. The Board also considers survey data on
directors’ fees paid by comparable companies, and expert advice commissioned from time to time.
Fees to non-executive directors reflect the demands and the responsibilities of each director including service on Board Committees.
By resolution of the Board, each non-executive director sacrifices at least 25% per annum of his or her director’s fees to the
Company’s Employee Share Plan. Under this Plan, shares are purchased on-market by an independent trustee on behalf of
directors, as well as for employees who have salary sacrificed to participate in the Plan. Share acquisition dates are pre-set by the
trustee.
14
Remuneration Report
Directors have resolved that there will be no increase in Directors fees for 2008-09 year. At the date of this report the Board has set
fees as follows:
Chair *
Other Non-Executive Director
Chair of Audit & Risk Committee
Members of Audit & Risk Committee
Chair of Personnel Policy & Remuneration Committee
Members of Personnel Policy & Remuneration Committee
Chair of the Nominations Committee
Members of Nominations Committee
* Ronald Walker, as Chair, does not receive committee fees.
The fees above do not include statutory superannuation payments.
3.1 RETIREMENT BENEFITS FOR NON-EXECUTIVE DIRECTORS
$
336,000
120,000
40,000
30,000
30,000
20,000
30,000
20,000
The Company makes superannuation contributions on behalf of non-executive directors in accordance with statutory requirements.
In 2004, the Company discontinued its retirement benefits scheme for non-executive directors and froze existing entitlements at that
time. Other than superannuation contributions as outlined above, non-executive directors who did not have five years service on the
Board as at 30 June 2004 are not eligible for retirement benefits. Non-executive directors who had served on the Board for at least
five years as at 30 June 2004 and who therefore had already qualified for benefits under the previous scheme are, on retirement,
entitled to a retirement benefit equivalent to the lesser of:
(a) three times the relevant director’s annual directors fee as at 30 June 2004: or
(b) the maximum allowable without shareholder approval under the Corporations Act and the ASX Listing Rules.
4. Remuneration of the Chief Executive Officer
The remuneration details for the CEO, are set out in section 5.6 of this report.
The key terms of Mr Kirk’s Executive Services Agreement with the Company include a base salary, currently $1.7 million per year,
and performance bonus (“Performance Bonus”) of up to 100% of base salary depending on achievement of defined performance
criteria set at the beginning of each financial year. The performance targets are approved by the Personnel Policy and Remuneration
Committee (“PPRC”) of the Board each year. Sixty percent of the Performance Bonus is determined by achievement of financial
targets for the Group. The remaining forty percent is based on other Key Performance Indicators set by the PPRC each year
depending on the operational and strategic goals of the Group. For the financial years 2006 and 2007, one third of the Performance
Bonus earned by the CEO was paid in Company shares purchased on market by the trustee of the Employee Share Plan. Each of
the annual allocations of these shares have a three year vesting date.
Under his Executive Service Agreement entered into when he joined the Company, Mr Kirk was entitled to a one-off special payment
of $1.2 million in lieu of benefits forgone from previous employment. Of this amount, $400,000 was paid on commencement of
employment, a further instalment of $400,000 was paid on 1 July 2006 and the final $400,000 was paid on 1 July 2007. Mr Kirk has
salary sacrificed each of the instalments into the Fairfax Employee Share Plan for the purchase of Fairfax shares.
In 2007 the Company introduced a new long-term equity based incentive scheme for senior executives, including the CEO (“Long
Term EBIS”). This scheme is effective from the 2008 financial year. This replaced the previous equity-based incentive scheme.
Details of the Long Term EBIS are set out in section 5.2(C) of this report. Under the Long Term EBIS Mr Kirk receives the equivalent
of 150% of his total fixed remuneration as an allocation of Company shares each year. These shares vest on the terms set out in
section 5.2(C) below.
5. Remuneration of Senior Executives
The objectives of the Company’s executive remuneration framework are to align executive remuneration with the achievement of
strategic objectives, the creation of value for shareholders, and to be in line with market.
15
Remuneration Report
The PPRC aims to ensure that executive remuneration addresses the following criteria:
• Fairly remunerate capable and performing executives.
• Attract, retain and motivate talented, qualified and experienced people in light of competitive employment markets.
• Align remuneration with achievement of business strategy.
• Align interests of executives and shareholders.
• Deliver competitive cost outcomes.
• Comply with regulatory requirements.
• Be transparent and fair.
The framework provides a mix of fixed salary and performance-based incentives. Payment of performance-based incentives is
determined by the financial performance of the Company, the financial performance of the business unit relevant to the executive
and the performance of the individual executive against objectives set at the beginning of the year.
The PPRC discusses and approves the remuneration packages and any bonus payments to the direct reports of the CEO annually
in August. On the recommendation of the CEO, it also approves key performance indicators for these executives for the following
year.
The executive remuneration framework has the following components:
• A fixed remuneration package which includes base pay, superannuation and other benefits.
• Performance incentives.
The combination comprises the executive’s total remuneration.
The fixed component of the remuneration package (represents the total cost to the Company and) includes all employee benefits
and related Fringe Benefits Tax (FBT), for example, motor vehicle, parking and superannuation.
5.1 PERFORMANCE BASED SHORT TERM INCENTIVES (“BONUS”) FOR SENIOR EXECUTIVES
Annual Bonus payments for senior executives depend on achievement of annual financial performance criteria for the Group as well
as specific strategic and operational criteria. The Bonus criteria for the CEO are set each year by the Board.
Each senior executive has a target bonus opportunity depending on the accountabilities of the role and impact on Company or
business unit performance. For most senior executives reporting directly to the CEO the on-target Bonus opportunity for 2008 was
40% of the executive’s fixed remuneration package and the maximum Bonus opportunity was 80% of the fixed remuneration package.
Generally, the Bonus opportunity consists of three components: 35% of the Bonus opportunity is based on EBITDA and earnings per
share, 35% is based on business unit financial performance and 30% is based on other key performance indicators (KPIs). For
corporate executives whose duties are not confined to one business unit, generally 60% of the Bonus opportunity is based on
corporate financial performance.
For the period ended 29 June 2008, the KPIs linked to the incentive plans for senior executives were based on Group performance,
individual business unit performance and personal objectives (KPIs). The KPIs required performance in increasing revenue, reducing
operating costs and achieving specific targets relating to other key strategic non-financial measures linked to drivers of the Group’s
performance, including circulation, readership and market position. Specific measures for individuals include EPS, EBITDA, revenue,
circulation, readership targets and occupational health and safety targets.
The Board sets Group profit targets annually as part of the budget and strategic planning process. Using a profit target ensures
reward is linked to achievement of the business plan and value creation for shareholders. Incentives are leveraged for performance
above the threshold to provide incentive for executive over performance.
5.2 EQUITY-BASED INCENTIVE SCHEMES (EBIS)
Participants are senior executives reporting to the CEO whose roles and skills are critical to the strategy of the Group.
16
Remuneration Report
(A) PRE 2006 EBIS
Under the Pre 2006 EBIS in place prior to the 2006 financial year, equity-based incentives (EBIs) were payable according to the
total shareholder return (TSR) of the Company over a three year period against a comparator group of companies. The
maximum reward was 25% of fixed pay plus bonus and was payable in Company shares.
Each year a target EBI amount was determined for each participating executive (the “Allocation”). At the end of three years from
the Allocation date, the Allocation becomes available to the executive (“Vests”) if performance hurdles have been met. If the
performance hurdles are not met at the end of the third year the executive loses the Allocation.
The comparator group is the ASX 300 Industrial Accumulation Index (“Comparator”). For each Allocation to vest, the Company’s
TSR over the relevant three year period must outperform the Comparator (the “Hurdle”). Allocations in the EBIS were made in
each July 2001, 2002, 2003, 2004 and 2005. Over all of the performance periods, the Hurdle was not met and as a result, at the
end of the 2008 financial year all allocations have been cancelled.
In 2006, the Pre 2006 EBIS was replaced by the 2006/07 EBIS described below.
(B) 2006-2007 EBIS
In 2006, after a review of the Pre 2006 EBIS by the PPRC and consultation with an external remuneration expert, the Company
replaced the Pre 2006 EBIS with the 2006/07 EBIS to more closely align shareholders’ interests with the Company’s
remuneration principles.
Under the 2006-2007 EBIS, which applied for bonuses earned in the 2006 and 2007 financial years, one third of the annual
bonus earned on the achievement of KPIs, as detailed in Section 5.1 above, was deferred. The deferred amount was remitted to
the trustee of the Employee Share Plan who purchases shares on market and allocates the shares inside the Plan to the relevant
executive. Each executive’s allocated shares vest three years after the allocation date subject to ongoing employment
requirements.
C) 2008 LONG TERM EBIS
In August 2007, the Board approved a new long-term EBIS (Long Term EBIS) for the CEO, his direct reports and a wider group
of senior executives whose performance is critical to the overall performance of the Group. The Long Term EBIS commenced
from the 2008 financial year. It aims to reward executives for creating growth in shareholder value. Participants in the Long Term
EBIS receive a percentage of their total fixed remuneration as an allocation of Company shares (Allocation), as part of the
performance review process. The number of Company shares to which a participant is entitled will depend on the participant’s
role and responsibilities.
Company shares for the Allocations are be purchased on market by the Trustee of the Employee Share plan and held by the
Trustee in trust until the Allocation vests or is forfeited.
For an Allocation to vest, there are two performance hurdles, both linked to the Company’s return to shareholders. The hurdles
are measured at the end of the three year vesting period. In addition, if an Allocation does not vest at the end of the three year
period, a re-test of the performance hurdles will occur at the end of the fourth year, and if satisfied, the Allocation will vest.
Fifty percent of an Allocation will vest on achievement by the Company of the total shareholder return (TSR) target. TSR will be
measured against the S&P/ASX 300 Consumer Discretionary Index and shares will vest against the capital weighted percentile
thresholds set out in the table below:
TSR performance
% of allocation that vests
Under 50th percentile
50th percentile
50th to 75th percentile
Above 75th percentile
Nil
50% of allocation
Straight line pro rata
100%
The other fifty percent of the Allocation will vest on achievement of the earnings per share (EPS) target. EPS will be measured by
the compound annual growth rate (CAGR) of the Company’s EPS and vesting will be according to the table below:
17
Remuneration Report
EPS performance
% of allocation that vests
Less than 7% CAGR
7% CAGR
Nil
25%
7% to 10% CAGR
Straight line pro rata
10% CAGR or above
100%
OTHER TERMS OF THE LONG-TERM EBIS
On termination of a participant’s employment, vesting rights will depend on the circumstances of the termination. If a participant
resigns, unvested allocations will be forfeited however the Board will have a discretion to allow vesting. On termination for fraud
or misconduct, allocations will be forfeited. If a participant is terminated without cause, for example made redundant or dies or is
permanently disabled, then vesting will be at the Board’s discretion and subject to the achievement of the performance hurdles.
In the circumstances of an offer to acquire the Company, vesting will be at the Board’s discretion.
The financial performance of the Company in key shareholder value measures over the past five years is shown below:
Underlying operating revenue
Net profit before significant items
Earnings per share before significant items
Dividends per share
*Total Shareholder Returns (TSR)
AIFRS
AIFRS
AIFRS
AGAAP
AGAAP
Restated
$m
$m
Cents
Cents
%
2008
2,909
395.9
25.1
20.0
(34.7)
2007
2006
2005
2004
2,117.6
1,907.8
1,873.4
1,767.7
267.8
23.2
20.0
34.2
234.3
24.5
19.5
(5.70)
237.6
25.8
23.5
23.20
207.6
21.4
16.5
36.64
*
Total shareholder returns comprises share price appreciation and dividends, gross of franking credits, reinvested in the shares (source:
Bloomberg)
5.3 RETENTION ARRANGEMENTS
In 2005, retention arrangements were put in place for two key executives to ensure their retention and successful contribution during
the transition to the new CEO. The two key executives and the amounts of the retention are:
G Hambly
$300,000
S Narayan
$300,000
To facilitate this arrangement, ordinary Fairfax Media shares were purchased on market by the trustee of the Employee Share Plan
and held in the Employee Share Plan until they vest. The shares vest over a three year period. Vesting is contingent on the executive
continuing to be employed by the Company on the date of vesting and also subject to the achievement of the executive’s personal
KPIs related to each individual’s area of responsibility. The KPIs are chosen as the most appropriate to drive the successful delivery
of business outcomes. The first tranche of 25% of the shares vested on 1 October 2006, the second tranche of 25% vested on 1
October 2007 and the final tranche of 50% is due to vest on 1 October 2008.
5.4 RETIREMENT BENEFITS FOR EXECUTIVES
Except for a small number of long serving executives who are members of a defined-benefit superannuation plan, retirement benefits
are delivered through defined contribution superannuation plans. The defined-benefit fund (which is closed to new entrants) provides
defined lump sum benefits based on years of service, retirement age and the executive’s remuneration at the time of retirement.
5.5 EXECUTIVE SERVICES AGREEMENTS
The terms of employment of the CEO are set out in section 4 and in the tables below.
The remuneration and other terms of employment for the highest paid executives (disclosed pursuant to section 300A of the
Corporations Act) are set out in written agreements. Except for Ms Withers (who has a fixed term contract), these service agreements
are unlimited in term but may be terminated without cause by written notice by either party or by the Company making payment in lieu
of notice. They may also be terminated with cause as set out below.
18
Remuneration Report
Each of these agreements sets out the arrangements for total fixed remuneration, performance-related cash bonus opportunities,
superannuation, termination rights and obligations and eligibility to participate in the equity-based incentive scheme.
As described elsewhere in this report, executive salaries are reviewed annually. The executive service agreements do not require
the Company to increase base salary, pay incentive bonuses or continue the participant’s participation in the equity-based incentive
scheme. The key non-financial terms of the contracts for key executives are set out below. Base pay, bonus and equity payments
are set out in tables below.
TERMINATION OF EMPLOYMENT WITHOUT NOTICE AND WITHOUT PAYMENT IN LIEU OF NOTICE
The Company may terminate the employment of the executive without notice and without payment in lieu of notice in some
circumstances. Generally this includes if the executive:
(a) commits an act of serious misconduct;
(b) commits a material breach of the executive service agreement;
(c) is charged with any criminal offence which, in the reasonable opinion of the Company, may embarrass or bring the Fairfax Group
into disrepute; or
(d) unreasonably refuses to carry out his or her duties including complying with reasonable, material and lawful directions from the
Company.
TERMINATION OF EMPLOYMENT WITH NOTICE OR WITH PAYMENT IN LIEU OF NOTICE
The Company may terminate the employment of the executive at any time by giving the executive notice of termination or payment in
lieu of such notice. The amount of notice required from the Company in these circumstances is set out in the table below. If the
Company elects to make payment in lieu of all or part of the required notice, payment is calculated on the basis of fixed remuneration
excluding bonuses and non-cash incentives, except in the case of David Kirk, who is entitled to $2,000,000 in lieu of the full 12
months notice or a pro rata amount for part thereof.
Name of
Executive
David Kirk
Company
Employee
Termination
Termination
Notice Period
Notice Period
Post-Employment Restraint
12 months
6 months
- 12 month no solicitation of employees or clients
- 12 months no work for a competitor of the Fairfax Group
Brian McCarthy
12 months
6 months
- 12 month no solicitation of employees or clients
Gail Hambly
18 months
3 months
- 12 month no solicitation of employees or clients
- 6 months no work for a competitor of the Fairfax Group
- 6 months no work for a competitor of the Fairfax Group
Jack Matthews
12 months
6 months
- 12 month no solicitation of employees or clients
- 6 months no work for a competitor of the Fairfax Group
Sankar Narayan
12 months
4 months
- 12 month no solicitation of employees or clients
- 6 months no work for a competitor of the Fairfax Group
Joan Withers
6 months
6 months
- 12 month no solicitation of employees or clients
- 6 months no work for a competitor of the Fairfax Group
19
Remuneration Report
5.6 REMUNERATION OF DIRECTORS
SHORT-TERM
Base Salary
POST EMPLOYMENT
Performance
Directors’
& Other
Cash
Super-
Retirement
Long Service
Total *
Related
Fees
Benefits
Bonus
annuation
Benefits
Leave
Expense
RJ Walker
RC Corbett
D Evans
JB Fairfax
NJ Fairfax
DE Kirk
JM King
R Savage
P Young
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
336,000
328,000
151,667
151,667
147,333
130,000
140,000
20,290
173,667
24,638
-
-
150,000
140,000
152,977
-
154,000
140,000
MD Burrows
2008
128,333
2007
214,167
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,650,038
864,960
30,240
29,520
13,650
13,650
13,260
11,700
12,600
1,826
15,630
2,217
50,000
1,330,192
1,166,667
143,380
13,500
12,600
13,768
-
13,860
12,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,550
228,900
19,275
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
366,240
357,520
165,317
165,317
160,593
141,700
152,600
22,116
189,297
26,855
13,918
2,578,916
-
-
-
-
-
-
-
-
-
2,640,239
163,500
152,600
166,745
-
167,860
152,600
368,783
233,442
Total
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
50%
47%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Directors
2008
1,533,97
1,650,038
864,960
188,058
228,900
13,918
4,479,851
2007
1,148,76
1,330,192
1,166,667
246,768
-
-
3,892,389
* In addition to the remuneration in table 5.6 above, David Kirk’s total cost to the Company includes the amortised cost of the fair value of rights to
shares issued of $834,967 (2007: $116,666) representing a total of $3,413,883 (2007: $2,756,905). Non-executive directors are not participants in
any performance related share arrangements (refer section 3 of the remuneration report).
5.7 KEY MANAGEMENT PERSONNEL
The following are the key management personnel for the financial year in addition to the directors listed above.
Brian McCarthy
Gail Hambly
Jack Matthews
Sankar Narayan
Joan Withers
Title
Deputy CEO and CEO Australia
Group General Counsel and Company Secretary
CEO Fairfax Digital
Chief Financial Officer
CEO Fairfax New Zealand
There were no changes to the key management personnel between the end of the financial year and the date of this report.
20
Remuneration Report
REMUNERATION OF THE COMPANY & GROUP EXECUTIVES WHO RECEIVED THE HIGHEST REMUNERATION
OR ARE KEY MANAGEMENT PERSONNEL
POST
SHORT-TERM
EMPLOYMENT
Base Salary
Performance
& Other
Cash
Super-
Termination
Long Service
Total excluding
Related
Company
Group
Benefits
Bonus
annuation
Benefits
Leave Expense
shares
B McCarthy
G Hambly
J Matthews
S Narayan
J Withers
TOTAL
490,993
391,600
132,756
1,224,776
2008 (cid:57) (cid:57)
2007 (cid:57) (cid:57)
2008 (cid:57) (cid:57)
2007 (cid:57) (cid:57)
2008 (cid:57) (cid:57)
2007 (cid:57) (cid:57)
459,705
2008 (cid:57) (cid:57) 734,642
2007 (cid:57) (cid:57) 571,804
(cid:57)
564,759
2008
(cid:57)
2008
3,562,533
547,363
516,034
2007
780,000
100,000
-
15,258
150,000
59,045
299,638
74,474
155,000
46,114
116,667
40,295
288,000
65,396
442,071
78,387
174,382
91,616
-
-
1,547,382
270,554
2007
2,071,899
949,992
208,414
-
-
-
-
-
-
-
-
-
-
-
-
46,570
2,151,346
2,600
150,614
36,017
736,055
14,019
779,731
3,950
752,457
-
616,667
13,426
1,101,464
6,201
1,098,463
-
-
739,141
607,650
99,963
5,480,434
22,820 3,253,125
Total
44%
n/a
38%
48%
31%
19%
43%
48%
24%
15%
B McCarthy joined the Company and Group on 9 May 2007 following the acquisition of the Rural Press group.
The key management personnel of the Company and Group also include the five highest remunerated executives of the Company and Group.
Amortised cost to the Company of the fair value of rights to shares issued to key management personel:
B McCarthy $279,573 (2007: nil), G Hambly $180,863 (2007: $134,937), J Matthews $106,687 (2007: 3,334) and S Narayan $317,053 (2007
$151,790).
Total cost to Company after inclusion of the amortised cost of the fair value of rights to shares
B McCarthy $2,430,919 (2007: $ 148,014), G Hambly $916,918 (2007: $914,668), J Matthews $859,114 (2007: 620,001), S Narayan
$1,418,517 (2007 $1,250,253) and J Withers $739,141 (2007: $607,650).
5.8 OPTIONS
During the year ended 29 June 2008:
• no options were granted to directors or key management personnel (2007:nil);
• no options held by directors or key management personnel vested (2007:nil);
• no options held by directors or key management personnel lapsed (2007:nil); and
• no options held by directors or key management personnel were exercised (2007:nil).
5.9 LOANS TO DIRECTORS AND OTHER KEY MANAGEMENT PERSONNEL
During the year ended 29 June 2008, there were no loans to directors or to key management personnel (2007: nil).
5.10 HEDGING RISK ON SCECURITIES FORMING PART OF REMUNERATION
The rules of the Employee Share Plan Trusts prohibit employees from creating any encumbrance on unvested share rights. The
Board does not presently have a formal policy in relation to employees limiting their exposure to risk in relation to securities which
form part of remuneration.
21
Corporate Governance
The Company has considered the ASX Corporate Governance Council’s “Principles of
Good Corporate Governance and Best Practice Recommendations” and recorded its
compliance with the recommendations in the following table.
Compliance
Page Reference
Principle 1: Lay solid foundations for management and oversight
1.1 Formalise and disclose the functions reserved to the board and those delegated to
management
(cid:57)
24
Principle 2: Structure the board to add value
2.1 A majority of the board should be independent directors
(cid:57)
(cid:57)
2.2 The Chair should be an independent director
2.3 The roles of Chair and chief executive officer should not be exercised by the same individual (cid:57)
(cid:57)
2.4 The board should establish a nomination committee
(cid:57)
2.5 Provide the information indicated in Guide to reporting on Principle 2
25-27
Principle 3: Promote ethical and responsible decision making
3.1 Establish a code of conduct to guide the directors, the chief executive officer (or equivalent),
the chief financial officer (or equivalent) and any other key executives as to:
3.1.1 The practices necessary to maintain confidence in the Company’s integrity; and
3.1.2 The responsibility and accountability of individuals for reporting and investigating
reports of unethical practices
3.2 Disclose the policy for trading in company securities by directors, officers and employees
3.3 Provide the information indicated in Guide to reporting on Principle 3
Principle 4: Safeguard integrity in financial reporting
4.1 Require the chief executive officer (or equivalent) and the chief financial officer (or equivalent)
(cid:57)
(cid:57)
(cid:57)
26-29
to state in writing to the board that the Company’s financial reports present a true and fair view
in all material respects, of the Company’s financial condition and operational results and are in
accordance with relevant accounting standards.
4.2 The Board should establish an audit committee
4.3 Structure the audit committee so that it consists of:
• only non-executive directors
• a majority of independent directors
• an independent chair, who is not chair of the board
• at least three members
4.4 The audit committee should have a formal charter
4.5 Provide the information indicated in Guide to reporting on Principle 4
Principle 5: Make timely and balanced disclosure
5.1 Establish written policies and procedures designed to ensure compliance with ASX Listing
Rule disclosure requirements and to ensure accountability at a senior management level
for that compliance
5.2 Provide the information indicated in Guide to reporting on Principle 5
22
(cid:57)
(cid:57)
(cid:57)
(cid:57)
1
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
26-27
27-29
Corporate Governance
Compliance
Page Reference
Principle 6: Respect the rights of shareholders
6.1 Design and disclose a communications strategy to promote effective communication
with shareholders and encourage effective participation at general meetings
6.2 Request the external auditor to attend the annual general meeting and be available to
answer shareholder questions about the conduct of the audit and the preparation and
content of the auditor’s report
Principle 7: Recognise and manage risk
7.1 The board or appropriate board committee should establish policies on risk oversight
and management
7.2 The chief executive officer (or equivalent) and the chief financial officer (or equivalent)
should state to the board in writing that:
7.2.1 the statement given in accordance with best practice recommendation 4.1
(the integrity of financial statements) is founded on a sound system of risk
management and internal compliance and control which implements the policies
adopted by the board
7.2.2 the Company’s risk management and internal compliance and control system is
operating efficiently and effectively in all material aspects
7.3 Provide the information indicated in Guide to reporting on Principle 7
Principle 8: Encourage enhanced performance
8.1 Disclose the process for performance evaluation of the board, its committees and
individual directors, and key executives.
Principle 9: Remunerate fairly and responsibly
9.1 Provide disclosure in relation to the Company’s remuneration policies to enable investors
to understand (i) the costs and benefits of those policies and (ii) the link between
remuneration paid to directors and key executives and corporate performance.
9.2 The Board should establish a remuneration committee
9.3 Clearly distinguish the structure of non-executive directors’ remuneration from that
of executives
9.4 Ensure that payment of equity-based executives’ remuneration is made in accordance
with thresholds set in plans approved by shareholders
9.5 Provide the information indicated in Guide to reporting on Principle 9
Principle 10: Recognise the legitimate interests of stakeholders
10.1 Establish and disclose a code of conduct to guide compliance with legal and other
obligations to legitimate stakeholders.
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
2
(cid:57)
(cid:57)
3
(cid:57)
(cid:57)
4
(cid:57)
(cid:57)
28
26-28
14-19, 29
14-21
26
23
Corporate Governance
The above disclosure should be read in conjunction with the following:
1 see Audit and Risk Committee section below;
2.
the Company has complied with the Guide to Compliance with the ASX Principle 7: Recognise and Manage Risk prepared by the
Group of 100 and endorsed by the ASX Corporate Governance Council;
3. remuneration policy and procedures are set out in the Remuneration Report on pages 14 - 21; and
4. equity-based remuneration is not paid to directors other than the CEO. The terms of the CEO’s equity-based incentive were
approved by shareholders at the 2005 Annual General Meeting. In 2008, the Board introduced a new long-term equity based
incentive scheme for the CEO and key executives for the 2008 financial year and future years. Details of the scheme, including
hurdles, are set out on pages 16 - 18 of this report. The scheme did not require shareholder approval as the shares for the
scheme are purchased on market.
Set out on the following pages are the key corporate governance principles of the Company.
The Board of Directors
The Board of Directors is responsible for the long-term growth and profitability of the Group.
The Board has adopted a Board Charter which sets out the responsibilities of the Board and its structure and governance
requirements. Under the Board Charter, the powers and responsibilities of the Board are to:
(a) set the strategic direction of the Fairfax Group;
(b) provide overall policy guidance and ensure that policies and procedures for corporate governance and risk management are in
place to ensure shareholder funds are prudently managed and that the Group complies with its regulatory obligations and ethical
standards;
(c) set and monitor performance against the financial objectives and performance targets for the Group;
(d) determine the terms of employment and review the performance of the Chief Executive Officer;
(e) set and monitor the Group’s programs for succession planning and key executive development with the aim to ensure these
programs are effective;
(f) approve acquisitions and disposals of assets, businesses and expenditure above set monetary limits; and
(g) approve any issues of securities and entry into material finance arrangements, including loans and debt issues.
Membership of the Board and its committees at the date of this report is set out in the table below.
24
Corporate Governance
THE BOARD OF DIRECTORS
Director
Membership Type
Audit & Risk
Nominations
Remuneration
COMMITTEE MEMBERSHIP
Personnel Policy &
RJ Walker
DE Kirk
Independent Chair
CEO
RC Corbett
Independent
D Evans
JB Fairfax
N Fairfax
JM King
R Savage
Independent
Non-Independent
Non-Independent
Independent
Independent
P Young
Independent
MD Burrows*
Independent Deputy Chair
* Mr Burrows resigned from the Company on 31 January, 2008
-
-
Member
-
-
Chair
-
Member
Member
Chair
Member
-
-
Member
-
Member
Chair
-
-
Member
-
-
Chair
Member
Member
-
-
-
Member
Member
The qualifications and other details of each member of the Board are set out on pages 6 - 7 of this report.
Except for the Chief Executive Officer, Mr John B Fairfax and Mr Nicholas Fairfax, all directors (including the Chair) are considered by
the Board to be independent, non-executive directors.
The Constitution requires that the Board has a minimum of 3 directors and maximum of 12 or such lower number as the Board may
determine from time to time. The Board has resolved that presently the maximum number of directors is 9.
The Constitution authorises the Board to appoint directors to vacancies and to elect the Chair. One third of directors (excluding the Chief
Executive Officer and a director appointed to fill a casual vacancy and rounded down to the nearest whole number) must retire at every
annual general meeting. Other than the Chief Executive Officer, no director may remain in office for more than three years or the third
annual general meeting following appointment without resigning and being re-elected.
Any director appointed by the Board must stand for election at the next general meeting of shareholders.
The Nominations Committee reviews potential Board candidates when necessary. The Committee may seek expert external advice on
suitable candidates.
The Board has adopted a formal Charter for the Nominations Committee. Under the Charter, the Committee uses the following
principles to recommend candidates and provide advice and other recommendations to the Board:
•
•
A majority of directors and the Chair should be independent.
The Board should represent a broad range of expertise consistent with the Company’s strategic focus.
Any director may seek independent professional advice at the Company’s expense. Prior approval by the Chair is required, but
approval must not be unreasonably withheld.
INDEPENDENT DIRECTORS
Under the Board Charter, the majority of the Board and the Chair must be independent.
Directors have determined that all directors except the Chief Executive Officer, Mr John B Fairfax and Mr Nicholas Fairfax, are
independent. In assessing whether a director is independent, the Board has considered directors’ obligations to shareholders, the
requirements of applicable laws and regulations and the ASX Principles of Good Corporate Governance and Best Practice
Recommendations. The guidelines in the Recommendations examine in summary the following criteria:
• whether the director is a substantial shareholder
•
•
independence from management
freedom to exercise independent judgement
25
Corporate Governance
• whether the director has any present or prior executive role with the Company or the Company’s auditor or other professional
advisor
• whether the director has any significant supplier, customer or contractual relationship with the Company other than as a non-
executive director
Mr John B Fairfax has a relevant share interest of 14.3% in the Company and Mr Nicholas Fairfax has a family relationship with Mr
John B Fairfax. On this basis, the Board has concluded that, given the shareholding criteria in the Recommendations, neither is an
independent director.
CODES OF CONDUCT
All directors, managers and employees are required to act honestly and with integrity.
The Company has developed and communicated to all employees, directors and consultants the Fairfax Codes of Conduct. The Codes
assist in upholding ethical standards and conducting business in accordance with applicable laws. The Codes also set out the
responsibility of individuals for reporting Code breaches.
The Fairfax Codes of Conduct aim to:
•
•
•
•
provide clear guidance on the Company’s values and expectations while acting as a representative of Fairfax;
promote minimum ethical behavioural standards and expectations across the Fairfax Group, all business units and locations;
offer guidance for shareholders, customers, readers, suppliers and the wider community on our values, standards and
expectations, and what it means to work for Fairfax;
raise employee awareness of acceptable and unacceptable behaviour and provide a means to assist in avoiding any real or
perceived misconduct.
Supporting the Codes of Conduct is the Company’s range of documented guidelines and policies. These policies are posted on the
Company intranet, are communicated to employees at the time of employment and are reinforced by training programs.
AUDIT AND RISK COMMITTEE
The Board has had an Audit and Risk Committee since listing on the ASX in 1992. The Committee operates in accordance with a
written charter which sets out its role and functions. In summary, the Committee’s role is to advise and assist the Board on the
establishment and maintenance of a framework of risk management, internal controls and ethical standards for the management of
the economic entity and to monitor the quality and reliability of financial information for the Group. To carry out this role, the
Committee:
•
•
•
appoints the external auditor, reviews its performance, independence and effectiveness, approves the auditor’s fee arrangements
and enforces the Company’s Charter of Audit Independence;
ensures that appropriate systems of control are in place to effectively safeguard the value of assets;
ensures accounting records are maintained in accordance with statutory and accounting requirements;
• monitors systems designed to ensure financial statements and other information provided to shareholders is timely, reliable and
•
•
•
•
accurate;
formulates policy and oversees key finance and treasury functions;
seeks to ensure there is an appropriate framework for compliance with all legal and regulatory requirements and monitors
performance against these requirements;
reviews the audit process with the external auditor, including in the absence of management to ensure full and frank discussion of
audit issues;
recommends to the Board the appointment and tenure of the Internal Audit Manager, reviews the Internal Audit Manager’s
performance, approves the internal audit plan, receives summaries of significant reports prepared by internal audit and meets with
the Internal Audit Manager (including in the absence of management if considered necessary).
Executives may attend by invitation. The Chair of the Committee is required to have relevant financial expertise and may not be the
Chair of the Board.
26
Corporate Governance
Mr Nicholas Fairfax is a non-independent director. Notwithstanding his non-independent status, the Board considers that it is
appropriate for him to Chair the Audit & Risk Committee on the basis of his financial and accounting qualifications, his recognition of his
obligation to properly consider the best interests of all shareholders in bringing independent judgment to bear in decision making. The
Board also takes into account that all other members of the Audit & Risk Committee are independent directors.
The Chair of the Committee may, at the Company’s expense, obtain such external expert advice, assistance and information from
officers of the Group as is reasonably required from time to time.
CHARTER OF AUDIT INDEPENDENCE
The Board has also adopted a Charter of Audit Independence, a copy of which is available on the Company’s website.
The purpose of this Charter is to provide a framework for the Board and management to ensure that the statutory auditor is both
independent and seen to be independent. The purpose of an independent statutory audit is to provide shareholders with reliable and clear
financial reports on which to base investment decisions. The Charter sets out key commitments by the Board and procedures to be
followed by the Audit and Risk Committee and management aimed to set a proper framework of audit independence.
To promote audit quality and effective audit service by suitably qualified professionals, the Board ensures that the auditor is fairly
rewarded for the agreed scope of the statutory audit and audit-related services.
Restrictions are placed on non audit work performed by the auditor. Non audit fees above a fixed minimum level may not be incurred
without the approval of the Chair of the Audit and Risk Committee.
The Company requires rotation of the senior audit partner for the Company at least every five years. The Company’s audit partner
was changed during the previous financial year.
The Audit and Risk Committee requires the auditor to confirm annually that it has complied with all professional regulations and
guidelines issued by the Australian accounting profession relating to auditor independence and that it has no financial or material
business interests in the Company outside of the supply of professional services.
INTEGRITY IN FINANCIAL REPORTING
As well as the Audit and Risk Committee Charter and the Charter of Audit Independence, the Company has implemented a structure
to verify and safeguard the integrity of its financial reporting.
The Chief Executive Officer and the Chief Financial Officer provide a written statement to the Board that, to the best of their
knowledge and belief, the Company’s published financial reports present a true and fair view, in all material respects, of the
Company’s financial condition and that the operational results are in accordance with relevant accounting standards.
This statement to the Board is underpinned by the requirement for appropriate senior executives to provide a signed letter of
representation addressed to the Chief Executive Officer and Chief Financial Officer verifying material issues relating to the executive’s
areas of responsibility and disclosing factors that may have a material effect on the financial results or operations of the Group.
DISCLOSURE POLICY
The Company has a Market Disclosure Policy which sets out requirements aimed to ensure full and timely disclosure to the market
of material issues relating to the Group to ensure that all stakeholders have an equal opportunity to access information.
The policy reflects the ASX Listing Rules and Corporations Act continuous disclosure requirements.
The Market Disclosure Policy requires that the Company notify the market, via the ASX, of any price sensitive information (subject to
exceptions to disclosure under the Listing Rules). Information is price sensitive if a reasonable person would expect the information to
have a material effect on the price or value of the Company’s securities.
The Chief Executive Officer, Chief Financial Officer, Director of Corporate Affairs, General Manager Investor Relations and Group
General Counsel and Company Secretary are designated as Disclosure Officers who are responsible for reviewing potential
disclosures and deciding what information should be disclosed.
Only the Disclosure Officers may authorise communication on behalf of the Company to the ASX, media, analysts and investors. This
safeguards the premature exposure of confidential information and aims to ensure proper disclosure is made in accordance with the law.
The Disclosure Officers are also authorised to determine whether a trading halt will be requested from the ASX to prevent trading in an
uninformed market.
27
Corporate Governance
The onus is on all staff to inform a Disclosure Officer of any price sensitive information as soon as becoming aware of it. The
Executive Leadership Team is responsible for ensuring staff understand and comply with the policy.
As well as its statutory reporting obligations, the Company actively encourages timely and ongoing shareholder communications.
Company announcements, annual reports, notices of meetings, analyst and investor briefings, financial results and other information
useful to investors such as press releases are placed on the Company’s website as soon as practical after release to the ASX.
The Chair’s and the Chief Executive Officer’s addresses and the results of resolutions of meetings of shareholders, are also posted
on the Corporate Governance section of the Fairfax website.
The external auditor attends the annual general meeting and is available to answer shareholder questions about the audit and the audit report.
RISK MANAGEMENT
The Board has set a risk management program, including internal control and compliance.
This program draws upon the guidelines endorsed by the ASX Corporate Governance Council and seeks to provide a consistent
approach to identifying, assessing, and reporting risks, whether they be related to company performance, reputation, safety,
environment, internal control, compliance or other risk areas.
Key aspects of the Company’s risk management system are summarised as follows:
• Risk is assessed at least annually and revised periodically for each division through the business planning, budgeting, forecasting,
reporting and performance management processes.
•
•
•
The Board, through the Audit and Risk Committee, receives regular reports from management (and independent advisers where
appropriate) on key risk areas such as treasury, health safety and environment, regulatory compliance, taxation, finance and internal
audit.
The process for assessing and reporting on risks, internal controls and internal compliance is being standardised, enhanced and
formalised across the Group. This is an ongoing process.
Formal risk assessments are required as part of business case approvals for one-off projects or initiatives of a significant nature.
Project teams are responsible for managing the risks identified.
• Under the direction of the Audit and Risk Committee, Internal Audit conducts a program of internal control reviews over key areas, based
on their importance to the Company, and provides independent assurance over the internal control assessments undertaken by
management.
The Board has received written assurance from the Chief Executive and the Chief Financial Officer that in their opinion:
(a) The financial statements and associated notes comply in all material respects with the accounting standards as required by
Section 296 of the Corporations Act 2001;
(b) The financial statements and associated notes give a true and fair view, in all material respects, of the financial position as at 29
June, 2008, and performance of the Company and consolidated entity for the year then ended as required by Section 297 of the
Corporations Act 2001;
(c) The financial records of the Company have been properly maintained in accordance with Section 286 of the Corporations Act
2001;
(d) The statements made in (a) and (b) above regarding the integrity of the financial statements are founded on a sound system of
risk management and internal compliance and control which, in all material respects, implements the policies adopted by the
Board;
(e) The risk management and internal compliance and control systems of the Company and consolidated entity relating to financial
reporting objectives are operating efficiently and effectively, in all material respects; and
(f) Subsequent to 29 June, 2008, no changes or other matters have arisen that would have a material effect on the operation of
risk management and internal compliance and control systems of the Company and consolidated entity.
28
Corporate Governance
REMUNERATION
Details of the Company’s remuneration policies are set out in the Remuneration Report beginning on page 14.
DIRECTORS’ DEALINGS IN COMPANY SHARES
By resolution of the Board, each non-executive director sacrifices at least 25% of his or her director’s fees to the Company’s
Employee Share Plan. Under this Plan, shares are purchased on the market by an independent trustee on behalf of directors and
employees who have salary sacrificed to participate in the Plan. Share acquisition dates are pre-set and determined by the trustee.
Consistent with the law, directors must not trade directly or indirectly in Fairfax securities while in possession of unpublished price
sensitive information.
Price sensitive information is information, usually about the Group or its intentions, which a reasonable person would expect to have
a material effect on the price or value of Fairfax securities.
The Company has a written policy on trading in the Company’s securities by directors and relevant employees. The policy sets out
periods when no trading is to be undertaken and a process for authorisation of trading at other times.
Notwithstanding the above, it is also the responsibility of each individual director to reasonably consider whether he or she is in possession
of price sensitive information and if in doubt, the director should not trade, to minimise the possibility of a perception of improper trading.
A director must notify the Company Secretary of any change in the director’s legal or beneficial interest in Company securities so as
to ensure compliance with the disclosure requirements of the ASX Listing Rules.
REVIEW OF THE BOARD’S EFFECTIVENESS
The Board conducts a review of its structure, composition and performance annually.
The Board has access to external expertise to assist in the process.
29
Management Discussion & Analysis Report
OVERVIEW
The net profit attributable to members of the Company increased 46.8% to $386.9 million. Excluding significant non recurring items,
the underlying net profit increased to $395.3 million, an increase of 47.6% over the previous year.
Reported earnings per share increased by 8.1%. Excluding the impact of significant non recurring items, underlying earnings per
share increased 8.2% to 25.1 cents with growth in earnings per share in both the first and second halves. This was on the back of
growth in existing businesses as well as the realisation of acquisition synergies. The diversification program of the last few years has
also greatly reduced earnings cyclicality.
With significant changes to the Fairfax Media business from the Rural Press merger and the acquisition of the radio and TV
production and distribution assets of Southern Cross, the reported results do not present a true comparative assessment against last
year. For comparative purposes, including the 2007 results of Rural Press Limited for the twelve months to 1 July 2007, including
Southern Cross and Southern Star for the eight months to 1 July 2007 and excluding significant items, a like for like analysis shows:
• Revenue increased 2.9% to $2.92 billion
• Earnings before interest and tax increased 8.7% to $722.1 million (9.6% on a constant currency basis)
• Total costs increased 1.4% to $2.09 billion
Detailed segment analysis of revenues and profitability and commentary on divisional performance is covered in detail in the Chief
Executive Officer’s report on pages 3 to 5 of the annual report.
SIGNIFICANT ITEMS
During the year, significant non recurring losses of $8.4 million after tax were incurred. These items were in the two categories of
Property and Restructuring/Fixed Asset Impairment.
Property related costs of $1.7 million after tax associated with the relocation from the Sydney CBD offices to Pyrmont were incurred
during the year. The relocation was completed during the 2008 financial year.
Restructuring, systems integration and fixed asset impairment charges of $6.7 million after tax were largely incurred as a result of the
integration of the Rural Press, Southern Cross Radio and Southern Star businesses.
BALANCE SHEET
The acquisition in November 2007 of the Southern Cross radio business and Southern Star production business for $536 million had
a significant impact on the balance sheet. Intangible assets and goodwill increased by $478.6 million. The acquisition, funded from
cash resources and drawdowns of existing debt facilities, largely accounts for the reduction from the prior year in cash on hand by
$272.4 million and the increase in non current interest bearing liabilities.
Contributed equity increased to $4.32 billion from $4.18 billion last year. This increase was largely driven by a $148 million increase
in ordinary shares on issue from the underwritten Dividend Reinvestment Plan (DRP) for the September 2007 final dividend. Shares
acquired for $14 million under the new long term employee incentive plan which are yet to vest have been included as a reduction in
contributed equity as required by accounting standards.
The actual number of shares on issue increased by 33.9 million over the year and represented the shares issued under the DRP for
the final dividend paid on 27 September 2007.
The DRP was also in operation for the interim dividend paid on 31 March 2008. During the DRP pricing period, the Company made
on market purchases of shares to satisfy the take up under the DRP. There was therefore no increase in the actual number of shares
issued by the Company for this dividend.
Movements in particularly the AUD/NZD exchange rates over the course of the year also had an impact on the balance sheet, The
AUD equivalent of NZD denominated net assets generated a $250.9 million reduction in foreign currency translation reserves in the
year. This is shown as a reduction in reserves in the balance sheet.
30
Management Discussion & Analysis Report
CASH FLOW
Operating cash flow remains strong with net cash inflow from operations increasing by 15% to $419.7 million. This increase is after
absorbing approximately $50 million related to provisions for non recurring items raised in the 2007 financial year.
Expenditure on plant, equipment and systems upgrades of $115.4 million compared to $88.7 million last year was slightly above the
$108.3 million depreciation charge. The increase was mainly due to upgrades to printing plants in Australia and New Zealand and
investments being made to improve the editorial, advertising, digital and financial systems across the Company. These investments
meet our strict financial criteria and will generate significant benefits into the future.
Since balance date, the Company has announced the conditional sale of the UK based Carnival Film and Television business for
₤22.5 million. The Company has also since balance date announced a major restructuring initiative which will incur one-off costs of
approximately $50 million. The restructuring initiative will result in $50 million of savings from the 2010 financial year.
DEBT
Over the past twelve months, credit markets globally have experienced significant upheavals from which we were protected due to
the capital raisings we completed in July 2007. While our net debt did increase by $436.7 million during the year to predominately
finance acquisitions, our debt ratios are well within debt covenant limits. The Company does not face any refinancing exposure for
the next 18 months and currently has $475 million in undrawn facilities available.
The graph below details the debt maturity profile of the Company
Committed Facility Maturity Profile (inc SPS)
Committed Facility Maturity Profile (inc SPS)
AUD $m's
AUD $m's
1,000
1,000
750
750
500
500
250
250
0
0
Staple Preference Security (SPS)
Staple Preference Security (SPS)
Staple Preference Security (SPS)
Eurobond Issue
Eurobond Issue
Eurobond Issue
US Private Placement III
US Private Placement III
US Private Placement III
A$ Bank Syndication (8 Banks)
A$ Bank Syndication (8 Banks)
A$ Bank Syndication (8 Banks)
CBA A$200m Bank Facility
CBA A$200m Bank Facility
CBA A$200m Bank Facility
NZD Redeemable Preference Shares
NZD Redeemable Preference Shares
NZD Redeemable Preference Shares
Chullora Financing
Chullora Financing
Chullora Financing
ASB NZD Facility
ASB NZD Facility
ASB NZD Facility
Domestic MTN A$200m
Domestic MTN A$200m
Domestic MTN A$200m
US Private Placement II
US Private Placement II
US Private Placement II
2009
2009
2010
2010
2011
2011
2012
2012
2013
2013
2014
2014
2015
2015
2016
2016
2017
2017
2018
2018
2019
2019
Borrowings denominated in foreign currency have been hedged against the impact of currency movements on both the debt
outstanding and the interest obligations. These hedges largely account for a $63 million increase in derivative current and non
current derivative assets and an increase in non current derivative liabilities of $31 million.
31
Management Discussion & Analysis Report
DIVIDENDS
Total ordinary dividends of $299.4 million were paid during the year, an increase of $81.0 million on last year. Ordinary dividends
amounting to $243.2 million were paid in cash with the balance of $56.2 million being satisfied by the issue of ordinary shares under
the Company’s DRP. The September 2007 final dividend was fully underwritten with 21.1 million shares being issued to the
underwriters for $91.8 million cash.
Dividends of $25.6 million were paid on the Stapled Preference Shares in both the current and prior years.
A final dividend of 10 cents per share, franked to 75% has been declared. This takes the total dividend per share on ordinary shares
for 2008 to 20 cents per share, comparable with the amount paid last year.
FRANKING
Based upon current estimates of income tax payable in Australia as a percentage of the total income tax paid by the Company, it is
anticipated that future dividends will be franked at 75%. The 25% unfranked portion of the dividend will be treated as Conduit
Foreign Income under income tax legislation.
32
Consolidated Income Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
No te
2(A)
2(B)
C o ns ol id ate d
C on so li da ted
C om pa ny
C om pa ny
2 9 Ju n e 2 00 8
1 Ju ly 20 07
29 Jun e 2 0 08
1 Ju ly 2 0 07
$' 00 0
$ '0 00
$ '0 00
$ '0 00
2,900,883
2,111,385
33,124
67,155
101,445
26,509
776,463
26,758
2,934,007
2,178,540
127,954
803,221
11(C)
8,735
2,961
-
-
3(A)
3(B)
3(C)
(2,099,355)
(108,295)
(1,615,034)
(111,281)
(211,919)
(116,964)
523,173
(135,683)
387,490
(612)
338,222
(76,601)
261,621
1,889
(86,003)
(9,514)
(5)
32,432
26,754
59,186
-
(86,613)
(12,635)
(2,743)
701,230
20,355
721,585
-
Revenue from continuing operations
Other revenue and income
Total revenue and inc ome
Share of net profits of assoc iates and joint ventures
Expenses from continuing operations excluding
depreciation, amortisation, asset impairment and finance costs
Depreciation, amortis ation and asset impairment
Finance costs
Net profit from continuing operations before income tax expense
Income tax (expens e)/benef it
Net profit from continuing operations after income tax expense
Net (profit)/loss attribut able to minority interest
Net profit attributable to members of the Company
Earnings per share (cents per share)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
5
26
27
27
The above Income Statements should be read in conjunction with the accompanying Not es.
386,878
263,510
59,186
721,585
24.6
24.1
22.7
23.0
33
Consolidated Balance Sheets
Fairfax Media Limited and Controlled Entities as at 29 June, 2008
CURRENT ASSETS
Cash and cash equivalents
Trade and other rec eivables
Inventories
Derivative assets
As sets held for sale
Other current asset s
Total curr ent assets
NON-CURRENT ASSETS
Receivables
Investments accounted f or using the equity method
Available for sale investments
Held to maturity inves tments
Intangible as sets
Property, plant and equipment
Derivative assets
Pension asset
Deferred tax ass ets
Other financial assets
Other non-current assets
Total non-cur rent assets
Total assets
CURRENT LIABILITIES
Payables
Interest bearing liabilities
Derivative liabilities
Provisions
Current tax liabilities
Total curr ent liabilities
NON-CURRENT LIABILITIES
Interest bearing liabilities
Derivative liabilities
Deferred tax liabilities
Provisions
Other non-current liabilities
Total non-cur rent liabilities
Total liabilities
NET ASSET S
EQ UITY
Contributed equity
Reserves
Retained profits
Total parent entity interest
Minority interest
TOTAL EQUITY
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
No te
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
37(B)
7
8
16
9
10
7
11
12
13
14
15
16
17(A)
18(A)
19
10
20
21
16
22
21
16
18(A)
22
23
24
25
26
93, 864
499, 126
44, 801
3,519
2,222
11, 610
366,307
408,917
48,527
8
500
-
680
687
1,277,111
1,360,669
-
-
-
-
-
-
-
-
655, 142
824,259
1,277,791
1,361,356
3,683
45, 690
3,547
14, 686
1,323
34,478
2,431
16,014
401,122
398,705
-
-
-
-
-
-
6,492,640
6,131,043
875, 181
860,044
14,044
16,839
21,417
23,163
59, 417
5,542
128, 561
122
8,890
165
13,381
117,282
122
-
-
-
-
-
9,200
3,143,723
9,310
3,142,329
-
-
7,637,959
7,176,283
3,584,928
3,594,924
8,293,101
8,000,542
4,862,719
4,956,280
330, 045
289,519
15,900
14,640
15, 816
1,006
159, 837
5,456
12,237
1,344
147,022
30,425
512, 160
480,547
2,496,133
2,335,498
121, 251
148, 931
45, 398
3,894
90,448
89,564
41,087
2,404
2,815,607
2,559,001
-
-
7,385
14,279
37,564
-
-
7,643
703
-
8,346
-
-
4,889
11,641
31,170
-
-
3,943
1,939
-
5,882
3,327,767
3,039,548
45,910
37,052
4,965,334
4,960,994
4,816,809
4,919,228
4,318,409
4,184,325
4,324,524
4,190,440
(186, 063)
821, 987
15,583
748,164
1,750
490,535
(1,943)
730,731
4,954,333
11, 001
4,948,072
12,922
4,816,809
-
4,919,228
-
4,965,334
4,960,994
4,816,809
4,919,228
The above Balanc e Sheets should be read in conjunction with the accompanying Notes.
34
Consolidated Statements of Recognised Income and Expense
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Amounts recognised directly in equity
Cashflow hedge reserve, net of tax
Net investment hedge reserve, net of tax
Foreign currency translation reserve, net of tax
Changes in fair value of available for sale assets, net of tax
Ac tuarial (loss)/gain on defined benefit plans, net of tax
Share of ass et revaluation of joint venture, net of tax
Minority interest trans fer
Tax benefits recognis ed directly in equity
Reclassification of tax benefits to equity
Net (expense)/income recognised directly in equity
Net prof it from c ontinuing operations after income tax expense
Total recognised income and expense for the financial period
Total recognised income and expense attributable to minority interes t
Total recognised income and expense attributable
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
22,046
24,281
(250,865)
(801)
(4,315)
-
-
8,427
7,833
(193,394)
387,490
194,096
(612)
(5,425)
(20,225)
178,271
667
1,459
887
619
-
-
156,253
261,621
417,874
1,889
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
59,186
59,186
-
-
721,585
721,585
-
to members of the Company
193,484
419,763
59,186
721,585
The above Statements of Recognised Income and Expense should be read in conjunction with the acc ompanying Notes.
35
Consolidated Cash Flow Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Cash flows from operating acti vities
Receipts from customers (inclusive of G ST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Dividends and distributions received
Finance costs paid
Net income taxes paid
Co n so lid a ted
C o ns ol id ate d
Co mp an y
C o mp an y
2 9 Jun e 2 0 08
1 Jul y 2 00 7
2 9 Ju ne 2 00 8
1 J ul y 2 00 7
No te
$ '0 00
$' 00 0
$' 00 0
$' 00 0
3,192,965
2,325,834
673
838
(2,461,573)
(1,782,749)
(76, 173)
(86,627)
25,177
8,837
(209,511)
(136,219)
5,100
1,957
(96,132)
(89,130)
26, 509
100, 000
(6)
(26, 636)
26,758
775,000
(2,280)
(7,041)
Net cash inflow from operating activities
37(A)
419,676
364,880
24, 367
706,648
Cash flows from investing activities
Payment for purchase of controlled entities,
assoc iates and joint ventures (net of cash acquired)
Payment for purchase of businesses, including mastheads
Payment for property, plant and equipment, sof tware and mastheads
Proceeds from sale of property, plant and equipment
Payment for available for sale investments
Proceeds from sale of investments and ot her assets
Loans advanced to controlled entities
Loans repaid by controlled entities
(586,735)
(8,189)
(115,403)
5,181
-
6,481
-
-
(574,247)
(7,579)
(88,746)
64,589
(1,125)
23,516
(1, 389)
-
(7, 031)
(427,233)
-
(4,708)
-
-
-
-
-
-
-
-
-
150, 085
(123,915)
-
Net cash (outflow)/inflow from investing activities
(698,665)
(583,592)
141, 665
(555,856)
Cash flows from financing activities
Proceeds from issue of shares
Payment for shares acquired by employee share trust
Proceeds from borrowings and other financial liabilities
Repayment of borrowings and other financial liabilities
Transaction costs - debt sec urities
Dividends paid to shareholders including SPS*
91,808
(14,621)
352,763
(150,149)
-
(268,844)
-
-
1,256,911
(547,487)
(358)
(176,332)
91, 808
(14, 621)
-
-
-
-
-
-
-
(243, 226)
(358)
(150,701)
Net cash inflow/(outflow) from financing activities
10,957
532,734
(166, 039)
(151,059)
Net (decrease)/increase in cash and cash equivalents held
Cash and cash equivalents at beginning of the year
Ef fect of exchange rate c hanges on cash and cash equivalents
(268,032)
366,307
(4,411)
314,022
52,748
(463)
Cash and cash equival ents at end of the financial year
37(B)
93,864
366,307
(7)
687
-
680
(267)
954
-
687
*
Under the term s of t he DRP, $56.2 m illion ( 2007: $ 67.7 m illion) of dividends were paid via th e issu e of 12 ,820,970 ordin ary shares
(2007 : 16,414, 299 ordinary shares). A cash dividend payment of $243. 2 million (2 007: $150. 7 million) w as made to ordinary
sh areholders that did not elect t o participate in the D RP.
Total cash dividends for the year totalled $268 .8 million (2007: $176. 3 million); this includes $2 5.6 million (2007: $25. 6 million) made to
st ap led preference shareholders (SPS) .
The above Cash Flow Statements should be read in conjunction with the acc ompanying Notes.
36
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
1. Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for
Fairfax Media Limited as an individual entity and the consolidated entity consisting of Fairfax Media Limited and its controlled entities.
The financial report is for the period 2 July 2007 to 29 June 2008 (2007: the period 1 July 2006 to 1 July 2007). Reference in this report
to 'a year' is to the period ended 29 June 2008 or 1 July 2007 respectively, unless otherwise stated.
( A) BASIS OF PREPARATIO N
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authorative pronouncements of the Australian Accounting
Standards Board. The financial report also complies with Australian Accounting Standards as issued by the Australian
Accounting Standards Board and International Financ ial Reporting Standards (IFRS) as is sued by the International Acc ounting
Standards Board.
Historical cost convention
These financial statements have been prepared on a going concern basis and on the basis of historical cost principles except for
derivative financial instruments and certain financial ass ets whic h are measured at fair value. The carrying values of recognis ed
assets and liabilities that are hedged with fair value hedges are adjusted to record changes in the fair values attributable to the risks
that are being hedged.
Compar atives
Certain comparative amounts have been reclas sified to be consistent with current year presentation.
( B) PRINCIPLES OF CO NSOLIDATIO N
(i) Contr olled entities
The c onsolidated financial statements incorporate the assets and liabilities of the Company, Fairfax Media Limited, and its
controlled entities. Fairfax Media Limited and its controlled entities together are referred to in this financial report as the Group
or the c onsolidated entity.
Controlled entities are fully consolidated from the date on which control is transferred to the Group. T hey are de-consolidated from
the date that control ceases.
The purchase method of accounting is us ed to account for the acquisition of controlled entities by the Group (refer to Note 1(C)).
All inter-entity trans actions, balances and unrealised gains on transactions between Group entities have been eliminated in full.
Minority interest in the earnings and equity of controlled entities is shown separately in the consolidated income statement and
balance sheet respectively.
(ii) Associates and joint ventures
Investments in associates and joint ventures are accounted for in the consolidated financial statements using the equity method.
Associates are entities over which the Group has significant influence and are neither subsidiaries or joint ventures.
The Group’s share of its associates’ and joint ventures’ post-acquisition profits or losses are recognised in the income
statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment. Dividends received from associates and joint ventures
are recognised in the c onsolidated financial statements as a reduction in the carrying amount of the investment.
37
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate, the G roup does
not recognise further losses, unless it has inc urred obligations or made payments on behalf of the as sociate.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the G roup’s
interest in as sociates and joint ventures.
( C) ACCOUNTING FOR ACQUISITIONS
The purchase method of accounting is us ed to account for all business combinations, including business combinations involving
entities or businesses under common control, regardless of whether equity ins truments or other assets are acquired. Cos t is
meas ured as the fair value of the ass ets given, equity instruments issued or liabilities inc urred or assumed at the date of exchange
plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the fair value of the
instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that
the published pric e at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods
provide a more reliable measure of fair value. Transac tion costs arising on the is sue of equity instruments are recognised
directly in equity.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date. The excess of the c ost of acquisition over the fair value of the net identifiable assets
acquired represents goodwill (refer to Note 1(E)(i)).
( D) IMPAIRMENT O F ASSETS
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circums tances indic ate that they might be impaired. Assets that are subject
to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may
not be recoverable. An impairment loss is recognised for the amount by whic h the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use,
the estimated future cash flows are disc ounted to their pres ent value us ing a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the as set. Where an asset does not generate largely independent
cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. A cash generating unit
is the grouping of assets at the lowest level for which there are separately identifiable cash flows. Non-financial assets other
than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
At each balance date, the Group ass esses whether there is any indication that an asset may be impaired. Where an
indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the c arrying amount of an asset
exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
( E) INTANGIBLES
(i) G oodwill
Goodwill represents the excess of cost of an acquisition over the fair value of the Group's share of the net identifiable as sets of
the acquired subsidiary/assoc iate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible
assets. Goodwill on acquisitions of associates is inc luded in investments in associates. Goodwill is alloc ated to cash-generating
units for the purposes of impairment tes ting (refer Note 1(D)). G oodwill is not amortis ed. Instead, goodwill is tested for impairment
annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment los ses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating
to the entity sold.
38
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(ii) Other intangible assets
Mastheads and tr adenames
The newspaper mastheads and tradenames have been ass essed to have indefinite useful lives. Ac cordingly, they are not
amortised, instead they are tested for impairment annually, or whenever there is an indication that the carrying value may be
impaired, and are carried at cos t less accumulated impairment los ses.
The Group's mastheads and tradenames operate in established markets with limited license conditions and are expected to continue
to complement the Group's new media initiatives. On this basis, the direc tors have determined that mastheads and tradenames
have indefinite lives as there is no foreseeable limit to the period over which the assets are expected to generate net cash inflows
for the Group.
Radio licences
Radio licences, being commercial radio licences held by the consolidated entity under the provisions of the Broadcasting Services
Act 1992, have been ass essed to have indefinite useful lives. Ac cordingly, they are not amortised, instead they are tested for
impairment annually, or whenever there is an indication that the carrying value may be impaired, and are carried at cost less
accumulated impairment los ses.
Web-Sites
Internal and external costs directly incurred in the development of web-sites are capitalised and amortised using a straight-line
method over the assessed useful lives of the web-sites. Capitalised web-site costs are reviewed annually for potential impairment.
Computer software
Acquired computer software licences are capitalised as an intangible as are internal and external cos ts directly incurred in the
purchase or development of computer software, including subsequent upgrades and enhancements when it is probable that they
will generate future economic benefits attributable to the consolidated entity. Thes e costs are amortis ed using the straight-line
method over three years.
Other
Other intangibles, where applicable, are stated at cost les s accumulated amortisation and impairment losses. T he useful lives of the
intangible assets are ass essed to be either finite or indefinite and are examined on an annual basis and adjustments, where
applicable, are made on a prospective basis.
Other intangible assets created within the business are not capitalis ed and are expensed in the income statement in the period the
expenditure is inc urred.
Intangible assets are tested for impairment annually (refer to Note 1(D)).
( F) FOREIGN CURRENCY
(i) Currency of presentation
All amounts are expressed in Australian dollars, which is the parent entity and consolidated entity’s presentation currency. Items
included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the functional currency).
(ii) Transactions and balances
Foreign currency transactions are translated into the func tional currency using the exchange rates prevailing at the dates of t he
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
reporting date exchange rates of monetary as sets and liabilities denominated in foreign currencies are recognised in the inc ome
statement, with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a
foreign operation and qualifying c ash flow hedges, which are deferred in equity until disposal. Tax charges and credits attributable
to exchange differences on borrowings are also recognised in equity.
39
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Translation differences on non-monetary items that are measured in terms of historical c ost in a foreign currency are translated
using the exchange rate as at the date of the initial transaction. Translation differences on non-monetary items, such as available
for sale financial assets, are translated us ing the exchange rates at the date when the fair value was determined and included
in the asset revaluation reserve in equity.
(iii) Group entities
The results and financial position of all the Group entities that have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
•
•
•
assets and liabilities for eac h balanc e sheet presented are translated at the clos ing rate at the date of that balance sheet;
income and expenses for eac h income statement are translated at average exchange rates; and
all resulting exchange differenc es are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the borrowings designated as hedges of the net investment in
foreign entities are taken directly to a s eparate component of equity, the net investment hedge reserve.
On disposal of a foreign entity, or borrowings that form part of the net investment are repaid, the deferred cumulative amount of the
exchange differences in the net investment hedge reserve relating to that foreign operation is recognised in the income
statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquis ition of a foreign entity are
treated as assets and liabilities of the foreign entity and translated at the closing rate.
( G) REVENUE RECO GNITION
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the amount of the
revenue can be reliably measured. Advertising and circulation revenue from the sale of newspapers, magazines and other
publications is recognised on publication net of expected returns and pricing adjustments. Revenue from rendering of services is
recognised when control of a right to be compensated for the s ervices has been attained and the stage of completion of the service
contract can be reliably measured. Stage of completion is measured by reference to the services performed to date as a percentage
of total estimated services to be performed for each contract. If a contract outcome cannot be reliably measured, revenue is
recognised only to the extent that costs have been incurred.
Revenue from dividends and distributions from controlled entities are recognis ed by the Company when they are declared by the
controlled entities.
Interest is recognised as it accrues, taking into account the effective yield on the financ ial asset.
Revenue from the contribution of services and materials during the production of television programs and the licensing of copyright
is rec ognised when the program is available for delivery, the contract is fully executed and the collectability is reasonably assured.
Revenue from the provision of production services is recognised in ac cordance with the agreement for the project and is brought to
account on a stage-of-completion basis. Revenue from royalties due from the ownership of a program copyright is recognised
on an accrual bas is in accordance with the agreement and is only brought to account where the amount of the royalty can be
reliably estimated and collec tion is reasonably assured.
( H) INCO ME TAX AND OTHER TAXES
The inc ome tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the national
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributed to temporary differences
between the tax bases of assets and liabilities and their carrying amounts in the financial s tatements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the balance sheet date between the tax bases of
assets and liabilities and their carrying amounts for financ ial reporting purposes.
40
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Deferred income tax liabilities are rec ognised for all taxable temporary differences:
•
•
except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not
a bus iness combination and, at the time of the trans action, af fects neither the accounting profit nor taxable profit or loss; and
in res pect of taxable temporary differences associated with investments in subsidiaries , associates and interests in joint
ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not revers e in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry-forward of unused tax assets and unused tax loss es can be utilised:
•
except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
•
in res pect of deductible temporary differences associated with investments in subsidiaries , associates and interests in joint
ventures, deferred tax assets are only recognis ed to the extent that it is probable that the temporary differences will reverse in
the fores eeable future and taxable profit will be available against which the temporary differences can be utilised.
The c arrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance
sheet date. Income taxes relating to items recognised directly in equity are recognised in equity.
Goods and Services Tax (GST)
Revenues, expenses and assets are rec ognised net of the amount of GST except:
(i) where the GST incurred on a purchas e of goods and services is not recoverable from the taxation authority, in which case the
GST is recognised as part of the cost of acquisition of t he asset or as part of the cost of acquisition of the asset or as part of the
expense item as applicable; and
(ii) receivables and payables are stated with the amount of GST included.
This net amount of GST rec overable from, or payable to, the taxation authority is included as part of receivables or payables in the
balance sheet.
Cashflows are included in the cash flow statement on a gross bas is and the GST component of cashflows arising from investing
and financing activities, which are recoverable from, or payable to the taxation authority are classified as operating cashflows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
Tax consolidation - Australia
Fairfax Media Limited (the head entity) and its wholly-owned Aus tralian entities have implemented the tax consolidation legislation
as of 1 July 2003. Each member in the tax consolidated group continues to account for their own current and deferred tax amounts
as if they continued to be a modified stand alone taxpayer in its own right.
On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement which,
in the opinion of the directors, limits the joint and several liability of the wholly-owned entities in the case of a default of the head
entity, Fairfax Media Limited.
41
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully c ompensate Fairfax Media
Limited for any current tax payable assumed and are compensated by the Company for any current tax receivable and deferred tax
assets relating to unused tax loss es or unused tax credits transferred to Fairfax Media Limited under the tax consolidation legis lation.
Assets or liabilities arising under tax funding arrangements with the tax cons olidated entities are recognised as amounts receivable
from or payable to other entities in the group. The amounts receivable/payable under the tax funding arrangements are due upon
demand from the head entity. The head entity may also require payment of interim funding amounts to assist with its obligations to
pay tax instalments.
( I) LEASES
(i) Finance leases
Assets acquired under finance leases which result in the consolidated entity rec eiving substantially all the risks and rewards of
owners hip of the as set are capitalised at the lease’s inception at the lower of the fair value of the leased property or the estimated
present value of the minimum lease payments. The corresponding financ e lease obligation, net of finance charges, is included
within interest bearing liabilities. The interest element is allocated to acc ounting periods during the leas e term to reflect a constant
rate of interest on the remaining balance of the liability for each accounting period. The leased asset is included in property, plant
and equipment and is depreciated over the shorter of the estimated useful life of the asset or the lease term.
(ii) Operating leases
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases .
Net rental payments, excluding contingent payments, are recognised as an expense in the income statement on a straight-line basis
over the period of the lease.
( J) CASH AND CASH EQ UIVALENTS
Cash and cash equivalents includes cash on hand, deposits held at c all with financial institutions and other short term investments
with original maturities of three months or less that are readily convertible to cash and subject to insignificant risk of changes in value.
Bank overdrafts are shown within interest bearing liabilities in current liabilities on the balance sheet.
( K) TRADE AND O THER RECEIVABLES
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost, which in the case of the Group,
is the original invoic e amount less an allowance for any uncollectible amount. Collec tability of trade receivables is reviewed on an
ongoing basis and a provision for doubtful debts is made when there is objective evidence that the Group will not be able to
collec t the debts.
Interest receivable on related party loans is recognised on an accruals basis.
( L) INVENTORIES
Inventories including work in progres s are stated at the lower of cost and net realisable value. The methods used to determine cost
for the main items of inventory are:
•
•
•
raw materials (comprising mainly newsprint and paper on hand) are assessed at average cost and newsprint and paper in
transit by specific identification cost;
finished goods and work-in-progress are assess ed as the cost of direct material and labour and a proportion of manufacturing
overheads based on normal operating capacity; and
in the c ase of other inventories, cost is as signed by the weighted average cost method.
A provision for diminution in value of inventories exists to cover the es timated decline in value from the effec ts of storage hazards.
42
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Program copyright
Expenditure incurred in relation to film and television program copyright is capitalised and allocated against future licens ing revenue.
Licensing revenue forecas ts are reviewed when events or changes in circumstances indicate that forecasts are unachievable,
and the remaining capitalised balance is written down to net realisable value. Costs of developing new program concepts are
expensed if the program does not proceed.
( M) AVAILABLE-FO R-SALE INVESTMENTS
Available-for-sale financial assets are investments in listed equity securities in which the Group does not have significant influence
or control. They are stated at fair value based on current quoted pric es and unrealis ed gains and losses arising from c hanges in the
fair value are recognised in the ass et revaluation res erve. The assets are inc luded in non-current ass ets unless management
intends to dispose of the investment within twelve months of the balance sheet date.
( N) INVESTMENTS AND OTHER FINANCIAL ASSETS
The Group classifies its investments in the following categories: financial assets at fair value through profit or los s, loans and
receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for
which the investments were acquired. Management determines the classification of its investments at initial recognition and,
in the case of assets classified as held to maturity, re-evaluates this designation at each reporting date.
The c onsolidated entity clas sifies and measures its investments as follows:
(i) Financial assets at fair value through profit and loss
This category has two sub-categories: financial assets held for trading and thos e designated at fair value through profit and
loss on initial recognition. The policy of management is to designate a financial asset at fair value through profit and loss if there
exists t he pos sibility it will be sold in the short term and the asset is subjec t to frequent changes in fair value. These assets
are measured at fair value and realised and unrealised gains and losses arising from changes in fair value are included in the
income s tatement in the period in which they arise.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market and are included in receivables in the balance sheet and measured at amortis ed cost using the effective interest method.
(iii) Other financial assets
These ass ets are non-derivatives that are either designated or not c lassified in any of the other categories and measured at
fair value. Any unrealised gains and losses arising from changes in fair value are included in equity, impairment loss es are
included in profit and loss. Investments in partnerships are carried at cost less impairment loss.
(iv) Held-to-maturity investments
Held-to-maturity investments are non-derivative financ ial assets with fixed or determinable payments and fixed maturities that the
Group’s management has the positive intention and ability to hold to maturity. These ass ets are measured at amortised cos t using
the effective interest method.
Financial assets other than derivatives are recognised at fair value or amortised cost in accordance with the requirements
of AASB 139 Financial Instruments: Recognition and Measurement. Where they are carried at fair value, gains and losses on
remeasurement are recognised directly in equity unles s the financial assets have been designated as being held at fair value
through profit and loss, in which case the gains and losses are recognised directly in the income statement.
All financ ial liabilities other than derivatives are carried at amortised cos t.
43
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
The Group uses derivative financial instruments such as forward foreign currency c ontracts, and foreign currency and interest rate
swaps to hedge its risks associated with interest rate and foreign currency fluctuations. Derivatives, including those embedded in
other contractual arrangements, are initially recognis ed at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value. The method of recognising the resulting gain or los s depends on whether the derivative
is designated as a hedging instrument, and if so, the nature of the item being hedged.
The measurement of the fair value of forward exchange contracts is calculated by reference to current forward exchange rates for
contracts with s imilar maturity profiles. The fair value of interes t rate swap contrac ts is determined by reference to market values
for similar instruments.
Hedge accounting
For the purposes of hedge accounting, hedges are classified as either fair value hedges (hedges of the fair value of recognised
assets or liabilities or a firm commitment) or c ash flow hedges (hedges of highly probable forecast transactions).
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement,
together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. Any gain or loss
attributable to the hedged risk on remeasurement of the hedged item is adjusted against the carrying amount of the hedged item and
recognised in the income statement. Where the adjustment is to the carrying amount of a hedged interest-bearing financial instrument,
the adjustment is amortised to the income statement such that it is fully amortised by maturity.
When the hedged firm commitment results in the recognition of an as set or a liability, then, at the time the asset or liability is
recognised, the associated gains or losses that had previously been recognised in equity are included in the initial measurement of
the acquisition cost or other carrying amount of the as set or liability.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised
in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.
Gains or losses that are recognis ed in equity are transferred to the income statement in the same year in which the hedged firm
commitment affects the net profit and loss, for example when the future sale actually occurs.
The c onsolidated entity’s interest rate swaps and cross currency swaps held for hedging purposes are generally accounted for
as cash flow hedges.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies
for hedge ac counting. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is retained
in equity until the forecasted transaction occurs . If a hedged transaction is no longer expected to occur, the net cumulative gain or
loss recognised in equity is transferred to the income statement.
Derivatives that do not qualify for hedge accounting
For derivatives that do not qualify for hedge accounting, any gains or losses aris ing from changes in f air value are taken direc tly
to the income statement.
( O) O THER ASSETS
Film investments
Costs assoc iated with acquiring film inves tments are capitalised and allocated against future licensing revenue. Licensing revenue
forecasts are reviewed regularly and when lower than the capitalised balance the remaining amount is written down to its recoverable
amount. Classification of film investments between current and non current is based on when the amounts will be allocated.
44
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Distr ibution advances and costs
Advanc es and costs incurred for television program distribution rights are capitalised and allocated against future licensing revenue.
An allowance for unrecoupable advances and costs is recorded where the amount is not expected to be fully recoverable out of
future licensing revenue. Classification of distribution advances and c osts between current and non current is based on when
the amounts will be allocated.
( P) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost less depreciation and where applicable an impairment provision. Directly attributable
costs arising from the acquisition or construction of fixed ass ets, including internal labour and interest, are also capitalis ed as
part of the cost.
Recoverable amount
All items of property, plant and equipment are reviewed annually to ensure carrying values are not in excess of recoverable amounts.
Recoverable amounts are bas ed upon the present value of expected future cashflows.
Depr eciation and amor tisation
Land is not depreciated. Depreciation on other assets is c alculated us ing the straight line method to allocate their cost, net of their
residual values, over their estimated useful lives, as follows:
Buildings
Printing presses
Other production equipment
Other equipment
up to 60 years
up to 20 years
up to 15 years
up to 40 years
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date. An asset’s
carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its es timated
recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with carrying amount. These are
included in the income statement.
( Q) TRADE AND OTHER PAYABLES
Liabilities for trade creditors and other amounts are carried at amortised cost which is the fair value of the consideration to be paid
in the future for goods and services received. Loans payable to related parties are carried at amortised cost and interest payable is
recognised on an accruals basis.
( R) PROVISIONS
Provisions are recognised when the G roup has a legal, equitable or construc tive obligation to make a future sacrifice of economic
benefits to others as a result of past transactions, or past events, it is probable that a future sacrifice of economic benefits will be
required and a reliable estimate c an be made of the amount of the obligation. Provisions are not recognised for future operating
losses.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present
obligation at the balance sheet date using a discounted cash flow methodology. The risks specific to the provision are factored
into the cash flows and as such a risk-free government bond rate relative to the expected life of the provision is used as a discount
rate. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the
time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is
recognised in finance costs.
A provision for dividends is not recognised as a liability unless the dividends are declared, determined or publicly recommended
on or before balanc e date.
45
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
( S) INTEREST-BEARING LIABILITIES
Subsequent to initial recognition at fair value, net of transaction costs incurred, interest bearing liabilities are measured at amortised
cost. Any difference between the proceeds (net of trans action costs ) and the redemption amount is recognised in the income
statement over the period of the borrowings using the effective interes t method.
Finance lease liabilities are determined in accordanc e with the requirements of AASB 117 Leases (refer to Note 1(I)).
Borrowing costs
Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation or ancillary costs
incurred in connection with arrangement of borrowings and foreign exchange loss es net of hedged amounts on borrowings,
including trade creditors and lease finance charges.
Borrowing costs are expens ed as inc urred unless they relate to qualifying as sets. Qualifying assets are as sets which take more
than 12 months to get ready for their intended use or sale. In these circumstances, borrowing costs are capitalised to the cos t of
the asset. W here funds are borrowed generally, borrowing costs are capitalised using a weighted average capitalisation rate.
There were no borrowing costs capitalised during either of the pas t two financial years.
( T) EMPLOYEE BENEFITS
(i) Wages, salaries, annual leave and long service leave
Current liabilities for wages and salaries , holiday pay, annual leave and long service leave are recognised in the provision for
employee benefits and measured at the amounts expected to be paid when the liabilities are settled.
The employee benefit liability expected to be settled within twelve months from balance date is recognised in current liabilities.
The non-current provis ion relates to entitlements, including long service leave, which are expected to be payable after twelve
months from balance date and are measured as the present value of expected future payments to be made in respect of services
employee departures and periods of service. Expected future payments are discounted using market yields at balance date on
national government bonds with terms to maturity and currency that match, as closely as poss ible, the estimated future cash outflows.
Employee benefit on-costs are recognised and included in employee benefit liabilities and costs when the employee benefits to
which they relate are recognised as liabilities.
(ii) Share-based payment transactions
Share based compensation benefits can be provided to employees in the form of shares and/or options. No options have been
issued by the Company since the 2001 financial year.
The c ost of share based payments is recognised over the period in which the performance and/or servic e conditions are
fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the ves ting
date).
At each subsequent reporting date until ves ting, the cumulative charge to the income statement is the product of (i) the grant date
fair value of the award; (ii) the c urrent best estimate of the number of awards that will vest, taking into ac count such factors as
the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions being met;
and (iii) the expired portion of the vesting period.
The market value of shares is sued to employees for no cas h cons ideration under the Long Term Incentive Share Plan is recognised
as an employee benefits expense over the vesting period (refer to Note 33).
Shares purchased, but whic h have not yet vested to the employee as at reporting date are offest against contributed equity of the
Group (see note 1U).
46
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(iii) Defined benefit super annuation plans
Fairfax Media Limited and certain controlled entities partic ipate in a number of superannuation plans.
An asset in respect of defined benefit superannuation plans is recognised in the balance sheet, and is measured as the present value
of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses), less the
fair value of the superannuation fund's assets at that date and any unrecognised past service cos t. The present value of the defined
benefit obligation is based on expected future payments which arise from membership of the fund to the balance date, calculated
annually by independent actuaries using the projected unit credit method. Consideration is given to expected future wage and salary
levels, experience of employee departures and periods of service. Actuarial gains and losses are recognised in retained earnings
in the periods in which they arise.
Contributions made by the Group to defined contribution superannuation funds are charged to the income statement in the
period the employee’s service is provided.
(iv) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee ac cepts
voluntary redundancy in exc hange for these benefits. The Group recognises termination benefits when it is demonstrably committed
to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or
providing termination benefits as a result of an offer made to enc ourage voluntary redundancy.
(v) Bonus plans
The Group recognises a provision and an expense for bonuses where contrac tually obliged or where there is a pas t practice
that has created a constructive obligation.
( U) CONTRIBUTED EQUITY
Ordinary shares are classified as equity. Stapled preference shares are classified as equity (refer Note 23(C)).
Incremental costs directly attributable to the issue of new shares or options are recognised in equity as a reduction from the
proceeds . Incremental costs directly attributable to the issue of new shares for the ac quisition of a bus iness are not included in the
cost of the acquisition as part of the purchase consideration.
If the Group reacquired its own equity instruments, eg. under the Long Term Incentive Plan, those instruments are deducted
from equity.
Debentures
Debentures have been included as equity as the rights attaching to them are in all material respects comparable to those attaching to
the ordinary shares. Such debentures are unsecured non-voting securities that have interest entitlements equivalent to the dividend
entitlements attaching to the ordinary voting s hares and rank equally with such s hares on any liquidation or winding up. These
interest entitlements are treated as dividends.
The debentures are convertible into shares on a one-for-one basis at the option of the holder provided that convers ion will not result
in a breach of any of the following:
(i) any provision of the Foreign Acquisitions and Takeovers Act 1975;
(ii) any undertaking given by the Company to the Foreign Investment Review Board or at the request of the Foreign Investment
Review Board from time to time; or
(iii) any other applicable law including, without limitation the Broadcasting Act 1942.
47
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
( V) EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share (EPS) is calculated by dividing the net profit attributable to members , adjusted to exclude costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial
year, adjusted for any bonus elements in ordinary shares issued during the financ ial year.
Diluted earnings per share
Diluted earnings per share is calculated by dividing the basic EPS earnings adjusted by the after tax effect of interest and other
financing costs associated with dilutive potential ordinary shares and the effect on revenues and expenses of conversion to
ordinary shares associated with dilutive potential ordinary shares by the weighted average number of ordinary s hares and dilutive
potential ordinary shares adjusted for any bonus issue.
( W) SEGMENT REPORTING
A business segment is a group of assets and operations engaged in providing products or services that are subjec t to risks and
returns that are different to those of other business segments. A geographical segment is engaged in providing products or services
within a particular economic environment and is subject to risks and returns that are different from those of segments operating in
other economic environments. Geographical segments are the c onsolidated entity’s primary reporting format.
( X) SIGNIFICANT ACCO UNTING ESTIMATES AND JUDGEMENTS
The c arrying amounts of certain as sets and liabilities are often determined based on estimates and assumptions of future events .
The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain
assets and liabilities within the next financial year are:
(i) Impairment of goodwill and intangibles with indefinite useful lives
The Group tests annually whether goodwill and intangible assets with indefinite useful lives are impaired. This requires an es timation
of the recoverable amount of the cash-generating units to which the goodwill and intangibles with indefinite useful lives are
allocated. The assumptions used in this estimation of recoverable amount and the c arrying amount of goodwill and intangibles
with indefinite useful lives are detailed in Note 14.
(ii) Income taxes
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required
in determining the worldwide provision for income taxes. There are many transactions and calculations undertaken during the
ordinary cours e of business for which the ultimate tax determination is uncertain.
(iii) Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of equity instruments at the
date at which they are granted. The fair value is determined by an external valuer us ing a binomial model, using the assumptions
detailed in Note 33.
The Group measures the cost of share-based payments at fair value at the grant date using the Monte Carlo formula taking into
account the terms and conditions upon which the instruments were granted, as discussed in Note 33.
(iv) Defined benefit plans
Various actuarial assumptions are required when determining the Group’s superannuation plan obligations. Thes e assumptions and
the related carrying amounts are discussed in Note 17.
48
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(v) Held-to-maturity investments
The Group follows the AASB 139 guidance on classifying non-derivative financial assets with f ixed or determinable payments and
fixed maturity as held-to-maturity. This classification requires s ignificant judgement. In making this judgement, the Group evaluates
its intention and ability to hold such investments to maturity.
If the G roup fails to keep thes e inves tments to maturity other than for specific circumstances explained in AASB 139, it will be
required to reclassify the whole class as available-for-sale. The investments would therefore be measured at fair value not amortised
cost which would result in a corresponding entry in the fair value res erve in shareholders ’ equity. Furthermore, the entity would not
be able to classify any financial assets as held-to-maturity for the following two financial years.
( Y) ROUNDING OF AMOUNTS
The c onsolidated entity is of a kind referred to in Class Order 98/0100, as amended by Class Order 04/667, issued by the Australian
Securities and Investments Commission relating to the “rounding off” of amounts in the financial report. Amounts in this report have
been rounded to the nearest thousand dollars in acc ordance with that Class Order, unless otherwise indic ated.
( Z) NEW ACCOUNTING STANDARDS AND UIG INTERPRETATIONS
Certain new accounting standards and interpretations have been publis hed that are not mandatory for 29 June 2008 reporting
periods. The Group and the Company's assessment of the impact of these new standards and interpretations is set out below:
49
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Referen ce
T itle
Sum mary
AASB Int. 12
and AASB 2007-
2
Service Concession
Arrangements and
consequential amendments to
other Australian Accounting
Standards
AASB Int. 4
(Revised)
Determining whether an
Arrangement contains a Lease
AASB Int. 129 Service Concession
Arrangements: Disclosures
Clarifies how operator s recognise the
infr astructure as a financial asset and/or an
intangible asset – not as property, plant and
equipment.
The revised Interpretation specifically scopes out
arrangements that fall within the scope of AASB
Interpretation 12.
Requires disclosure of provisions or significant
features necessary to assist in assessing the
amount, timing and certainty of futur e cash flows
and the nature and extent of the var ious r ights
and obligations involved. T hese disclosures apply
to both grantors and oper ators.
Ap plicat ion
date o f
standard*
1 Januar y 2008
Imp act on Gro up fin ancial report
Unless the Group enters into ser vice concession
arrangements or public-private-partnerships (PPP),
the amendments are not expected to have any
impact on the Group's financial report.
App licatio n
d ate for
Group*
30 June 2008
1 Januar y 2008
Refer to AASB Int. 12 and AASB 2007-2 above.
30 June 2008
1 Januar y 2008
Refer to AASB Int. 12 and AASB 2007-2 above.
30 June 2008
AASB Int. 13
Customer Loyalty Programmes Deals with the accounting for customer loyalty
programmes, which are used by companies to
provide incentives to their customers to buy their
products or use their services.
1 July 2008
T he Group does not have any customer loyalty
programmes and as such this interpretation is not
expected to have any impact on the Group’s financial
report.
30 June 2008
AASB Int. 14
AASB 119 – T he Limit on a
Defined Benefit Asset, Minimum
Funding Requirements and their
Interaction
Aims to clar ify how to determine in normal
circumstances the limit on the asset that an
employer’s balance sheet may contain in respect
of its defined benefit pension plan.
1 Januar y 2008
T he Group has a defined benefit pension plan and
as such this inter pretation may have an impact on
the Group’s financial report. However, the Group has
not yet determined the extent of the impact, if any.
30 June 2008
AASB 8 and
AASB 2007-3
Operating Segments and
consequential amendments to
other Australian Accounting
Standards
New standard replacing AASB 114 Segment
Reporting, which adopts a management reporting
approach to segment reporting.
1 Januar y 2009
AASB 123
(Revised) and
AASB 2007- 6
Borrowing Costs and
consequential amendments to
other Australian Accounting
Standards
The amendments to AASB 123 require that all
borrowing costs associated with a qualifying
asset be capitalised.
1 Januar y 2009
AASB 101
(Revised) and
AASB 2007- 8
Presentation of Financial
Statements and consequential
amendments to other Australian
Accounting Standards
1 Januar y 2009
Intr oduces a statement of comprehensive
income. Other revisions include impacts on the
presentation of items in the statement of changes
in equity, new presentation requirements for
restatements or r eclassifications of items in the
financial statements, changes in the presentation
requirements for dividends and changes to the
titles of the financial statements.
AASB 8 is a disclosure standar d so will have no
direct impact on the amounts included in the
Group' s financial statements, although it may
indirectly impact the level at w hich goodwill is tested
for impairment. In addition, the amendments may
have an impact on the Gr oup’s segment disclosures.
29 June 2009
T hese amendments to AASB 123 require that all
borrowing costs associated with a qualifying asset
be capitalised. The Gr oup has no borrowing costs
associated with qualifying assets and as such the
amendments are not expected to have any impact
on the Group' s financial report.
T hese amendments are only expected to affect the
presentation of the Group’s financial report and will
not have a dir ect impact on the measurement and
recognition of amounts disclosed in the financial
report. T he Group has not determined at this stage
whether to present a single statement of
comprehensive income or two separate statements.
29 June 2009
29 June 2009
AASB 2008-1
Amendments to Australian
Accounting Standard – Share-
based Payments: Vesting
Conditions and Cancellations
The amendments clarify the definition of 'vesting
conditions', introducing the ter m 'non- vesting
conditions' for conditions other than vesting
conditions as specifically defined and prescribe
the accounting treatment of an award that is
effectively cancelled because a non-vesting
condition is not satisfied.
1 Januar y 2009
T he Group has share-based payment arrangements
that may be affected by these amendments.
However, the Group has not yet determined the
extent of the impact, if any
29 June 2009
AASB 2008-2
Amendments to Australian
Accounting Standards – Puttable
Financial Instruments and
Obligations arising on
Liquidation
The amendments provide a limited exception to
the definition of a liability so as to allow an entity
that issues puttable financial instruments with
cer tain specified features, to classify those
instruments as equity rather than financial
liabilities.
1 Januar y 2009
T hese amendments are not expected to have any
impact on the Group’s financial report as the Group
does not have on issue or expect to issue any
puttable financial instr uments as defined by the
amendments.
29 June 2009
50
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Referen ce
T itle
Sum mary
AASB 3
(Revised)
Business Combinations
The revised standard introduces a number of
changes to the accounting for business
combinations, the most significant of which
allows entities a choice for each business
combination entered into – to measure a non-
controlling interest (formerly a minority interest)
in the acquiree either at its fair value or at its
proportionate interest in the acquiree’s net
assets. T his choice will effectively r esult in
recognising goodwill relating to 100% of the
business ( applying the fair value option) or
recognising goodwill relating to the percentage
interest acquired. T he changes apply
prospectively.
Ap plicat ion
date o f
standard*
1 July 2009
Imp act on Gro up fin ancial report
T he Group may enter into some business
combinations during the next financial year and may
therefore consider early adopting the revised
standard. The Group has not yet assessed the
impact of early adoption, including which accounting
policy to adopt.
App licatio n
d ate for
Group*
29 June 2009
AASB 127
(Revised)
Consolidated and Separ ate
Financial Statements
Under the revised standard, a change in the
ownership interest of a subsidiary (that does not
result in loss of control) will be accounted for as
an equity transaction.
1 July 2009
If the Group changes its owner ship interest in
existing subsidiar ies in the future, the change will be
accounted for as an equity transaction. T his will
have no impact on goodwill, nor will it give rise to a
gain or a loss in the Group’s income statement.
29 June 2009
AASB 2008-3
Amendments to Australian
Accounting Standards arising
from AASB 3 and AASB 127
Cost of an Investment in a
Subsidiary, Jointly Contr olled
Entity or Associate
Amendments to
International
Financial
Reporting
Standards
Amending standard issued as a consequence of
revisions to AASB 3 and AASB 127.
1 July 2009
Refer to AASB 3 (Revised) and AASB 127 (Revised)
above
29 June 2009
The main amendments of relevance to Australian
entities are those made to IAS 27 deleting the
‘cost method’ and requiring all dividends from a
subsidiary, jointly controlled entity or associate to
be recognised in profit or loss in an entity's
separate financial statements (i.e., parent
company accounts). T he distinction between pre-
and post-acquisition profits is no longer required.
However, the payment of such dividends requires
the entity to consider whether there is an
indicator of impairment.
AASB 127 has also been amended to effectively
allow the cost of an investment in a subsidiary, in
limited reorganisations, to be based on the
previous carrying amount of the subsidiary ( that
is, share of equity) rather than its fair value.
1 Januar y 2009
Recognising all dividends received from
subsidiaries, jointly controlled entities and
associates as income will likely give rise to greater
income being recognised by the parent entity after
adoption of these amendments.
29 June 2009
In addition, if the Group enter s into any group
reorganisation establishing new parent entities, an
assessment will need to be made to determine if the
reorganisation meets the conditions imposed to be
effectively accounted for on a ‘carry-over basis’
rather than at fair value.
Improvements to IFRSs
Amendments to
International
Financial
Reporting
Standards
The improvements project is an annual pr oject
that provides a mechanism for making non-
urgent, but necessary, amendments to IFRSs.
The IASB has separ ated the amendments into
two par ts: Part 1 deals with changes the IASB
identified resulting in accounting changes; Part II
deals w ith either terminology or editorial
amendments that the IASB believes will have
minimal impact.
1 Januar y 2009
except for
amendments
to IFRS 5,
which are
effective from 1
July 2009.
T he Group has not yet determined the extent of the
impact of the amendments, if any.
29 June 2009
IFRIC 16
Hedges of a Net Investment in a
Foreign Operation
This interpretation proposes that the hedged risk
in a hedge of a net investment in a foreign
operation is the foreign currency risk arising
between the functional currency of the net
investment and the functional currency of any
parent entity. This also applies to foreign
operations in the form of joint ventur es,
associates or branches.
*designates the beginning of the applicable annual repor ting period unless otherwise stated
1 Januar y 2009
T he Inter pretation is unlikely to have any impact on
the Group since it does not significantly r estrict the
hedged risk or where the hedging instrument can be
held.
29 June 2009
51
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
2. Revenues
( A) REVENUE FROM OPERATIONS
Revenue generated from s ales of:
Newspapers and magazines
Online and other
Total sales revenue
Revenue from printing and other services
Dividend/distribution revenue
Wholly owned controlled entities
Other c orporations
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
2,276,638
1,846,767
503,222
221,943
2,779,860
2,068,710
120,895
41,955
-
1,445
1,445
-
-
1,463
1,463
-
-
128
-
720
100,000
-
775,000
-
Total revenue from continuing oper ations
2,900,883
2,111,385
101,445
776,463
( B) OTHER REVENUE AND INCOME
Interest income
Wholly owned controlled entities
Other c orporations
Net gain on sale of property, plant and equipment
Net gain on sale of investments
Net gain on foreign exchange
Other
Total other revenue and income
Total revenue and income
-
25,044
2,430
-
2,933
2,717
33,124
-
5,760
41,859
13,227
113
6,196
67,155
26,368
141
26,557
201
-
-
-
-
-
-
-
-
26,509
26,758
2,934,007
2,178,540
127,954
803,221
52
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
3. Expenses
( A) EXPENSES BY NATURE
Staff costs excluding staff redundancy costs
Newsprint and paper
Distribution and other production costs
Promotion and advertis ing costs
Staff redundancy costs
Rent and outgoings
Repairs and maintenance
Communication costs
News services
Computer costs
Fringe benefits tax, travel and entertainment
Royalties and copyright payments
Other
Total expenses befor e depreciation, amortisation,
asset impairment and finance costs
( B) DEPRECIATIO N, AMORTISATION AND ASSET IMPAIRMENT
Depreciation of freehold property
Depreciation of plant and equipment
Amortis ation of leas ehold property/buildings
Amortis ation of software
Amortis ation of customer relationships
Impairment of depreciable assets
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
951,943
311,807
313,006
108,572
11,423
62,434
32,426
24,056
16,522
19,917
34,886
696,852
269,057
235,522
88,141
12,862
78,076
24,417
17,418
12,398
15,135
23,534
44,985
167,378
4,341
137,281
35,654
-
2
343
7,446
17,890
6,769
931
31
5,884
2,263
10
8,780
40,138
-
9
69
832
23,050
4,963
2,305
40
5,997
2,105
-
7,105
2,099,355
1,615,034
86,003
86,613
4,860
79,834
2,303
19,385
1,913
-
3,574
68,594
1,504
19,447
892
17,270
-
7,183
41
2,290
-
-
-
4,779
144
7,712
-
-
Total depreciation, amortisation and asset impairment
108,295
111,281
9,514
12,635
( C) FINANCE COSTS
Finance costs
External corporations/persons*
Finance lease
Total finance costs
( D) DETAILED EXPENSE DISCLOSURES
Costs of sales
Operating lease rental expense
Lease surrender fee and additional rent costs - Darling Park head office
Defined contribution fund expense
Share based payments expense
207,124
4,795
112,127
4,837
211,919
116,964
5
-
5
869,649
43,583
-
56,789
4,429
764,415
30,023
37,188
41,685
822
-
16,858
-
3,196
4,429
* Finance costs paid to external persons at 1 July 2007 included $1.8m of PRESSES costs. PRESSES converted on 27 July 2006.
2,743
-
2,743
-
22,567
-
3,794
822
53
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
4. Significant items
The profit after tax from continuing operations inc ludes the following whose
disclosure is relevant in explaining the financial performance of the
consolidated entity.
Property - Comprising:
Profit on sale of Spencer Street property *
Property costs associated with the relocation from Darling Park to the new
facility at One Darling Island, Pyrmont **
Income tax benefit
Property (loss)/gain, net of tax
Investments and Impairments - Comprising:
Profit on sale of inves tment in Cars ales.com.au Limited ***
Impairment of investments and ass ets held for sale
Impairment of mastheads
Outside equity interest share of masthead impairment
Income tax benefit
Investment gains and impairment of intangibles and investments,
net of tax
Fixed asset impairment and restructuring - Comprising:
Impairment of plant, equipment and software
Restructuring and redundancy charges
Income tax benefit
Fixed asset impairment and restructuring, net of tax
-
41,929
(2,398)
719
(1,679)
(41,283)
12,184
12,830
-
-
-
-
-
-
13,227
(8,538)
(6,666)
3,000
519
1,542
778
(17,270)
(10,419)
2,893
(6,748)
(9,344)
7,982
(18,632)
Net significant and non-recurring items after income tax expense
(8,427)
(4,260)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,377)
713
(1,664)
-
(3,046)
-
-
-
(3,046)
(553)
-
166
(387)
(5,097)
*
The consolidated entity utilised existing capital losses and as such no income t ax was payable on the disposal of the Spencer Street
propert y
** Other property costs includes the lease surren der fee, real estate consult an t fees, w rite-off of assets and fixtures that could not b e relocated
from the Darling Park offices to the new office location
*** The consolidated entity utilised existing capital losses and as such no income t ax was payable on the disposal of the investment in
Carsales.com.au L im it ed
54
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
5. Income tax expense
Income tax expense is reconciled to prima fac ie inc ome tax payable as follows:
Net prof it before inc ome tax expense
523,173
338,222
32,432
701,230
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
Prima facie income tax at 30% (2007: 30%)
Tax effect of differences:
Share of net profits of associates and joint ventures
Capital gains not taxable
Non assessable dividends
Over provision in prior financial years
Overs eas tax rate and accounting differentials
Non-deductible items
Intragroup provision transfers
Other
Income tax expense/(benefit)
Current income tax expens e/(benefit)
Deferred income tax (benefit)/expense
Over provision in prior financial years
156,952
101,467
9,730
210,369
(1,476)
(6,017)
(74)
(2,633)
(13,876)
2,555
-
252
135,683
156,532
(18,216)
(2,633)
(638)
(17,597)
(590)
(30)
(8,646)
1,679
-
956
76,601
89,503
(12,872)
(30)
-
-
(30,000)
(2,396)
-
1,519
(5,607)
-
-
(232,500)
(338)
669
272
-
-
1,173
(26,754)
(20,548)
(3,810)
(2,396)
(20,355)
(18,060)
(1,957)
(338)
Income tax expense/(benefit) in the income statement
135,683
76,601
(26,754)
(20,355)
55
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
6. Dividends paid and proposed and
finance costs
( A) ORDINARY SHARES
Interim 2008 75% franked dividend: 10 cents - paid 31 March 2008
(2007: f ully f ranked 10 cents - paid 21 March 2007)
151, 418
102,255
151,418
102,255
Final 2007 f ully f ranked dividend: 10 cents - paid 27 S eptember 2007
(2006: 11.5 cents - paid 6 O ctober 2006)
Total dividends paid - ordinary shares
147, 964
116,182
147,964
116,182
299, 382
218,437
299,382
218,437
( B) PREFERRED RESET SECURITIES EXCHANGEABLE
FOR SHARES (PRESSES)
Fully f ranked PRES SES dividend:
2008: $nil*
2007: $0. 8921 per share - paid 4 A ugust 2006
Total finance costs pai d - PRES SES
( C) STAPLED PREFERENCE SHARES ( SPS)
SP S dividend:
2008: $4. 3341 per share - paid 30 April 2008
2008: $4. 0404 per share - paid 31 October 2007
2007: $4. 0040 per share - paid 30 April 2007
2007: $4. 3721 per share - paid 31 October 2006
Total dividends paid - SPS
-
-
-
-
2,230
2,230
13, 262
12, 356
-
-
25, 618
-
-
12,515
13,116
25,631
-
-
-
-
-
-
-
-
-
2,230
2,230
-
-
-
-
-
Total dividends and PRES SES finance costs paid
325, 000
246,298
299,382
220,667
*
PRESSES were r ed eem ed on 27 July 2006 and conver ted into fully paid ordinary shar es.
( D) DIVIDENDS PROPOSED AND NOT RECOG NISED AS A LIABILITY
Sinc e balance date the directors have declared a final dividend of 10 cent s per fully paid ordinary share 75% franked at the
corporate t ax rate of 30%. The aggregat e amount of the final dividend to be paid on 2 October 2008 out of the retained profits at
29 June 2008, but not recognised as a liability at the end of the year is expected to be $151.4 million.
( E) FRANKED DIVIDENDS
Franking acc ount balance as at balanc e date at 30% (2007: 30%)
Franking credits t hat will aris e from t he payment of income tax payable balances
as at the end of the financial year
Total franki ng credits avai lable for subsequent financial years based on a tax rate of 30%
C o mp an y
C o mp an y
20 0 8
$'0 0 0
20 07
$ '0 00
10,030
25,504
7,927
17,957
10,756
36,260
On a tax-paid basis, the Company’s franking account balance is approximately $10. 0 million (2007: $25.5 million). The impact on the
f ranking account of the dividend declared by t he directors since balance date, will be a reduction in the f ranking account of
approximat ely $48.6 million. The Company expects t o have suf ficient f ranking account credits arising f rom payment of income tax payable.
56
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
7. Receivables
Current
Trade debtors *
Provision for doubtful debts
Loans to related parties **
Loans and deposits
Prepayments
Other
Total current receivables
Non-current
Loans to related parties ***
Loans and deposits
Prepayments
Other
Total non-current receivables
Consolidated
Consolidated
Company
Company
29 June 2008
1 July 2007
29 June 2008
1 July 2007
$'000
$'000
$'000
$'000
439,427
(9,515)
372,585
(5,711)
429,912
366,874
-
-
-
770
-
770
-
274
16,771
52,169
-
98
16,204
25,741
1,273,644
1,354,703
-
2,624
843
75
4,344
777
499,126
408,917
1,277,111
1,360,669
-
1,102
2,008
573
3,683
-
398,566
398,566
1,171
25
127
-
2,008
548
-
25
114
1,323
401,122
398,705
* Trade debtors are non-interest bearing and are generally on 7 to 45 day terms
** Loans to related parties current are non-interest bearing and are repayable at call
*** Loans to related parties non-current are interest bearing deriving interest of 9.5% p.a. and are repayable on 27 June 2015, although this term
may be extended upon mutual agreement of the parties
(A) IMPAIRED TRADE DEBTORS
As at 29 June 2008, trade debtors of the Group with a nominal value of $9.5million (2007: $5.7m) were impaired and fully provided for.
Refer to Note 38(C) for the factors considered in determining whether trade debtors are impaired.
There were no impaired trade debtors for the Company in 2008 or 2007.
As at 29 June 2008, an analysis of trade debtors that are not considered as impaired is as follows:
Consolidated
Consolidated
Company
Company
Not past due
Past due 0 - 30 days
Past due 31 - 60 days
Past 60 days
2008
$'000
239,371
148,590
21,151
20,800
2007
$'000
206,637
134,794
14,758
10,685
429,912
366,874
2008
$'000
-
-
-
-
-
The past 60 day ageing category was impacted by the inclusion of the Southern Cross Broadcasting group which was acquired
during the 2008 year.
Based on the credit history of these receivables, it is expected these amounts will be received. All other receivables do not contain
impaired assets and are not past due.
2007
$'000
770
-
-
-
770
57
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Movements in the provision for doubtful debts are as follows:
Balance at the beginning of the financial year
Additional provisions
Acquisition of controlled entities
Utilised
Exchange differences
Balance at the end of the financial year
8. Inventories
Raw materials and stores - at cost
Provision for diminution in value
Total raw materials and stores
Finished goods - at cost
Work in progress - at cost
Program copyright in production costs
Total inventories
9. Assets held for sale
Mastheads*
Property**
Total assets held for sale
Consolidated
Consolidated
2008
$'000
5,711
4,081
2,469
(2,566)
(180)
9,515
2007
$'000
3,572
2,126
2,476
(2,589)
126
5,711
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
39,353
(128)
39,225
3,852
1,565
159
44,613
-
44,613
3,426
488
-
44,801
48,527
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,222
2,222
500
-
500
-
-
-
-
-
-
* On 9 May 2007 the Company acquired Rural Press Limited. In order to address specific concerns of the Australian Competition and
Consumer Commission (ACCC) arising from this acquisition the Group gave an undertaking to divest two community newspapers,
The Newcastle and Lake Macquarie Post and The Hunter Post. These mastheads were classified as held for sale at 1 July 2007.
The newspapers were subsequently sold on 1 December 2007.
** A decision was taken prior to 29 June 2008 to sell two buildings owned by Fairfax Media (UK) Limited, a wholly owned subsidiary
of Fairfax Media Limited. A further property owned by the Group in Nowra, NSW is also due to be sold. These properties are being
actively marketed, with a sale expected within six months.
58
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
10. Other assets
Current
Distribution advances and costs
Film investments
Provision for impairment of film investments
Total other current assets
Non-current
Distribution advances and costs
Provision for impairment of distribution advances and costs
Total other non-current assets
11. Investments accounted for using
the equity method
Shares in associates
Shares in joint ventures
Total investments accounted for using the equity method
(A) INTERESTS IN ASSOCIATES
Note
(A)(i)
(B)(i)
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
5,903
12,449
(6,742)
5,707
11,610
29,847
(20,957)
8,890
-
-
-
-
-
-
-
-
14,764
30,926
45,690
13,545
20,933
34,478
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Name of Company
Autobase Limited
Principal Activity
Place of
Incorporation
Ownership interest
29 June 2008
1 July 2007
E-commerce: online vehicle dealer
New Zealand
25.4%
25.4%
Australian Associated Press Pty Ltd
News agency business and
Australia
47.0%
47.0%
automotive website
information service
Executive Publishing Network Pty Ltd*
Magazine Publishing
Guardian Print Limited
Printing facility
Australia
New Zealand
Homebush Transmitters Pty Ltd**
Rental of a transmission facility
Australia
Newspaper House Limited
Property ownership
New Zealand
New Zealand Press Association Ltd
News agency business and financial
New Zealand
information service
30.0%
25.0%
50.0%
45.5%
49.2%
30.0%
25.0%
-
45.5%
49.2%
NGA.net Pty Ltd
Provider of e-recruitment software
Australia
30.0%
30.0%
Perth FM Facilities Pty Ltd**
Rental of a transmission facility
Australia
Times Newspapers Limited
Newspaper Publishing
New Zealand
33.3%
49.9%
-
49.9%
to corporations
*
**
The value of the investment in Executive Publishing Network Pty Ltd was written off at June 2007 following advice that a Board
resolution had been passed to place the company into liquidation.
Investments in associates acquired as part of the Southern Cross Broadcasting acquisition on 9 November 2007.
59
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(i) Carrying amount of investment in associates
Balance at the beginning of the financial year
Investments in associates acquired during the financ ial year
Adjustment for foreign exchange revaluation
Share of ass ociates' net profit after income tax expense
Dividends received/receivable from associates
Investments in associates disposed during the financial year
Impairment of investment in associate *
Balance at end of the financial year
(ii) Share of associates' profits
Profit before income tax expens e
Income tax expense
Net profit after income tax expense
(iii) Shar e of associates' assets and liabilities
Current assets
Non-current ass ets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
C on so li da te d
C on so li da ted
29 Ju ne 20 0 8
1 Ju ly 20 07
$'0 0 0
$ '0 00
13,545
100
(868)
2,427
(340)
(100)
-
15,553
796
203
333
(294)
-
(3,046)
14,764
13,545
2,607
(180)
2,427
10,434
21,436
31,870
5,739
3,104
8,843
744
(411)
333
10,355
21,393
31,748
5,652
3,231
8,883
( B) INTERESTS IN JOINT VENTURES
Na me of C om pa n y
Prin ci pa l A ctivi ty
P la ce o f
In co rp ora tio n
Own e rsh ip in tere st
29 Ju ne 20 0 8
1 Ju ly 20 07
Advantate Pty Ltd** *
E-commerce: Online Marketing
Australia
Columbia Press Pty Ltd
Newspaper publishing and printing
Australia
Endemol Southern Star (NZ) Pty Ltd**
Television program production
New Zealand
Endemol Southern Star Pty Ltd**
Television program production
Gilgandra Newspapers Pty Ltd
Newspaper publishing and printing
Gippsland Regional Partnership
Newspaper publishing and printing
Hi-5 Operations Pty Ltd* ***
Television program production
Australia
Australia
Australia
Australia
Torch Publishing Company Pty Ltd
Newspaper publishing and printing
Australia
50.0%
50.0%
49.0%
49.0%
50.0%
50.0%
50.0%
50.0%
-
50.0%
-
-
50.0%
50.0%
-
50.0%
**
***
Investment s in joint ventu res acquired as part of the Southern C ross Br oad casting acquisition on 9 Novem ber 20 07.
Investment in joint venture acquired on 14 May 2008 .
****
Investment in joint venture acquired on 11 March 2008.
60
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(i) Carrying amount of investment in joint ventures
Balance at the beginning of the financial year
Share of joint venture's net profit after income tax expense
Interests in joint venture acquired during the year
Dividends received/receivable from joint venture
Share of increment in joint ventures' reserves
Balance at end of the financial year
(ii) Share of joint ventures' profits
Revenues
Expenses
Profit before income tax expens e
Income tax expense
Net profit after income tax expense
(iii) Shar e of joint ventur es' assets and liabilities
Current assets
Non-current ass ets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
( C) SHARE OF NET PROFITS OF ASSOCIATES AND J OINT VENTURES
Profit before income tax expens e
Income tax expense
Net profit after income tax expense
C on so li da te d
C on so li da ted
29 Ju ne 20 0 8
1 Ju ly 20 07
$'0 0 0
$ '0 00
20,933
6,308
12,053
(8,368)
-
30,926
31,999
(23,991)
8,008
(1,700)
6,308
17,636
10,840
28,476
9,559
1,154
10,713
2,780
2,628
16,000
(1,362)
887
20,933
40,097
(36,259)
3,838
(1,210)
2,628
3,034
6,162
9,196
1,188
563
1,751
10,615
(1,880)
8,735
4,582
(1,621)
2,961
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
12. Available for sale investments
Listed equity securities - at fair value
Total available for sale investments
3,547
3,547
2,431
2,431
-
-
-
-
Available for sale investments consis t of investments in ordinary shares and have no fixed maturity date. During the financ ial year,
an impairment charge of $1.4 million was recognised in the income statement in respec t of one of these investments due to a
significant dec line in the share price of the investment during the financial year.
61
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
13. Held to maturity investments
Bonds
Total held to maturity investments
14,686
14,686
16,014
16,014
-
-
-
-
The annuity bonds issued by Paperbonds Limited, which were acquired on 8 March 2006 and are to be held to maturity in
September 2015, have a face value of $20.0 million. They are indexed to the consumer price index (CPI) and have an effective interes t
rate for the period ended 29 June 2008 of 5.64% (2007: 5.64%).
14. Intangible assets
Mastheads and tradenames
Software
Customer relationships
Radio licences
Goodwill
Total intangible assets
3,715,455
3,788,983
-
-
62,250
14,298
53,136
16,411
146,245
2,554,392
17,000
2,255,513
14,044
21,417
-
-
-
-
-
-
6,492,640
6,131,043
14,044
21,417
RECONCILIATIONS
Reconciliations of the carrying amount of each class of intangible at the beginning and end of the current financial year are set out below:
Radio
Customer Mastheads &
licences
relationships
tradenames
Software
Goodwill
Note
$'000
$'000
$'000
$'000
$'000
Total
$'000
(i) Consolidated
At 1 July 2006
Cost
Accumulated amortisation and impairment
Net carrying amount
-
-
-
1,000
-
2,200,270
-
127,316
(83,080)
654,142
-
2,982,728
(83,080)
1,000
2,200,270
44,236
654,142
2,899,648
62
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Radio
Customer Mastheads &
licences
relationships
tradenames
Software
Goodwill
Note
$'000
$'000
$'000
$'000
$'000
Total
$'000
Period ended 1 July 2007
Balance at beginning of the financial year
Additions
Disposals
-
-
-
1,000
2,200,270
-
-
1,428
-
44,236
26,218
(586)
654,142
2,899,648
5,711
33,357
-
(586)
Acquisition of business combinations
17,000
16,303
1,494,780
2,131
1,534,763
3,064,977
Impairment charge
Amortisation charge
Assets classified as held for sale
Transfers from plant & equipment
Exchange differences
3(B)
9
15(i)
At 1 July 2007, net of accumulated amortisation
and impairment
-
-
-
-
-
-
(892)
-
-
-
(8,396)
-
(500)
-
101,401
(8,530)
(19,447)
-
8,401
713
-
-
-
-
60,897
(16,926)
(20,339)
(500)
8,401
163,011
17,000
16,411
3,788,983
53,136
2,255,513
6,131,043
At 1 July 2007
Cost
Accumulated amortisation and impairment
Net carrying amount
17,000
-
17,000
17,303
(892)
3,795,649
(6,666)
163,421
(110,285)
2,255,513
-
6,248,886
(117,843)
16,411
3,788,983
53,136
2,255,513
6,131,043
Radio
Customer Mastheads &
licences
relationships
tradenames
Software
Goodwill
Note
$'000
$'000
$'000
$'000
$'000
Total
$'000
Period ended 29 June 2008
Balance at beginning of the financial year
17,000
16,411
3,788,983
Additions
Disposals
Acquisition of business combinations
Amortisation charge
Exchange differences
3(B)
At 29 June 2008, net of accumulated amortisation
and impairment
At 29 June 2008
Cost
Accumulated amortisation and impairment
-
(6,369)
135,614
-
-
-
-
(200)
(1,913)
-
27,035
-
39,885
-
(140,448)
53,136
28,864
(106)
1,438
(19,385)
(1,697)
2,255,513
6,131,043
7,937
-
63,836
(6,475)
372,472
549,209
-
(81,530)
(21,298)
(223,675)
146,245
14,298
3,715,455
62,250
2,554,392
6,492,640
146,245
-
17,103
(2,805)
3,715,455
-
188,748
(126,498)
2,554,392
-
6,621,943
(129,303)
Net carrying amount
146,245
14,298
3,715,455
62,250
2,554,392
6,492,640
63
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(ii) Company
At 1 July 2006
Cost
Accumulated amortisation and impairment
Net carrying amount
Period ended 1 July 2007
Balance at beginning of the financial year
Additions
Disposal
Amortisation charge
Transfers from plant & equipment
3(B)
15(ii)
At 1 July 2007, net of accumulated amortisation
and impairment
At 1 July 2007
Cost
Accumulated amortisation and impairment
Net carrying amount
Period ended 29 June 2008
Balance at beginning of the financial year
Additions
Disposals
Amortisation charge
Intercompany transfers
3(B)
At 29 June 2008, net of accumulated amortisation
and impairment
At 29 June 2008
Cost
Accumulated amortisation and impairment
Net carrying amount
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53,350
(27,529)
25,821
25,821
2,253
(3)
(7,712)
1,058
21,417
56,466
(35,049)
21,417
21,417
1,833
(35)
(2,290)
(6,881)
14,044
53,392
(39,348)
14,044
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53,350
(27,529)
25,821
25,821
2,253
(3)
(7,712)
1,058
21,417
56,466
(35,049)
21,417
21,417
1,833
(35)
(2,290)
(6,881)
-
14,044
53,392
(39,348)
14,044
64
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(iii) Impair ment of cash generating units (CGU) including goodwill and indefinite life assets
Goodwill is allocated to CGU groups which represent the economic entity's main operational groups within geographic segments.
The rec overable amount of each CGU which includes goodwill or indefinite life intangibles has been reviewed.
The rec overable amount of each CGU is determined based on value-in-use c alculations over a five year period with a terminal
value as this method resulted in a higher recoverable amount than the fair value less costs to sell method. These calculations use
cash flow projec tions based on financial budgets approved by the Directors for the 2009 financial year, after an adjustment for central
overheads and s ynergy benefits. Cas h flows beyond the 2009 period are extrapolcated using the estimated growth rates stated
at (v) below. The growth rates do not exceed the long-term avarage growths rate for the bus inesses in which the CGU operates.
In the prior year the recoverable amount was determined based on fair value less cost to sell using a masthead multiple, based on
recent market transactions, independent valuations or directors' assessment, to the CGU's resulting cas hflows.
(iv) Allocation of goodwill and non-amortising intangibles to CGUs
For the financial year ended 1 July 2007, the consolidated entity allocated goodwill and non-amortising intangibles to the following CGU
Groups:
Allocation of goodwill to CGU Groups
New South Wales General Publications
Victorian General Publications
Queensland, South Australia, Western Australia and Tasmania General Publications
Fairfax Business Media
Agricultural Publications
Australian Digital
New Zealand Publishing
New Zealand Digital
Total goodwill
Allocation of non-amortising intangibles to CGU Groups
New South Wales General Publications
Victorian General Publications
Queensland, South Australia, Western Australia and Tasmania General Publications
Fairfax Business Media
Agricultural Publications
Australian Digital
New Zealand Publishing
New Zealand Digital
Total indefinite life intangibles
Total goodwill and indefinite life intangibles
C on so li da ted
1 Ju ly 20 07
$ '0 00
724,369
307,632
352,630
14,253
177,058
67,743
-
611,828
2,255,513
1,319,628
564,805
332,000
167,050
380,650
8,450
1,003,624
29,776
3,805,983
6,061,496
For the financial year ended 29 June 2008, the consolidated entity has redefined its CGU Groups. This change has occurred primarily as
a result of the acquisition of the Rural Press and Southern Cross Broadcasting entities.
65
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
The consolidated entity has allocated goodwill and non-amortising intangibles to the following CGU Groups for the year ended 29
June 2008:
Allocation of goodwill to CGU Groups
New South Wales Metropolitan and Community Publications
Victorian Metropolitan and Community Publications
Regional Publications
Business Public ations
Agricultural Publications
New Zealand Publications
Australian Digital
New Zealand Digital
Fairfax Radio Networks and Southern Star Group
Rural Press Printing
Australian Printing and Publishing
Total goodwill
Allocation of non-amortising intangibles to CGU Groups
New South Wales Metropolitan and Community Publications
Victorian Metropolitan and Community Publications
Regional Publications
Business Public ations
Agricultural Publications
New Zealand Publications
Australian Digital
New Zealand Digital
Fairfax Radio Networks and Southern Star Group
Total indefinite life intangibles
Total goodwill and indefinite life intangibles
C on so li da ted
29 Ju ne 20 08
$ '0 00
11,795
54,623
230,338
16,216
39,863
2,824
66,969
568,299
363,230
577,910
622,325
2,554,392
650,779
436,906
1,175,697
167,050
371,480
879,181
8,450
25,912
146,245
3,861,700
6,416,092
No goodwill or indefinite life intangibles are allocated to a CGU in the Company.
(v) Key assumptions used for value-in-use calculations
The key as sumptions on which management has based its cashflow projections when determining the value-in-use calc ulations
of the CGUs are as follows:
•
no significant increase in budgeted gross margin or growth rate from the 29 June 2008 financial year for non-digital CGUs.
This is bas ed on past performance and expected efficiency improvements.
growth rates of between 30% to 50% for digital CGUs , 3%-12% for publication CGUs and 25% to 30% for combined digital/public ation
CGUs.
the weighted average growth rates used are c onsistent with forecasts included in industry reports .
the spot exchange rate prevailing at balance date is used when converting foreign cashflows on foreign mas theads . The exchange
rate of 0.7926 has been applied to New Zealand mastheads for the current financial year.
the post-tax discount rate applied to the cash flow projections was 10.5%
•
•
•
•
(vi) Impact of possible change in key assumptions
If the discount rate applied to the cash flow projections was increased to 11%, an aggregated impairment of $3.8 million would result
across three CGUs . Management does not cons ider a reasonably possible change in any of the other key assumptions would cause
the carrying amount of any of the CGU Groups to exceed its rec overable amount.
66
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
15. Property, plant and equipment
Freehold land and buildings
At cost
Provision for depreciation
Total freehold l and and buil dings
Leasehold buildings
At cost
Provision for depreciation
Total leasehold buildings
Plant and equipment
At cost
Provision for depreciation
Total plant and equipment
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
266, 515
(22, 228)
253,719
(17,491)
244, 287
236,228
80, 897
(18, 325)
80,887
(15,793)
62, 572
65,094
-
-
-
256
(116)
140
-
-
-
582
(144)
438
1,163, 748
(679, 664)
1,127,646
(608,035)
37,740
(26,268)
44,959
(27,566)
484, 084
519,611
11,472
17,393
Capital works in progress - at cost
84, 238
39,111
5,227
5,332
Total property, pl ant and equipment
875, 181
860,044
16,839
23,163
RECO NCILIATIONS
Reconc iliations of the c arrying amount of each class of property, plant and equipment during the financial year are set out below:
C ap ita l w or ks
in pr og re ss
Free h ol d l an d
L ea se h ol d
Pla n t a n d
& bu il di ng s
bu il di ng s
e qu ip me nt
N ote
$' 00 0
$' 00 0
$'0 0 0
$'0 0 0
Tota l
$ '0 00
(i) Consoli dated
At 1 July 2006
Cost
Ac cumulat ed depreciat ion and impairment
23, 489
-
184, 784
(14, 220)
57,015
1,026,976
1,292,264
(13,643)
(610,144)
(638,007)
Net car rying amount
23, 489
170, 564
43,372
416,832
654,257
Period ended 1 July 2007
Balance at beginning of f inancial year
Additions/capitalisations
Disposals
Ac quisition of controlled entities
Impairment charge
Depreciation charge
Transf ers to software
Transf ers to other asset categories
Exchange dif ferences
At 1 July 2007, net of accumul ated
depreciation and impairment
3(B)
14(i)
23, 489
14, 751
-
-
-
-
-
-
871
170, 564
43,372
416,832
654,257
306
(18, 532)
97, 909
-
(3, 574)
-
(15, 354)
4, 909
5,508
-
20,264
-
(1,504)
-
(2,548)
2
43,237
(4,590)
129,103
(10,740)
(68,594)
(8,401)
17,902
4,862
63,802
(23,122)
247,276
(10,740)
(73,672)
(8,401)
-
10,644
39, 111
236, 228
65,094
519,611
860,044
67
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Capital works
in progress
Freehold land
Leasehold
Plant and
& buildings
buildings
equipment
Note
$'000
$'000
$'000
$'000
Total
$'000
At 1 July 2007
Cost
Accumulated depreciation and impairment
39,111
-
253,719
(17,491)
80,887
(15,793)
1,127,646
(608,035)
1,501,363
(641,319)
Net carrying amount
39,111
236,228
65,094
519,611
860,044
Period ended 29 June 2008
Balance at beginning of financial year
Additions/capitalisations
Disposals
Acquisition of controlled entities
Depreciation charge
Assets classified as held for sale
Transfers to other asset categories
Exchange differences
At 29 June 2008, net of accumulated
depreciation and impairment
At 29 June 2008
Cost
Accumulated depreciation and impairment
3(B)
9
39,111
46,624
-
25
-
-
-
(1,522)
236,228
65,094
1,683
(6,699)
25,329
(4,860)
(1,096)
-
(6,298)
816
(89)
1,616
(2,303)
(1,126)
(1,082)
(354)
519,611
37,089
860,044
86,212
(11,035)
(17,823)
23,512
50,482
(79,834)
(86,997)
-
1,082
(6,341)
(2,222)
-
(14,515)
84,238
244,287
62,572
484,084
875,181
84,238
-
266,515
(22,228)
80,897
(18,325)
1,163,748
(679,664)
1,595,398
(720,217)
Net carrying amount
84,238
244,287
62,572
484,084
875,181
(ii) Company
At 1 July 2006
Cost
Accumulated depreciation and impairment
Net carrying amount
Period ended 1 July 2007
Balance at beginning of financial year
Additions/capitalisations
Disposals
Transfers to software
Depreciation charge
At 1 July 2007, net of accumulated
depreciation and impairment
At 1 July 2007
Cost
Accumulated depreciation and impairment
Net carrying amount
68
14(ii)
3(B)
5,899
-
5,899
5,899
(567)
-
-
-
5,332
5,332
-
5,332
-
-
-
-
-
-
-
-
-
-
-
-
473
-
473
43,808
(23,484)
50,180
(23,484)
20,324
26,696
473
109
-
-
(144)
20,324
2,913
(7)
(1,058)
(4,779)
26,696
2,455
(7)
(1,058)
(4,923)
438
17,393
23,163
582
(144)
438
44,959
(27,566)
50,873
(27,710)
17,393
23,163
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Capital works
in progress
Freehold land
Leasehold
Plant and
& buildings
buildings
equipment
Note
$'000
$'000
$'000
$'000
Period ended 29 June 2008
Balance at beginning of financial year
Additions/capitalisations
Disposals
Intercompany transfers
Depreciation charge
At 29 June 2008, net of accumulated
depreciation and impairment
At 29 June 2008
Cost
Accumulated depreciation and impairment
Net carrying amount
3(B)
5,332
(105)
-
-
-
5,227
5,227
-
5,227
-
-
-
-
-
-
-
-
-
Total
$'000
23,163
3,112
(7)
(2,205)
(7,224)
438
-
-
(257)
(41)
17,393
3,217
(7)
(1,948)
(7,183)
140
11,472
16,839
256
(116)
140
37,740
(26,268)
43,223
(26,384)
11,472
16,839
Consolidated
Consolidated
Company
Company
29 June 2008
1 July 2007
29 June 2008
1 July 2007
$'000
$'000
$'000
$'000
16. Derivative financial instruments
Current assets
Forward contracts - cash flow hedges
Forward contracts - fair value to profit and loss
Total current derivative assets
Non-current assets
Interest rate swap - cash flow hedge
Cross currency swap - cash flow hedge
Cross currency swap - fair value hedge
Cross currency swap - net investment hedge
Forward contracts - cash flow hedges
Total non-current derivative assets
Current liabilities
Share swap - fair value to profit and loss
Forward contracts - cash flow hedges
Total current derivative liabilities
Non-current liabilities
Cross currency swap - fair value hedge
Cross currency swap - net investment hedge
Cross currency swap - cash flow hedge
Cross currency swap - fair value to profit and loss
Forward contracts - cash flow hedges
3,519
-
3,519
20,277
17,583
107
21,437
13
59,417
719
287
1,006
92,751
-
8,757
19,737
6
-
8
8
165
-
-
-
-
165
-
1,344
1,344
69,688
12,538
5,175
3,047
-
Total non-current derivative liabilities
121,251
90,448
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The Group uses derivative financial instruments to reduce the exposure to fluctuations in interest rates and foreign currency rates.
The Group formally designates hedging instruments to an underlying exposure and details the risk management objectives and strategies
for undertaking hedge transactions. The Group assesses at inception and on a semi-annual basis thereafter, as to whether the derivative
financial instruments used in the hedging transactions are effective at offsetting the risks they are designed to hedge. Due to the high
effectiveness between the hedging instrument and underlying exposure being hedged, value changes in the derivatives are generally
offset by changes in the fair value or cash flows of the underlying exposure. Any derivatives not formally designated as part of a
hedging relationship are fair valued with any changes in fair value recognised in the income statement. The derivatives entered
into are over-the-counter instruments within liquid markets.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
69
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
( A) HEDGING ACTIVITIES
(i) Cash flow hedges - interest rate and cr oss curr ency swaps
At 29 June 2008, the Group held interest rate s waps and cross currency swaps designated as hedges of future contracted
interest payments on the EUR denominated Eurobonds. The combined swaps are being used to hedge a combination of future
movements in interest rates and foreign currency exchange rates.
At 29 June 2008, the notional principal amounts and period of expiry of the swaps are as follows:
Pay fixed, receive floating - AUD$550m
M a tu ri ty da te
15 June 2012
In tere st ra te
20 0 8
20 07
7.60%
7.60%
The swaps designated to cash flow hedges cover approximately 98% of the Eurobond principal outstanding, with the remaining 2% of
the Eurobond hedges designated as fair value hedges. The c ontracts require settlement on interest receivable annually and interest
payable each 90 days. These dates coincide with the interest payable dates on the underlying Eurobond.
At 29 June 2008, the Group also held cross currency swaps designated as hedges of future contracted interest payments on the
USD denominated senior notes issued in July 2007. The cross currency swaps are being used to hedge a combination of future
movements in interest rates and foreign currency exchange rates.
At 29 June 2008, the notional principal amounts and period of expiry of the swaps are as follows:
Pay fixed, receive floating - AUD$59.5m
Pay fixed, receive floating - AUD$59.5m
M a tu ri ty da te
10 July 2017
10 July 2017
In tere st ra te
20 0 8
7.52%
7.46%
20 07
-
-
The contracts require s ettlement on interest rec eivable semi annually and interest payable eac h 90 days. These dates coincide with
interest payable dates on the underlying Senior Notes.
At 29 June 2008, the hedges of both the Eurobonds and Senior Notes were assessed to be highly effective with a combined unrealised
gain in fair value of $19.3 million (2007: $3.5 million loss) recognised in equity for the period. During the year amounts trans ferred from
equity to the income statement totalled $1.3 million (2007: $0.7 million) as income.
(ii) Cash flow hedges - foreign exchange contracts
At 29 June 2008, the Group held forward exchange contracts to hedge future foreign capital purchase commitments and intragroup
monetary items across the Australian and New Zealand business. The contracts are timed to mature as payments are scheduled
to be made to suppliers or transacted between group entities.
In addition, the Group held forward exchange contracts to hedge future foreign currency sale agreements associated with the
UK television production and distribution business. The contracts are timed to mature as the foreign cash receipts are scheduled to
be received.
With the exception of s ix contracts, where cash flows are expected to occur beyond 12 months, all cash flows are expec ted to
occur over the next twelve months. At 29 June 2008, the details of the outstanding contrac ts are:
70
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Buy CHF/Sell AUD - Maturity 0 - 12 months
Buy USD/Sell AUD - Maturity 0 - 12 months
Buy EUR/Sell AUD - Maturity 0 - 12 months
Buy EUR/Sell NZD - Maturity 0 - 12 months
Buy EUR/Sell NZD - Maturity 13 - 24 months
Buy GBP/Sell NZD - Maturity 0 - 12 months
Buy AUD/Sell NZD - Maturity 0 -12 months
Buy CHF/Sell NZD - Maturit y 0 - 12 months
Buy CHF/Sell NZD - Maturit y 13 - 24 months
Buy AUD/Sell G BP - Maturity 0 -12 months
2 0 08 *
$' 00 0
2,688
2,226
2,657
5,231
2,375
258
113,505
2,723
509
428
W ei gh ted av era g e
2 0 07 * exch a ng e ra te
$'0 0 0
20 0 8
20 07
1,547
2,223
-
3,990
-
160
-
-
-
-
0.9245
0.9220
0.6208
0.4882
0.4647
0.3532
1.2285
0.7562
0.7216
0.4266
0.9157
0.7455
-
0.5049
-
0.3570
-
-
-
-
* The amounts disclosed represent currency bought measured at the contracted rate.
The foreign currenc y contracts are considered to be fully effective hedges as they are matched exactly against the highly probable
f oreign capital purchases, intragroup monetary items or agreed foreign currency receipts, with any gain or loss on the contracts taken
directly to equity. W hen t he contrac t is delivered, the Group will adjust t he initial measurement of any component recognis ed on the
balance sheet by the related amount deferred in equity. Where the hedge item affec ts net profit and loss any gain or loss deferred in
equity is transferred to the income statement when the contract is delivered.
At 29 June 2008, the hedges were assessed to be highly effective wit h an unrealised gain of $2.76 million (2007: $1. 2 million los s)
recognised in equit y f or the period. The amount removed f rom equity and included in the initial measurement of capital purchases during
the period to 29 June 2008 was $1.2 million, result ing in an increase to the capital asset base (2007: nil). During the current and prior
f inancial period there was no material ineffectiveness recognised in the income st atement attribut able to cas h flow hedges of foreign
exchange contracts.
(iii) Fair val ue hedges
At 29 June 2008, the Group held cross currency swap agreements designat ed to changes in the underlying value of USD denominated
senior notes (ref er to Note 21). The t erms of cert ain cross currency swap agreements exchange USD obligations into AUD
obligations and other agreements exchange USD obligations into NZD obligations. The latter are also designated to hedge value
changes in the G roup’s New Zealand controlled entit ies (excluding Trade Me Limited), as discussed in Note (iv) below.
At 29 June 2008, the Group also held cross currency swap agreements partly designated to changes in the underlying value of t he
EUR denominated Eurobond (refer to Note 21). The terms of the cross currency swap exchange EUR obligations into AUD obligations.
This swap has been 98% designated t o a cash flow hedge, as discussed in (i) above.
At 29 June 2008, the cross currency swap agreements had a c ombined value of $92. 6 million (2007: $69.7 million).
The cross currency swaps are designated based on matched terms to the debt and also have the same maturit y prof ile as the USD
denominat ed senior notes and the EUR denominated Eurobonds.
The terms of these cross currency swaps are as f ollows:
Pay float ing AUD receive f ixed USD - USD $50m
Pay float ing AUD receive f ixed USD - USD $125m
Pay float ing AUD receive f loating USD - USD $25m
Pay float ing NZD receive fixed USD - USD $40m
Pay float ing NZD receive fixed USD - USD $90m
Pay float ing NZD receive fixed USD - USD $50m
Pay float ing AUD receive f ixed EUR - EUR $4m
Ma tu rity d a te
15 January 2011
10 July 2014
10 July 2014
15 January 2019
15 January 2016
15 January 2014
15 June 2012
71
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
For the Group, the remeas urement of the hedged items resulted in a gain before tax of $15.7 million (2007: $52.5m) and the changes in
the fair value of the hedging instruments resulted in a loss before tax of $15.5 million (2007: $52.6m) resulting in a net gain before tax of
$269,781 (2007: $94,264 loss) recorded in f inance c osts.
(iv) Net investment hedges
The NZD/USD cross currency swap agreements have also been designated to hedge the net investment in New Zealand
controlled entities acquired as part of the ac quisition of Independent News Limited in June 2003.
At 29 June 2008, the hedges were assessed to be highly effective with an unrealised gain of $24.3 million (2007: $20.2 million loss)
recognised in equity. During the c urrent and prior financial period there was no material ineffectiveness recognised in the income
statement attributable to the net investment hedges.
17. Pension asset
SUPERANNUATION PLAN
The Group c ontributes to defined contribution and defined benefit plans, which provide benefits to employees and their dependants
on retirement, disability or death.
The superannuation arrangements in Australia are managed in a s ub-plan of the Mercer Super Trust, called Fairfax Super. The Trustee
of the T rus t is Mercer Investment Nominees Limited. The superannuation arrangements in New Zealand are managed by AoN Cons ulting
New Zealand Limited in three funds - Fairfax NZ Retirement Fund, Fairfax New Zealand Superannuation Fund and Fairfax NZ Senior
Executive Superannuation Scheme. All New Zealand funds are defined contribution plans with the exc eption of the Fairfax NZ
Retirement Fund which als o has a defined benefit section, this defined benefit section is closed to new members.
The defined contribution plans receive fixed contributions from Group companies and the Group’s legally enforceable obligation is
limited to these contributions . The defined benefit plans receive employee c ontributions and the Group also contributes to the defined
benefit plans at rates recommended by the plans’ actuaries.
The NZ Retirement Fund includes investments in respect of members of the NZ Defined Benefit Plan and investments in respect of
the NZ Defined Contribution Plan.
The following sets out details in respec t of the defined benefit plans only and in the case of the Fairfax NZ Retirement Fund, excludes
$56.6 million of defined c ontribution as sets and entitlements.
( A) BALANCE SHEET
The amounts recognised in the balance sheet are determined as follows:
Present value of the defined benefit obligation
Fair value of defined benefit plan assets
Net pension asset
Unrecognised actuarial (loss es)/gains
Unrecognised past service costs
Net pension asset in the balance sheet
72
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
(24,254)
29,796
(20,048)
33,429
5,542
13,381
-
-
-
-
5,542
13,381
-
-
-
-
-
-
-
-
-
-
-
-
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
The Group companies may at any time, by notice to the Trustees terminate its contributions. The Group companies have a liability to
pay the monthly contributions due prior to the effective date of notice, but there is no current requirement for the Group companies to
pay any further contributions, irrespective of the financial condition of the plans.
(B) RECONCILIATION OF THE PRESENT VALUE OF DEFINED BENEFIT OBLIGATION
Consolidated
Consolidated
Company
Company
29 June 2008
1 July 2007
29 June 2008
1 July 2007
$'000
$'000
$'000
$'000
Balance at the beginning of the financial year
20,048
19,424
Current service cost
Interest cost
Contributions by employees
Actuarial (gains) and losses
Benefits paid
Taxes, premiums and expenses paid
Exchange differences on foreign plans
Transfers in/(out)
3,255
3,763
3,717
(2,955)
(9,097)
(708)
(64)
6,295
1,294
969
2,557
2,854
(4,760)
(630)
130
(1,790)
Balance at the end of the financial year defined benefit obligations
24,254
20,048
(C) RECONCILIATION OF THE FAIR VALUE OF PLAN ASSETS
Balance at the beginning of the financial year
Expected return on plan assets
Actuarial (gains) and losses
Contributions by Group companies and employees
Benefits paid
Taxes, premiums & expenses paid
Exchange differences on foreign plans
Transfers in/(out)
33,429
5,602
(8,958)
3,828
(9,097)
(708)
(595)
6,295
30,100
1,943
4,938
3,032
(4,760)
(630)
596
(1,790)
Balance at the end of the financial year defined benefit assets
29,796
33,429
(D) AMOUNTS RECOGNISED IN INCOME STATEMENT
The amounts recognised in the income statement are as follows:
Current service cost
Interest cost
Expected return on plan assets
Total included in employee benefits expense
Actual return on plan assets
3,255
3,763
(5,602)
1,416
1,294
969
(1,943)
320
(3,274)
6,881
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
73
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(E) CATEGORIES OF PLAN ASSETS
The major categories of plan assets as a percentage of the fair value of the total plan assets are as follows:
Consolidated
Consolidated
Company
Company
29 June 2008
1 July 2007
29 June 2008
1 July 2007
%
%
%
%
Cash
Australian equities
Overseas equities
Fixed interest securities
Property
Other
(F) PRINCIPAL ACTUARIAL ASSUMPTIONS
The principal actuarial assumptions used (expressed as weighted averages) were as follows:
Discount rate
Expected return on plan assets
Future salary increases
6
20
34
24
7
9
5.2
6.5
4.0
9
25
34
24
8
-
4.9
6.3
4.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The expected rate of return on assets has been determined by weighting the expected long term return for each class by the target
allocation of assets to each asset class. This resulted in a 6.5% p.a. rate of return, net of tax and expenses (2007: 6.25% p.a).
(G) EMPLOYER CONTRIBUTIONS
Employer contributions to the defined benefit section of the plans are based on recommendations by the plans’ actuaries. Actuarial
assessments are made at three yearly intervals and the last actuarial assessment of Fairfax Super was carried out as at 1 July 2006
by Mercer Human Resource Consulting Pty Ltd. The last actuarial assessments of Fairfax NZ Retirement Fund and Fairfax NZ Senior
Executive Superannuation Scheme were carried out as at 31 March 2005 by AoN Consulting New Zealand Limited and the next
assessment will occur in September 2008. Fairfax New Zealand Superannuation Fund is a defined contribution fund and does not
require an actuarial assessment.
The objective of funding is to ensure that the benefit entitlements of members and other beneficiaries are fully funded by the time they
become payable. To achieve this objective, the actuary has adopted a method of funding benefits known as the aggregate funding
method. This funding method seeks to have benefits funded by means of a total contribution which is expected to be a constant
percentage of members’ salaries over their working lifetimes.
Using the funding method described above and particular actuarial assumptions as to the plan’s future experience (as detailed below),
the actuary recommended in the actuarial review as at 1 July 2006 (for Australia) and 31 March 2005 (for New Zealand) that a
contribution holiday be taken until the next actuarial review is performed. This recommendation was adopted by the Group from
2 July 2007 and has been carried through to the current period.
Total employer contributions expected to be paid by Group companies for the 2009 financial year are nil (parent entity: $nil).
(H) NET FINANCIAL POSITION OF PLAN
In accordance with AAS 25 Financial Reporting by Superannuation Plans the plans’ net financial position is determined as the difference
between the present value of the accrued benefits and the net market value of plan assets. This has been determined as a surplus
of $7.6million at the most recent financial position of the plans, being 1 July 2006 for Australia and 31 March 2005 for New Zealand. As
such, the assets of each of the plans are sufficient to satisfy all benefits that would have vested under the plans in the event of
termination of the plans and voluntary or compulsory termination of employment of each employee.
The directors, based on the advice of the trustees of the plan, are not aware of any changes in circumstances since the date of
the most recent financial statements of the plans (1 July 2006 for Australia and 31 March 2005 for New Zealand), which would
have a material impact on the overall financial position of the defined benefit plan.
74
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
( I) HISTORIC SUMMARY
Defined benefit plan obligation
Plan assets
Surplus
2 00 5
$' 00 0
20 0 6
$'0 0 0
20 0 7
$'0 0 0
20 08
$ '0 00
(21,836)
28,652
(19,424)
30,100
(20,048)
33,429
(24,254)
29,796
6,816
10,676
13,381
5,542
Experience adjustments arising on plan liabilities
Experience adjustments arising on plan ass ets
(1,457)
644
(2,152)
(892)
(2,032)
(1,038)
7,678
(3,132)
18. Deferred tax assets and liabilities
( A) RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are attributable to the following:
Ass ets
Li ab il itie s
Ne t
2 9 Ju n e 2 00 8
1 Jul y 2 00 7
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$ '00 0
$' 00 0
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
(i) Consolidated
Property, plant and equipment
19,018
16, 525
Inventories
Investments
Intangible as sets
Other assets
Provisions
Payables
Other liabilities
Tax losses
Film production and distribution
Other
-
(345)
5,453
36,774
50,608
7,986
2,739
18
1,532
4,778
-
-
4,837
36, 181
45, 371
7,432
1,519
4,656
-
761
38,220
4,114
6,102
44,300
39,042
-
-
105
-
9,584
7,464
25,186
3,875
3,310
35,824
16,196
-
-
216
-
-
4,957
(19,202)
(4,114)
(6,447)
(38,847)
(2,268)
50,608
7,986
2,634
18
(8,052)
(2,686)
(8,661)
(3,875)
(3,310)
(30,987)
19,985
45,371
7,432
1,303
4,656
-
(4,196)
Net deferred tax assets/liabilities
128,561
117,282
148,931
89,564
(20,370)
27,718
(ii) Company
Property, plant & equipment
Intangible as sets
Other assets
Employee provisions
Ac cruals
Other
Net deferred tax assets/liabilities
-
5,178
-
2,426
1,405
191
9,200
4
4,459
-
1,976
2,232
639
9,310
3,630
-
2
-
-
4,011
7,643
3,943
-
-
-
-
-
3,943
(3,630)
5,178
(2)
2,426
1,405
(3,820)
1,557
(3,939)
4,459
-
1,976
2,232
639
5,367
There are no unrecognised deferred tax assets or liabilities and no unused tax losses for which no deferred tax ass et has
been recognised.
75
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
( B) MOVEMENT IN TEMPORARY DIFFERENCES DURING THE FINANCIAL YEAR
(i) Consolidated
Property, plant and equipment
Inventories
Investments
Intangible as sets
Other assets
Provisions
Payables
Other liabilities
Tax losses
Film production and distribution
Other
(ii) Company
Property, plant and equipment
Intangible as sets
Other financial assets
Provisions
Payables
Other
(i) Consolidated
Property, plant and equipment
Inventories
Investments
Intangible as sets
Other assets
Provisions
Payables
Other liabilities
Tax losses
Other
(ii) Company
Property, plant and equipment
Intangible as sets
Other financial assets
Provisions
Payables
Other
76
Ba la nc e
R ec og ni se d
R eco g ni se d
Re co g ni se d
Bal a nce
1 Jul y 2 00 7
o n a cq u isi tio n
i n i nc om e
in eq ui ty
29 Ju ne 20 08
(8, 661)
(3, 875)
(3, 310)
(30,987)
19, 985
45, 371
7,432
1,303
4,656
-
(4, 196)
(13,874)
-
(2,613)
(9,751)
230
3,341
526
117
-
(1,168)
6
3,333
(239)
(524)
1,891
(15,797)
1,896
28
1,214
(4,638)
(6,884)
1,504
-
-
-
-
(6,686)
-
-
-
-
-
-
(19,202)
(4,114)
(6,447)
(38,847)
(2,268)
50,608
7,986
2,634
18
(8,052)
(2,686)
27, 718
(23,186)
(18,216)
(6,686)
(20,370)
(3, 939)
4,459
-
1,976
2,232
639
5,367
-
-
-
-
-
-
-
309
719
(2)
450
(827)
(4,459)
(3,810)
-
-
-
-
-
-
-
(3,630)
5,178
(2)
2,426
1,405
(3,820)
1,557
Ba la nc e
R ec og ni se d
R eco g ni se d
Re co g ni se d
Bal a nce
3 0 Ju n e 2 00 6
o n a cq u isi tio n
i n i nc om e
in eq ui ty
1 Ju ly 20 07
(3, 616)
(2, 535)
(391)
(25,814)
(1, 157)
29, 157
3,568
403
-
(2, 996)
(3, 381)
(2, 729)
3,692
(202)
1,911
550
490
3,712
(6,283)
(100)
(2,633)
(4,891)
(459)
9,040
2,015
(10)
-
8
(3,313)
-
-
-
-
-
-
-
1,238
(1,240)
-
(282)
19,392
7,174
1,849
910
4,656
(443)
33,254
(1,210)
767
202
65
1,682
914
2,420
-
-
(286)
-
2,209
-
-
-
-
(765)
1,158
-
-
-
-
-
(765)
(765)
(8,661)
(3,875)
(3,310)
(30,987)
19,985
45,371
7,432
1,303
4,656
(4,196)
27,718
(3,939)
4,459
-
1,976
2,232
639
5,367
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
19. Other financial assets
Shares in controlled entities - at cost
Shares in unlisted entities
Total other financial assets
20. Payables
Trade and other payables *
Interest payable
Income in advance
Total curr ent payables
* T rade payables are non-interest bearing and are generally on 30 day term s
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
-
122
122
-
3,143,723
3,142,329
122
122
-
-
3,143,723
3,142,329
226,917
209,489
15,900
14,640
26,403
76,725
24,436
55,594
-
-
-
-
330,045
289,519
15,900
14,640
21. Interest bearing liabilities
Current - unsecured
Bank borrowings
Other loans
Current - secur ed
Finance leas e liability
Total curr ent inter est bear ing liabilities
Non-current - unsecured
Bank borrowings
Redeemable Preference Shares
Other loans
Senior notes
Medium term notes
Eurobonds
Other
Non-current - secured
Finance leas e liability
Total non-cur rent inter est bear ing liabilities
(C)
(C)
(A)
(D)
(B)
(E)
(F)
(C)
3,957
8,665
2,060
7,297
3,194
15,816
2,880
12,237
973,109
1,058,435
146,401
166,282
519,676
199,682
570,249
61,680
257,434
199,589
554,976
70,345
(C)
25,336
28,437
2,496,133
2,335,498
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
( A) BANK BORROWINGS
Non-current
A $1,200 million syndicated bank facility is available to the Group until periods ranging from April 2010 to April 2012.
At 29 June 2008, $850 million was drawn down (2007: $850 million). The interest rate for the drawings under this facility is the
applicable bank bill rate plus a credit margin.
A $200 million revolving committed cash advance facility is available to the group until September 2010. At 29 J une 2008, $125 million
was drawn down (2007: $200 million). The interest rate for this facility is the applicable bank bill rate plus a credit margin.
( B) SENIOR NOTES
The Group issued Senior Notes in the US private placement market with a principal value of US$230 million (A$246.5 million)
in January 2004 with a fixed coupon of between 4.74% p.a. and 5.85% p.a payable semi-annually in arrears.
The interest and principal on the Senior Notes are payable in US dollars and were swapped into floating rate New Zealand dollars and
floating rate Australian dollars via a cross currency swap. This issue of Senior Notes comprises maturities ranging from January 2011
to January 2019. The weighted average maturity of the issue is approximately six and a half years. The applicable cross-currency
swap credit margin includes the c ost of hedging all currency risk and future interest and principal repayments on a quarterly basis.
The Group issued further Senior Notes in the US private placement market with a principle value of US$250 million
(A$273.2 million) in J uly 2007 comprising maturities ranging from July 2014 to July 2017. The weighted average maturity of this issue is
approximately 7.2 years. The issued notes include fixed rate coupon notes, paying a weighted average coupon of 6.4% p.a. semi
annually in arrears,and floating rate coupon notes. The interest and principle on the Senior Notes are payable in US dollars and were
swapped into fixed and floating rate Australian dollars via cross currency swaps.
( C) OTHER LOANS AND FINANCE LEASE LIABILITY
The Chullora printing fac ility in Sydney is partially financed by a financ e lease facility and loans with a maturity date of September 2015.
There is a CPI indexed annuity loan with principal and interest outstanding of $45.5 million (2007: $49.0 million) and a finance leas e
of $28.5 million (2007: $31.3 million), which was entered into in February 1996. There is also principal and interest outstanding
of $24.9 million (2007: $28.5 million) in the form of a fixed rate loan with an established drawdown and repayment sc hedule.
( D) REDEEMABLE PREFERENCE SHARES (RPS)
The Group issued Redeemable Preference Shares in New Zealand in May 2005 with a principal value of NZ$186.5 million
(A$146.4 million) currently paying a fixed one year coupon of 9.31% p.a. payable quarterly in arrears and thereafter set at 1% over the
applicable one year swap rate. The Redeemable Preference Shares mature in June 2010. The interest and principal on the Redeemable
Preference Shares are payable in New Zealand dollars and were swapped into fixed rate Australian dollars via a cross-currency
swap. The applicable c ross-currency swap credit margin includes the cost of hedging all c urrency risk and future interest and principal
repayments on a quarterly basis.
( E) MEDIUM TERM NO TES (MTNs)
On 27 June 2006, the Group issued $200 million of MTNs with a maturity date of 27 June 2011. The MTNs were issued at
a fixed coupon of 6.865% p.a.
( F) EUROBO NDS
On 15 June 2007 the Group issued €350 million guaranteed notes with a maturity date of 15 June 2012. The notes pay a fixed
coupon of 5.25% p.a. payable annually in arrears. The interest and principal on the notes are payable in Euro and were swapped into
fixed rate Australian dollars via a cross c urrency swap.
78
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
( G) FINANCING ARRANGEMENTS
A NZ$50 million revolving committed cash advance facility is available to the Group until June 2010. At 29 June 2008 this facility
was not drawn down (2007: nil).
The Group has sufficient unused committed facilities at the balance sheet date to finance maturing current interest bearing liabilities .
The Group's financing facilities outlined in Note 21 are guaranteed by Fairfax Media Limited and are covered by Deeds of negative
pledge (refer note 30).
22. Provisions
Current
Employee benefits
Defamation
Property
Consideration payable under earn out arrangement
Other
Total curr ent provisions
Non-current
Employee benefits
Property
Other
Total non-cur rent provisions
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
113,793
2,228
1,603
37,959
4,254
102,068
1,311
37,888
-
5,755
159,837
147,022
6,990
-
-
-
395
7,385
4,649
-
-
-
240
4,889
13,108
31,533
757
45,398
14,224
25,780
1,083
41,087
703
1,939
-
-
-
-
703
1,939
RECO NCILIATION
Reconc iliations of the c arrying amount of each class of provision, other than employee benefits, during the financial year are set
out below:
C o ns ol id ate d
C o ns ol id ate d
C o nso l id ate d
C on so li da te d
C o mp an y
Current
Balance at beginning of the financial year
Ac quisition of controlled entities
Additional provision
Utilised
Exchange differences
Balance at end of the financial year
Non-current
Balance at beginning of the financial year
Additional provision
Utilised
Balance at end of the financial year
D e fa ma tio n
Pro pe rty
Ear n o ut
2 00 8
$' 00 0
2 00 8
$' 00 0
20 0 8
$'0 0 0
1,311
150
6,199
(5, 412)
(20)
2,228
37,888
255
-
(36,540)
-
-
37,959
-
-
-
1,603
37,959
-
-
-
-
25,780
5,753
-
31,533
-
-
-
-
Othe r
20 0 8
$'0 0 0
5,755
3,625
2,743
(7,869)
-
4,254
1,083
-
(326)
757
Othe r
20 08
$ '0 00
240
-
395
(240)
-
395
-
-
-
-
79
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
NATURE AND TIMING OF PRO VISIONS
(i) Employee benefits
Provisions for employee benefits include liabilities for annual leave and long service leave and are measured at the amounts expected
to be paid when the liabilities are settled, refer to Note 1(T)(i).
(ii) Defamation
From time to time, entities in the Group are sued for defamation and similar matters in the ordinary cours e of business. The defamation
provis ion maintained is with respect to various insignificant matters across the Group. At the date of this report there were no legal
actions against the consolidated entity that have not been adequately provided for or that are expected to have a material impac t
on the Group.
(iii) Property
The provision for property costs is in respec t of make good provisions , def erred lease incentives and the move of the Sydney
office from Darling Park to One Darling Island, Pyrmont. The utilisation of the provision in the current year included a lease
surrender fee and rent penalties for Darling Park and additional costs associated with the move. The make good provision and
deferred leases incentive are amortised over the shorter of the term of the lease or the us eful life of the assets, being up to 20 years.
(iv) Earn out
The provision for earn out relates to amounts in relation to recent acquisitions which are payable c ontingent on the achievement
of specified financial performance criteria by the entity acquired.
(v) Other
Other provisions includes redundanc y cos ts and various other costs relating to the business .
23. Contributed equity
Ordinary Shares
1,513,544,248 ordinary s hares fully paid
(2007: 1,479,640,401)
Unvested Employee Incentive Shar es
C o ns ol id ate d
C on so li da ted
C om pa ny
C om pa ny
2 9 Ju n e 2 00 8
1 Ju ly 20 07
29 Jun e 2 0 08
1 Ju ly 2 0 07
No te
$ '00 0
$ '0 00
$ '0 00
$ '0 00
(A)
4,039,131
3,891,162
4,039,131
3,891,162
3,384,916 unvested employee inc entive shares (2007: 0)
(B)
(13,885)
-
(13,885)
-
Stapled Preference Shar es (SPS)
3,000,000 stapled preference shares (2007: 3,000,000)
(C)
293,163
293,163
299,278
299,278
(D)
*
*
*
*
4,318,409
4,184,325
4,324,524
4,190,440
Debentures
281 debent ures fully paid (2007: 281)
Total contributed equity
* Amount is less than $10 00
80
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
RECO NCILIATIONS
Reconc iliations of each c lass of contributed equity at the beginning and end of the c urrent financial year are set out below:
Consolidated
( A) ORDINARY SHARES
Balance at beginning of the financial year
Dividend reinves tment plan issue - 27 September 2007
Dividend reinves tment plan issue - 21 March 2007
Dividend reinves tment plan issue - 6 October 2006
Conversion of PRESSES - 27 July 2006**
Share iss ue - 25 July 2006 Acquisition of Border Mail
Share iss ue - 9 May 2007 Acquisition of Rural Press
Share iss ue - 7 August 2007 Adjustment to Rural Press
acquisition share issue
Share iss ue - 27 September 2007 Merrill Lynch final
dividend underwriting
Share iss ue costs
2 9 Ju n e 2 00 8
1 Ju ly 20 07
29 Jun e 2 0 08
1 Ju ly 2 0 07
No . of sh ar es
N o. o f s ha re s
$ '0 00
$ '0 00
1,479,640,401
939,067,152
3,891,162
1,248,334
12,820,970
-
-
-
-
-
900
21,081,977
-
-
4,135,813
12,278,486
66,348,490
4,858,517
452,951,943
-
-
-
56,156
-
-
-
-
-
5
91,808
-
-
19,728
48,008
250,000
19,920
2,305,525
-
-
(353)
Balance at end of the financial year
1,513,544,248
1,479,640,401
4,039,131
3,891,162
( B) UNVESTED EMPLOYEE INCENTIVE SHARES
Balance at beginning of the financial year
Share acquisition - 22 February 2008
Share acquisition - 25 February 2008
Balance at end of the financial year
( C) STAPLED PREFERENCE SHARES ( SPS)
Balance at beginning of the financial year
Share iss ue costs
Balance at end of the financial year
( D) DEBENTURES
Balance at beginning of the financial year
Balance at end of the financial year
-
1,700,000
1,684,916
3,384,916
-
-
-
-
-
(6,969)
(6,916)
(13,885)
-
-
-
-
3,000,000
-
3,000,000
-
3,000,000
3,000,000
293,163
-
293,163
293,167
(4)
293,163
281
281
281
281
*
*
*
*
Total contributed equity
4,318,409
4,184,325
** On 27 July 2006 the Company converted all 2,500,000 PRESSES into 66,348,490 fully paid ordinary shares
TERMS AND CO NDITIO NS OF CONTRIBUTED EQ UITY
( A) Ordinary Shares
Ordinary shares entitle the holder to receive dividends as dec lared and, in the event of winding up the Company, to participate in the
proceeds from the sale of all surplus ass ets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle
their holder to one vote, either in person, or by proxy, at a meeting of the Company.
81
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Dividend Reinvestment Plan
Fairfax Media Limited introduced a Dividend Reinvestment Plan (DRP) to eligible shareholders during the financial year ended
30 June 2004.
The DRP will apply to the payment of the final dividend for the year ended 29 J une 2008 to be paid on 2 October 2008. The last date
for the receipt of an election notice for partic ipation in the plan for the final dividend is 2 September 2008.
Under the terms of the DRP eligible shareholders are able to elect to reinvest their dividends in additional Fairfax shares, free of any
brokerage or other transaction c osts. Shares are is sued and/or transferred to DRP participants at a predetermined price, less any
discount that the directors may elect to apply from time to time. The DRP is sue price in relation to the final dividend for the financial year
ended 29 June 2008 will be based on the arithmetic average of the daily volume weighted average s ale price of Fairfax Media Limited
shares traded on the Australia Securities Exchange during the period 4 September 2008 to 17 September 2008 inclus ive, excluding
any trades that do not qualify under the terms of the DRP.
During the financial year ended 29 June 2008, 12,820,970 ordinary shares (2007: 16,414,299 ordinary shares) were iss ued under the
terms of the DRP.
( B) Unvested Em ployee Incent ive Shares
Shares in Fairfax Media Limited are held by the Executive Employee Share Plan Trust for the purpose of issuing shares under
the Long Term Incentive Plan. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled
to one vote per s hare at shareholder meetings.
( C) Stapled Preference Shares (SPS)
The SPS (FXJPB), which was issued on 23 March 2006 for a face value of $100 per share, is a stapled security comprising a fully paid
SPS Preference Share issued by the Company, Fairfax Media Limited and a fully paid unsecured note issued by Fairfax Group Finance
New Zealand Limited, a wholly owned entity of the Company. Holders of the SPS are not entitled to vote.
Distribution payments are at the dis cretion of directors however distributions, in the form of interest on the notes, are expected to be paid
semi-annually in arrears each April and October, and rank in preference to ordinary shareholders and equally with preferenc e
shareholders . The distribution rate is calculated as the sum of the six month bank bill swap rate and the margin, which is determined
by the issuers or adjusted to the step-up margin. Dis tributions are non-cumulative. Total dividend payment in the year to SPS holders
was $25,618,128 (2007: $25,630,749).
The SPS are perpetual however Fairfax has the right to repurchase the SPS for cash or convert the SPS into a variable number of
ordinary shares from April 2011 or earlier in certain circums tances (an assignment event). In the event an assignment event occurs,
the SPS are ‘unstapled’ and the unsecured notes assigned to a wholly owned Fairfax subsidiary. The SPS holders would continue to
hold a listed SPS preference share issued by the Company and discretionary dividends on the preference shares, which may be franked.
The two securities may not be traded separately prior to an ass ignment event and an assignment event does not itself give the Company
the right to repurchase or convert the SPS. Holders are never entitled to both interest on the unsecured notes and dividends on the
SPS preference shares at the s ame time.
( D) Debentures
Debenture holders terms and conditions are disclosed in Note 1(U).
82
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
24. Reserves
As set revaluation reserve, net of tax
Foreign currency translation reserve, net of tax
Cashflow hedge reserve, net of tax
Net investment hedge reserve, net of tax
Share-based payment reserve, net of tax
Total reserves
(A) Asset revaluation r eserve
Balance at beginning of the financial year
Net unrealised (losses)/gains on available for sale investment
Transfer to retained earnings
Revaluation - joint venture
Tax effect of net los s on available for sale investment
Balance at end of the financial year
(B) Foreign currency translation reserve
Balance at beginning of the financial year
Net exchange differences on currency translation, net of tax
Balance at end of the financial year
(C) Cashflow hedge r eserve
Balance at beginning of the financial year
Effective portion of changes in value of cashflow hedges
Tax effect of net changes on cashflow hedges
Balance at end of the financial year
(D) Net investment hedge reserve
Balance at beginning of the financial year
Effective portion of changes in value of net investment hedges
Tax effect on net investment hedges
Balance at end of the financial year
(E) Share-based payment reserve
Balance at beginning of the financial year
Share-based payment expense
Transfer to Share T rus t to fund acquisition of shares
Balance at end of the financial year
NATURE AND PURPO SE OF RESERVES
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
No te
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
(A)
(B)
(C)
(D)
(E)
(801)
(201,881)
15,307
(438)
1,750
-
48,984
(6,739)
(24,719)
(1,943)
(186,063)
15,583
-
-
-
-
1,750
1,750
-
-
-
-
(1,943)
(1,943)
-
(801)
-
-
-
7,676
953
(9,230)
887
(286)
(801)
-
48,984
(129,287)
(250,865)
178,271
(201,881)
48,984
(6,739)
31,079
(9,033)
15,307
(1,314)
(7,755)
2,330
(6,739)
(24,719)
34,654
(10,373)
(4,494)
(28,893)
8,668
(438)
(24,719)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,943)
4,429
(736)
1,750
595
822
(3,360)
(1,943)
(1,943)
4,429
(736)
1,750
595
822
(3,360)
(1,943)
(A) Asset revaluation r eserve
The asset revaluation reserve is used t o rec ord increments and decrements on the revaluation of non-current assets. From 1 July 2004,
changes in the fair value of investments classified as available for sale investments are recognised in the asset revaluation reserve,
as described in Note 1(M).
83
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(B) Foreign currency translation reserve
The foreign currenc y trans lation reserve is used to record exchange differences arising on translation of foreign controlled entities and
assoc iated funding of foreign controlled entities , as described in Note 1(F).
(C) Cashflow hedge r eserve
The hedging reserve is used to record the portion of gains and losses on a hedging instrument in a cash flow hedge that is determined
to be an effective hedge, as des cribed in Note 1(N). Refer to futher disclos ures at Note 16.
(D) Net investment hedge reserve
The net investment hedge reserve is used to record gains and losses on a hedging instruments in a fair value hedge, as described in
Note 1(F). Refer to futher disclosures at Note 16.
(E) Share-based payment reserve
The share-based payments reserve is used to recognise the fair value of shares issued but not vested and transfers to fund the
acquisition of Share Trust shares , as described in Note 1(T)(ii).
25. Retained profits
Balance at beginning of the financial year
Transfer from ass et revaluation res erve
Net prof it for the financ ial year
Transfer from minority interest
Ac tuarial (loss)/gain on defined benefit plans, net of tax
Tax benefits recognis ed directly in equity
Reclassification of tax benefits to equity
Total available for appropriation
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
No te
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
748,164
717,414
730,731
227,583
-
9,230
-
-
386,878
263,510
59,186
721,585
-
(4,315)
8,427
7,833
619
1,459
-
-
-
-
-
-
-
-
-
-
1,146,987
992,232
789,917
949,168
Dividends paid
6
(325,000)
(244,068)
(299,382)
(218,437)
Balance at end of the financial year
821,987
748,164
490,535
730,731
84
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
26. Minority interest
Interest in:
Contributed equity
Res erves
Retained profits
Balance at end of the financial year
RECO NCILIATION
Balance at beginning of the financial year
Ac quisition of controlled entities
Ac quisition of minority interest balances in previously controlled entities
Transfer to retained earnings
Share of profit/(loss) for the period
Distribution to minority interest
Exchange differences
Balance at end of the financial year
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
4,898
8,585
(2,482)
5,692
8,438
(1,208)
11,001
12,922
12,922
1,587
(3,636)
-
612
(570)
86
11,001
4,718
10,836
-
(619)
(1,889)
(124)
-
12,922
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated
Consolidated
29 June 2008
1 July 2007
¢ per share
¢ per share
27. Earnings per share
Basic earnings per share
After significant and non-recurring items less SPS dividend (net of tax)
24.6
22.7
Diluted earnings per share
After significant and non-recurring items (net of tax)
Earnings reconciliation - basic
Net profit attributable to members of the Company
Less Dividends on SPS (net of tax)
Basic earnings after significant and non-recurring items less SPS dividend
Earnings reconciliation - diluted
Net profit attributable to members of the Company
24.1
23.0
Consolidated
Consolidated
29 June 2008
1 July 2007
$'000
$'000
386,878
(17,164)
263,510
(17,942)
369,714
245,568
386,878
263,510
85
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Weighted average number of ordinary shares used in calculating basic EPS
SPS
Weighted average number of ordinary shares used in calculating diluted
EPS
C on so li da te d
C on so li da ted
29 Ju ne 20 0 8
1 Ju ly 20 07
N u mbe r
N um be r
'0 0 0
'0 00
1,505,829
99,208
1,082,093
64,670
1,605,037
1,146,763
28. Commitments
O PERATING LEASE COMMITMENTS - GROUP AS LESSEE
The Group has entered into commercial leases on office and warehouse premises, motor vehicles and office equipment.
Future minimum rentals payable under non-cancellable operating leases as at the period end are as follows:
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
No te
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
Within one year
Later than one year and not later than five years
Later than five years
Total operating lease commitments
49,682
140,014
326,224
46,895
163,383
378,737
515,920
589,015
-
-
-
-
The Group is currently leasing the Spencer Street premises for the period 15 June 2007 to 31 March 2010. There are two six month
extensions available. Election to renew twelve months prior to the end of the term will not have an additional cost as sociated with it.
Election to renew the lease six and three months prior to the end of the term will cost $150,000 and $200,000 respectively, payable
in six equal ins talments .
FINANCE LEASE COMMITMENTS - GROUP AS LESSEE
The Group has a finance lease for plant and machinery with a carrying amount of $33.7m (2007: $35.0m). The lease has an average
lease term of s even years (2007: eight years) and a weighted average interest rate of 13.4% (2007: 13.4%).
Future minimum lease payments under the finance lease together with the present value of the net minimum lease payments
are as follows:
Within one year
Later than one year and not later than five years
Later than five years
Minimum lease payments
Less future finance charges
Total finance lease liability
Classified as:
Current interest bearing liabilities
Non-current interest bearing liabilities
Total finance lease liability
86
5,076
20,303
11,420
36,799
5,076
20,303
16,495
41,874
(8,269)
(10,557)
28,530
31,317
3,194
25,336
28,530
2,880
28,437
31,317
21(C)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
CONTINGENT RENTALS UNDER FINANCE LEASE
A component of the finance lease payments are contingent on movements in the consumer price index. At balance date, the contingent
rent payable over the remaining lease term of eight years is $27.6 million (2007: $30.9 million).
CAPITAL COMMITMENTS
At 29 June 2008, the Group has commitments principally relating to the purchase of property, plant and equipment. Commitments
contracted for at reporting date but not recognised as liabilities are as follows:
Consolidated
Consolidated
Company
Company
29 June 2008
1 July 2007
29 June 2008
1 July 2007
Note
$'000
$'000
$'000
$'000
28,999
18,545
-
47,544
21,783
10,711
-
32,494
-
-
-
-
-
-
-
-
Within one year
Later than one year and not later than five years
Later than five years
Total capital commitments
29. Contingencies
EARN O UT AGREEMENTS
The Group has earn out agreements which represent contingent liabilities at 29 June 2008 relating to the following
acquisitions:
- InvestSMART Financial Services Pty Ltd and Go East Furniture Company Pty Ltd
- Countrycars.com.au Pty Ltd
Additional cash consideration of up to $71.4 million will be payable by the Group if the above businesses achieve
specified financial performanc e criteria.
The amount of the earn outs are based on the earnings before interest, tax, depreciation and amortisation (EBITDA) of the acquired
business. The earn out targets cover 12 month periods up to 30 September 2010.
A liability for these earn outs has not been rec ognised at 29 June 2008 as the amount of the earn out is subject to a variety of
factors including market behaviour, c ompetition, trading volumes and activity and cannot be reliably determined at this stage.
When the earn out is probable and can be reliably measured, the liability will be ac counted for as an additional acquisition cost
and added to the carrying amount of the inves tment as goodwill.
G UARANTEES
Under the terms of ASIC Clas s Order 98/1418 (as amended), the Company and certain controlled entities (refer Note 30), have
guaranteed any deficienc y of funds if any entity to the class order is wound-up. No such deficiency exists at balance date.
DEFAMATIO N
From time to time, entities in the Group are sued for defamation and similar matters in the ordinary cours e of business.
At the date of this report, there were no legal actions against the consolidated entity, other than thos e rec ognised at Note 22, that are
expected to result in a material impac t.
87
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
30. Controlled entities
The following entities were c ontrolled as at the end of the financial year:
Fairfax Media Limited
CONTROLLED ENTITIES
5AU Broadcasters Proprietary Limited
ACN 002 642 266 Pty Limited
ACN 101 806 302 Pty Ltd
Agricultural Publishers Pty Limited
AIPD Pty Limited
As sociated Newspapers Ltd
Australian Property Monitors Pty Limited
Blenheim Films Limited
Border Mail Printing Pty Ltd
Bridge Printing Office Pty Limited
Broadcast Investments Holdings Pty Limited
Bundaberg Broadcas ters Pty Limited
Canweb Printing Pty Limited
Carnival (Charles Dickens) Limited
Carnival Film & Televis ion Ltd
Carpentaria News papers Pty Limited
Central Dis tricts Field Days Limited
Commerce Australia Pty Ltd
Communication Associates Limited
Constellar Press & Printing Pty Limited
Country Publis hers Pty Limited
CountryCars .com.au Pty Ltd
Creative House Publications Pty Limited
Cudgegong News papers Pty Limited
Darrall Macqueen Artis t Management Limited
Darrall Macqueen Limited
Darrall Macqueen West Limited
David Syme & Co Pty Limited
Debt Retrieval Agenc y Limited
Depotsound Limited
Digital Radio Australia Pty Limited
Es perance Holdings Pty Limited
Examiner Properties Pty Limited
F@rming Online Pty Limited
Fairfax Business Media (South Asia) Pte Limited
Fairfax Business Media Pte Limited
Fairfax Business Media Sdn. Bhd.
Fairfax Business Publications (Hong Kong) Ltd
Fairfax Community Network Limited
Fairfax Community Newspapers Pty Limited
Fairfax Corporation Pty Limited
88
N o te s
(a)
(a)
(a),(b)
(a)
(a)
(a)
(a)
(b)
(a)
(a)
(b)
(a)
(b)
(b)
(a)
(a)
(a)
(a)
(b)
(b)
(b)
(a)
(b)
(a),(b)
(a)
(a)
(a)
(a)
(a)
Co u ntry of
Inco rp or ati on
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
Australia
Australia
Australia
Australia
Australia
United Kingdom
United Kingdom
Australia
New Zealand
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
United Kingdom
United Kingdom
United Kingdom
Australia
New Zealand
United Kingdom
Australia
Australia
Australia
Australia
Singapore
Singapore
Malaysia
Hong Kong
Australia
Australia
Australia
Ow n ers hi p i nte re st
20 0 8
%
20 07
%
100
100
100
100
100
100
100
75
100
100
100
100
100
75
75
100
100
75
100
100
100
100
100
100
75
75
75
100
100
75
100
100
100
100
100
100
100
100
100
100
100
93
-
100
100
100
100
100
-
76
100
-
93
100
-
-
100
100
75
100
100
100
100
-
100
-
-
-
100
100
-
-
100
100
100
100
100
100
100
100
100
100
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Fairfax Digital Australia & New Zealand Pty Ltd
Fairfax Digital Limited
Fairfax EEC Limited
Fairfax Group Finance New Zealand Limited
Fairfax News Network Pty Limited
Fairfax Media Group Finance Pty Limited
Fairfax Media Management Pty Limited
Fairfax Media Publications Pty Ltd
Fairfax New Zealand Finance Limited
Fairfax New Zealand Holdings Limited
Fairfax New Zealand Limited
Fairfax Print Holdings Pty Limited
Fairfax Printers Pty Limited
Fairfax Radio Network Pty Ltd
Fairfax Regional Printers Pty Limited
Fairfax Radio Syndication Pty Limited
Fantasports Australia Pty Limited
Farm Progress Companies, Inc
Farm Progress Holding Co, Inc
Farm Progress Insurance Services, Inc
Financial Essentials Pty Ltd
Go East Furniture Company Pty Limited
Golden Mail Pty Limited
Harris and Company Pty Limited
Harris Enterprises Pty Limited
Harris Print Pty Limited
Harris Publications Pty Limited
Hunter Distribution Network Pty Limited
Illawarra Newspaper Holdings Pty Limited
Indiana Prairie Farmer Insurance Services, Inc
InvestSMART Financial Services Pty Limited
InvestSMART Limited
J&R Graphics Pty Limited
John Fairfax & Sons Limited
John Fairfax (UK) Limited
John Fairfax (US) Limited
John Fairfax Limited
Lanson Investments Pty Limited
Large Publications Pty Ltd
Leeton Newspapers Pty Ltd
Lime Digital Pty Limited
Macleay Valley Happynings Pty Limited
Mayas Pty Limited
Mayas Unit Trust
Media Investments Pty Limited
Melbourne Community Newspapers Pty Ltd
Merredin Advertiser Pty Limited
Notes
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a),(b)
(a)
(a),(b)
(b)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
Country of
Incorporation
Australia
Australia
United Kingdom
New Zealand
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
United States
United States
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
Australia
New Zealand
Australia
Australia
United Kingdom
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
2008
%
2007
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
66
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
79
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
-
-
100
100
100
-
-
66
100
100
100
100
100
100
100
-
-
100
100
100
100
100
93
79
100
100
100
100
100
100
100
100
89
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Metropolis Media Pty Ltd
Micosh Pty Ltd
Milton Ulladulla Publishing Co. Pty Limited
Mistcue Pty Limited
Mountain Press Pty Limited
NE Investments Pty Ltd
Newcastle Newspapers Pty Ltd
North Australian News Pty Limited
Northern Newspapers Pty Limited
NZ Rural Press Limited
Old Friends Limited
Online Services International Limited
Oxford Scientific Films Limited
Personal Investment Direct Access Pty Limited
Port Lincoln Times Pty Limited
Port Stephens Publishers Pty Ltd
Port Stephens Publishers Trust
Primetime Limited
Pro-Ag Pty Limited
Propaganda Print Pty Ltd
Queensland Community Newspapers Pty Limited
Radio 4BH Brisbane Pty Limited
Radio 2UE Sydney Pty Limited
Radio 4BC Brisbane Pty Limited
Radio 1278 Melbourne Pty Limited
Radio 3AW Melbourne Pty Limited
Radio 6PR Perth Pty Limited
Radio 96FM Perth Pty Limited
Real Estate Publications Australasia Pty Limited
Real Estate Publications Australasia Trust
Regional Printers Pty Limited
Regional Publishers (Tasmania) Pty Limited
Regional Publishers (Victoria) Pty Limited
Regional Publishers (Western Victoria) Pty Ltd
Regional Publishers Pty Limited
Notes
(a)
(a)
(a)
(a)
(a)
(b)
(a)
(a)
(b)
(a)
(a)
(a),(b)
(a),(b)
(a),(b)
(a),(b)
(b)
(a),(b)
(a),(b)
(a)
(a)
(a)
(a)
(a)
Riverina Newspapers (Griffith) Pty Ltd
(a),(b)
Rosemary and Thyme Enterprises Limited
RP Interactive Pty Limited
RPL Technology Pty Limited
RSVP.com.au Pty Limited
Rural Press (North Queensland) Pty Limited
Rural Press (USA) Limited
Rural Press Ltd
Rural Press Printing (Victoria) Pty Limited
Rural Press Printing Pty Limited
Rural Press Queensland Pty Limited
Rural Press Regional Media (WA) Pty Limited
Rural Press Share Plan Pty Limited
Rural Press USA Inc
90
(b)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
United Kingdom
Australia
Australia
Australia
Australia
United Kingdom
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
Australia
Australia
Australia
Australia
United States
Australia
Australia
Australia
Australia
Australia
Australia
United States
Ownership interest
2008
%
100
100
60
65
88
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
55
55
100
100
100
100
100
100
75
100
100
100
100
100
100
100
100
100
100
100
100
2007
%
100
100
60
65
88
100
100
100
100
100
100
100
-
100
100
100
100
-
100
100
100
-
-
-
-
-
-
-
55
55
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Rural Publishers Pty Limited
S.A. Regional Media Pty Limited
Satellite Interactive Marketing Pty Limited
Satellite Marketing Australia Pty Limited
Satellite Music Australia Pty Limited
Snowy Mountains Publications Pty Limited
Southern Cross View Pty Limited
Southern Star Group Limited
Southern Star Group Inc
Southern Star Entertainment Pty Limited
Southern Star Entertainment UK Plc
Southern Star Film Investments Pty Limited
Southern Star Films Sales Pty Limited
Southern Star International Limited
Southern Star Productions No. 1 Pty Limited
Southern Star Productions No. 2 Pty Limited
Southern Star Productions No. 3 Pty Limited
Southern Star Productions No. 4 Pty Limited
Southern Star Productions No. 5 Pty Limited
Southern Star Productions No. 6 Pty Limited
Southern Star Productions No. 7 Pty Limited
Southern Star Productions No. 8 Pty Limited
Southern Star Productions No. 9 Pty Limited
Southern Star Productions No. 10 Pty Limited
Southern Star Productions No. 11 Pty Limited
Notes
(a)
(a)
(a),(b)
(a),(b)
(a),(b)
(a),(b)
(a),(b)
(b)
(a),(b)
(b)
(a),(b)
(a),(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
Southern Star Operations Pty Limited
(a),(b)
Southern Star Sales (UK) Limited
Southern Star Singapore Pte Ltd
Southern Star Singapore No. 2 Pte Limited
SS Group Funds Pty Limited
Stayz Limited
Stayz Pty Limited
Stock Journal Publishers Pty Limited
Suzannenic Pty Limited
The Advocate Newspaper Proprietary Limited
The Age Company Ltd
The Age Print Company Pty Ltd
The Barossa News Pty Limited
The Border Morning Mail Ltd
The Examiner Newspaper Pty Limited
The Federal Capital Press of Australia Pty Limited
The Independent News Pty Ltd
The Miller Publishing Co, Inc
The Murrumbidgee Irrigator Pty Ltd
The Printing Press Pty Limited
The Queanbeyan Age Pty Limited
The Text Media Group Pty Ltd
(b)
(b)
(b)
(b)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
Australia
United Kingdom
Australia
Australia
United Kingdom
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
Singapore
Singapore
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
Australia
Australia
Australia
Australia
Ownership interest
2008
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2007
%
100
100
-
-
-
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
91
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
The Text Newspaper Company Pty Limited
TheVine.com.au Pty Ltd
The Wagga Daily Advertiser Pty Ltd
The Warrnambool Standard Pty Ltd
Tofua Holdings Pty Limited
Trade Me Limited
Tricom Group Pty Limited
Victorian Lifestyle Property Pty Limited
West Australian Rural Media Pty Limited
Western Australian Primary Industry Press Pty Ltd
Western Magazine Pty Limited
Western Magazine Settlement Trust
Whyalla News Properties Pty Limited
Winbourne Pty Limited
Notes
(a)
(a)
(a)
(a),(b)
(a)
(a)
(a)
(a)
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
2008
%
100
100
100
100
100
100
100
100
100
100
75
75
100
100
2007
%
100
-
100
100
100
100
-
100
100
100
75
75
100
100
(a)
The Company and the controlled entities incorporated within Australia are party to Class Order 98/1418 (as amended) issued by
the Australian Securities & Investment Commission. These entities have entered into a Deed of Cross Guarantee dated June
2008 under which each entity guarantees the debts of the others. These companies represent a ‘Closed Group’ for the purposes
of the Class Order and there are no other members of the ‘Extended Closed Group’. Under the Class Order, these entities have
been relieved from the requirements of the Corporations Act 2001 with regard to the preparation, audit and publication of accounts.
(b)
These companies were acquired as part of the Southern Cross acquisition. Refer to Note 31 for further details.
DEED OF CROSS GUARANTEE
Fairfax Media Limited and certain wholly-owned entit ies (the “Closed Group”) identified at (a) above are parties to a Deed of Cross
Guarantee under ASIC Class Order 98/1418 (as amended). Pursuant to the requirements of that Class Order, a summarised
consolidated income statement for the period ended 29 June 2008 and consolidated balance sheet as at 29 June 2008, comprising
the members of the Closed Group after eliminating all transact ions between members are set out below:
( A) BALANCE SHEET
Current assets
Cash and cash equivalents
Trade and other rec eivables
Inventories
Derivative assets
As sets held for sale
Other current assets
Total curr ent assets
92
2 0 08
$ '0 00
20 07
$ '0 00
40,634
413,447
38,395
3,314
1,096
11,610
323,885
331,919
38,928
8
500
-
508,496
695,240
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Non-current assets
Receivables
Investments accounted for using the equity method
Available for sale investments
Held to maturity investments
Intangible assets
Property, plant and equipment
Derivative assets
Pension asset
Deferred tax assets
Other financial assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Interest bearing liabilities
Derivative liabilities
Provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Derivative liabilities
Deferred tax liabilities
Provisions
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
Total equity
(B) INCOME STATEMENT
Total revenue
Share of net profits of associates and joint ventures
Expenses before finance costs
Finance costs
Net profit from continuing operations before income tax expense
Income tax expense
Net profit from continuing operations after income tax expense
2008
$'000
2007
$'000
517,084
43,926
3,547
14,686
636,584
15,536
-
16,014
4,829,520
3,957,807
780,222
59,403
4,858
107,080
1,277,473
8,890
692,256
165
9,292
97,402
1,484,297
-
7,646,689
6,909,353
8,155,185
7,604,593
269,023
15,816
919
111,630
2,018
399,406
224,307
10,178
1,344
131,596
20,353
387,778
2,352,638
2,160,827
149,295
116,042
44,052
2,881
90,448
79,972
37,986
335
2,664,908
2,369,568
3,064,314
2,757,346
5,090,871
4,847,247
4,318,409
4,184,325
137,334
635,128
(25,988)
688,910
5,090,871
4,847,247
2,322,237
1,589,096
8,478
2,577
(1,874,469)
(104,699)
(1,238,551)
(41,420)
351,547
(95,254)
311,702
(49,322)
256,293
262,380
93
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
31. Acquisition and disposal of controlled entities
( A) SOUTHERN CROSS BROADCASTING
The consolidated entity gained control over the following entities during the year as part of the Southern Cross Broadcasting
acquisition:
En tity o r b us in es s ac qu ir ed
P rin ci pa l a ctiv ity
Southern Star Group Limited
Southern Star Films Sales Pty Limited
Southern Star Operations Pty Limited
SS Group Funds Pty Limited
ACN 002 642 266 Pty Limited
Southern Star Group Inc
Southern Star Film Investments Pty Limited
Southern Star Entertainment Pty Limited
Southern Star Productions No. 1 Pty Limited
Southern Star Productions No. 2 Pty Limited
Southern Star Productions No. 3 Pty Limited
Southern Star Productions No. 4 Pty Limited
Southern Star Productions No. 5 Pty Limited
Southern Star Productions No. 6 Pty Limited
Southern Star Productions No. 7 Pty Limited
Southern Star Productions No. 8 Pty Limited
Southern Star Productions No. 9 Pty Limited
Southern Star Productions No. 10 Pty Limited
Southern Star Productions No. 11 Pty Limited
Southern Star Singapore Pte Ltd
Southern Star Singapore No. 2 Pte Limited
Southern Star Entertainment UK Plc
Southern Star Sales (UK) Limited
Primetime Limited
Oxford Scientific Films Limited
Southern Star International Limited
Darrall Macqueen Limited
Darrall Macqueen Artis t Management Limited
Darrall Macqueen West Limited
Carnival Film & Televis ion Ltd
Carnival (Charles Dickens) Limited
Blenheim Films Limited
Rosemary and Thyme Enterprises Limited
Depotsound Limited
Southern Cross View Pty Limited
Tricom Group Pty Limited
Southern Cross Emedia Pty Limited ** *
Fantasports Australia Pty Limited
Tricom Radio Holdings Pty Limited *
Radio 2UE Sydney Pty Limited
Talk Radio Network Pty Limited ***
3AW Southern Cross Radio Pty Limited *
United Broadcast Holdings Pty Limited ***
94
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
D a te o f
Ac qu is itio n
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
Ow ne rsh ip
In te res t
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
75%
75%
75%
75%
75%
75%
75%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Entity or business acquired
Principal activity
Broadcast Investments Holdings Pty Limited
1278 Southern Cross Radio Pty Limited *
96FM Southern Cross Radio Pty Limited *
6PR Southern Cross Radio Pty Limited *
Radio 4BC Brisbane Pty Limited
Queensland Radio 2000 Pty Limited *
Southern Cross Syndication Pty Limited *
Satellite Marketing Australia Pty Limited
Satellite Music Australia Pty Limited
Satellite Interactive Marketing Pty Limited
Digital Radio Australia Pty Limited
**
**
**
**
**
**
**
**
**
**
**
Date of
Acquisition
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
9 November 2007
* These company names were subsequently changed post acquisition to be consistent with those of the consolidated entity.
** The principal activities of the companies acquired are television production and distribution, radio broadcasting and music
subscription services.
*** These entities were subsequently liquidated post acquisition.
Consideration paid for the acquisition of the Southern Cross Broadcasting entities consisted of $532.4 million in cash.
(B) OTHER ACQUISITIONS
The consolidated entity gained control over the following entities or publishing assets during the year as part of other acquisitions:
Entity or business acquired
Central District Times
Border Mail Printing Pty Limited
Principal activity
Newspaper publishing
Printing facility
InvestSMART Financial Services Pty Limited
Online fund manager
InvestSMART Limited
Go East Furniture Company Pty Limited
Dormant
Dormant
The Guardian
NZ Life & Leisure
Creative House Publications Pty Limited
Star Broadcasting Network Pty Limited
Horse Deals
Financial Essentials Pty Ltd
TheVine.com.au Pty Ltd
Mail Newspapers
The World
The Cut
The Weather Company Pty Ltd
Newspaper publishing
Magazine publishing
Magazine publishing
Radio broadcasting
Magazine publishing
Financial education services
Online youth website
Newspaper publishing
Magazine publishing
Magazine publishing
Online weather website
Date of
Acquisition
29 August 2007
6 September 2007
28 September 2007
28 September 2007
28 September 2007
1 December 2007
10 December 2007
20 December 2007
21 December 2007
29 February 2008
29 February 2008
16 April 2008
18 April 2008
30 May 2008
4 June 2008
27 June 2008
Ownership
Interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Ownership
Interest
(i)
(ii)
100%
100%
100%
(iii)
(iv)
60% (v)
(vi)
(vii)
100%
70%
(viii)
(ix)
(x)
75%
95
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(i)
(ii)
The publis hing ass ets of Central Distric t Times in New Zealand were acquired, including the Central District Times masthead.
On 25 July 2006, the consolidated entity gained control over Border Mail Printing Pty Limited via the acquisition of a 75.5% interest
in this company. On 6 September 2007, the consolidated entity acquired the remaining 24.5% interest in this company resulting in
an ownership interest of 100%.
(iii)
The publis hing ass ets of The Guardian in Blacktown NSW were acquired (inc luding The Guardian masthead) in exchange for
the Newcastle and Lake Macquarie Pos t and the Hunter Post mastheads.
(iv)
(v)
(vi)
The publis hing ass ets of NZ Life & Leis ure in New Zealand were ac quired, including the NZ Life & Leisure masthead.
The consolidated entity ac quired a 60% interest in Creative House Publications Pty Limited, which includes the Focus Magazine
masthead.
The remaining 7% minority interest was acquired in Star Broadcasting Network Pty Limited resulting in an ownership interest
of 100%.
(vii)
(viii)
The publis hing ass ets of Horse Deals were acquired, including the Horse Deals masthead.
The publis hing ass ets of Mail Newspapers in New Zealand were ac quired, including the Napier Mail, Hastings Mail and the
Hawkes Bay Country Sc ene mastheads.
The publis hing ass ets of The World in New Zealand were acquired, including The World masthead.
The publis hing ass ets of The Cut in New Zealand were acquired, including The Cut masthead.
(ix)
(x)
For additional information refer to Note 32.
( C) DISPOSALS
The consolidated entity disposed of its 100% interest in Star Broadcasting Network Pty Limited on 28 May 2008.
96
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
32. Business combinations
( A) RURAL PRESS
On 9 May 2007 Fairfax Media Limited acquired 100% of the issued share capital of Rural Press Limited.
At 1 July 2007, the purchase price allocation for this business combination was based on provisional information. During the f inancial
year ended 29 June 2008, the purchase price alloc ation was finalised. The impact of this was a dec rease to goodwill of $32.5 million
The fair value of the identifiable assets and liabilities of the Rural Press entities as at the date of acquisition were:
R eco g ni se d
o n a cq ui si tio n
Ac qu ire e 's
ca rry in g a mo un ts
$'0 0 0
$ '0 00
Fair value of net assets acquired
Cash and cash equivalents
Receivables
Inventories
Investments accounted for using the equity method
Available for sale investments
Property, plant and equipment
Intangible as sets
Deferred tax ass ets
Total assets
Payables
Current tax liabilities
Interest bearing liabilities
Provisions
Deferred tax liabilities
Total liabilities
Fair value of identifiable net assets
Outside equity interest in net assets
Goodwill arising on acquisition
Total identifiable net assets and goodwill
Consideration
Purchase c onsideration - cash
Purchase c onsideration - shares
Costs direc tly attributable to the acquisition
Total consideration
Net cash outflow on acquisition
Net cash acquired with subsidiary
Cash paid
Net cash outflow
8,438
95,560
14,693
16,796
985
234,346
1,549,029
15,772
1,935,619
52,463
13,640
413,307
24,300
37,018
540,728
1,394,891
(8,995)
1,348,258
2,734,154
422,426
2,305,530
6,198
2,734,154
8,438
(428,624)
(420,186)
( B) SOUTHERN CROSS BROADCASTING
On 9 November 2007 certain assets and liabilities of Southern Cross Broadcasting were acquired. For details of the purchase
consideration and a full listing of entities acquired refer to Note 31(A). The purchase allocation has not been finalised and provisional
accounting has been applied. The assets and liabilities acquired were:
8,438
95,530
14,693
8,550
456
192,803
445,642
15,412
781,524
51,700
6,240
413,307
24,300
4,699
500,246
281,278
-
-
281,278
97
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Value of net assets acquir ed
Cash and cash equivalents
Receivables
Inventories
Investments accounted for using the equity method
Property, plant and equipment
Intangible as sets
As sets available for sale
Other current assets
Current tax assets
Deferred tax ass ets
Total assets
Payables
Interest bearing liabilities
Provisions
Other non current liabilities
Deferred tax liabilities
Total liabilities
Value of identifiable net assets
Outside equity interest in net assets
Goodwill arising on acquisition
Total identifiable net assets and goodwill
Consideration
Purchase c onsideration - cash
Costs direc tly attributable to the acquisition
Total consideration
Net cash outflow on acquisition
Net cash acquired with subsidiary
Cash paid
Net cash outflow
R eco g ni se d
Ac qu ire e 's
o n a cq ui si tio n
ca rry in g a mo un ts
$'0 0 0
$ '0 00
17,784
72,815
963
5,505
30,145
148,269
3,324
17,896
3,012
25,973
325,686
77,817
347
10,932
1,177
7,582
97,855
227,831
-
-
227,831
17,784
72,230
963
5,605
30,145
148,291
3,324
17,896
3,012
5,505
304,755
77,817
347
10,932
1,177
8,256
98,529
206,226
(257)
330,325
536,294
532,374
3,920
536,294
17,784
(536,294)
(518,510)
For the period since acquisition, being 9 November 2007 to 29 June 2008, the Southern Cross Broadcasting entities have
contributed net profit after income tax expense of $21.8 million. Synergies derived in other parts of the Group as a result of the
Southern Cross Broadcasting acquisition have not been incorporated into the above result. The total revenue for Southern Cross
Broadcasting had the acquis ition instead taken place on 2 J uly 2007, would have been $263.7 million. The total net profit after income
tax expense, had the acquisition instead taken place on 2 July 2007, would have been $28.4 million.
( C) OTHER ACQUISITIONS DURING THE PERIO D
Other acquisitions, none of which were individually significant to the consolidated entity, are lis ted in Note 31(B).
For some of these acquisitions, the purchas e allocation has not been finalised and provisional accounting has been applied. The assets
and liabilities acquired were:
98
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Value of net assets acquir ed
Cash and cash equivalents
Receivables
Inventories
Property, plant and equipment
Intangible as sets
Deferred tax ass ets
Total assets
Payables
Provisions
Current tax liabilities
Total liabilities
Value of identifiable net assets
Outside equity interest in net assets
Outside equity interest in net assets settled
Goodwill arising on acquisition
Total identifiable net assets and goodwill
Consideration
Purchase c onsideration - cash
Purchase c onsideration - non cash
Costs direc tly attributable to the acquisition
Total consideration
Net cash outflow on acquisition
Net cash acquired with subsidiary
Cash paid
Net cash outflow
33. Employee benefits
( A) NUMBER OF EMPLOYEES
R eco g ni se d
Ac qu ire e 's
o n a cq ui si tio n
ca rry in g a mo un ts
$'0 0 0
$ '0 00
2,025
1,005
73
1,038
8,632
-
12,773
852
153
276
1,281
11,492
-
-
-
11,492
2,025
995
73
4,738
30,502
452
38,785
852
650
276
1,778
37,007
(1,176)
3,636
29,464
68,931
64,889
2,670
1,372
68,931
2,025
(66,261)
(64,236)
As at 29 June 2008 the consolidated entity employed 9,800 full time employees (2007: 9,474) and 2,106 part-time and casual employees
(2007: 1,942). This includes 2,353 (2007: 2,348) full-time employees and 488 (2007: 299) part-time and casual employees in
New Zealand.
( B) EMPLOYEE SHARE PLANS
The Company has three employee share plans at balance date. Information relating to each plan is set out below:
1. Fairfax Exempt Employee Share Plan
This plan is open to all permanent full-time and part-time Aus tralian employees with more than twelve months service with the
consolidated entity in Australia. Under this Plan, participants may salary s acrifice up to $1,000 of pre tax salary per annum f or purchase
of is sued Fairfax shares at the market pric e on the open market of the ASX. The shares are purchased by an independent trustee
company on pre-fixed dates.
99
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
2. Fairfax Defer red Employee Share Plan
This plan is open to all permanent full-time and part-time Aus tralian employees with more than twelve months service with the
consolidated entity in Australia. Under this Plan, participants may salary s acrifice a minimum of $3,000 and up to a maximum of 25%
of salary per annum for purc hase of issued Fairfax shares at the market price on the open market of the ASX. The shares are
purc hased by an independent trustee company on pre-fixed dates.
3. Long Ter m Incentive Scheme
2006 - 2007 Equity-based incentive schemes
Under the 2006-2007 EBIS, which applied for bonus es earned in the 2006 and 2007 financial years, one third of the annual bonus
earned by senior exec utives reporting to the CEO was deferred. The deferred amount was remitted to the trustee of the Employee
Share Plan to purchases shares on market and alloc ates the shares inside the Plan to the relevant executive. Each executive’s
allocated shares vest three years after the allocation date subject to ongoing employment requirements.
2008 Equity-based incentive scheme
The long term incentive plan is available to certain permanent full-time and part-time employees of the consolidated entity.
Under this plan, the cash value of a percentage of an eligible employee’s annual total fixed remuneration will be in the form of
rights to Fairfax shares , which are beneficially held in a trust. The shares will vest if the eligible employee remains in employment
three calendar years from the date the rights are allocated and certain perf ormance hurdles are satisfied. If the allocation does not
vest at the end of year three, a re-test of the performanc e hurdles oc curs in the fourth year. There are currently no cash
settlement alternatives. Dividends on the allocated shares during the vesting period are paid directly to the eligible employee and the
Company does not have any recourse to dividends paid.
100
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
34. Remuneration of auditors
During the financial year the following amounts were paid or payable for services provided by the auditor of the Company and its
related parties:
Audit services
Ernst & Young Australia
Audit and review of financial reports
Affiliates of Ernst & Young Australia
Audit and review of financial reports
KPMG Australia
Audit and review of financial reports
Affiliates of KPMG Aus tralia
Audit and review of financial reports
Total audit services
Other assurance services
Ernst & Young Australia
Regulatory and contractually required audits
Other
Affiliates of Ernst & Young Australia
Regulatory and contractually required audits
Other
KPMG Australia
Other
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
$
$
$
$
1,788,000
991,000
1,788,000
991,000
360,000
358,000
360,000
358,000
-
-
683,229
19,454
-
-
683,229
19,454
2,148,000
2,051,683
2,148,000
2,051,683
296,000
106,075
268,600
242,895
-
-
8,240
175,425
230,402
29,723
271,641
30,000
-
50,000
-
-
-
-
-
-
Total other assurance ser vices
662,200
863,136
8,240
175,425
Total remuneration for assurance services
2,810,200
2,914,819
2,156,240
2,227,108
Non assurance services
Ernst & Young Australia
Other s ervices
Affiliates of Ernst & Young Australia
Other s ervices
KPMG Australia
Other s ervices
Total non assurance services
Total remuneration of auditors
42,632
15,450
11,413
4,903
-
398,692
54,045
419,045
-
-
-
-
-
-
287,337
287,337
2,864,245
3,333,864
2,156,240
2,514,445
For the 2007 financial year KPMG performed audit services at legacy Rural Press Limited entities in the Group. Fees for audit services
provided to the legacy Rural Press companies are included in this note to provide a comprehensive disclosure regarding fees paid to
audit firms for audit services in the 2007 financial year.
101
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
35. Director and executive disclosures
( A) EQUITY INSTRUMENT DISCLO SURES RELATING TO KEY MANAGEMENT PERSONNEL
Ba la n ce
Gra nte d a s
On e xerc ise
N e t c ha n ge
Ba la n ce
Po st ye ar- en d
Pos t y ea r-e nd
Pos t y ea r-e nd
1 Jul y 2 00 7
re mu ne ra tio n
o f o p ti on
Oth e r
2 9 Ju n e 2 00 8
a cq ui siti on s
di sp os al s
b al an ce
(i) Shareholdings
Directors
RJ Walker
MD Burrows
RC Corbett
D Evans
JB Fairfax
N Fairfax
JM King
DE Kirk
R Savage
P Young
1,014,300
45,712
29,540
13,801
216,501,147
1,210,113
47,252
324,405
-
12,367
Key management per sonnel
B McCarthy**
G Hambly
J Matthews
J W ithers
S Narayan
Total
1,074,384
114,619
-
3,296
22,981
220,413,917
Directors
RJ Walker
MD Burrows
RC Corbett
D Evans
JB Fairfax
N Fairfax
JM King
DE Kirk
P Young
Key Management Personnel
B McCarthy**
G Hambly
J Matthews
J W ithers
S Narayan
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,530
8,943
10,551
38,647
1,033,830
54,655
40,091
52,448
(18,365)
216,482,782
1,202,238
2,412,351
(1,184)
46,875
19,996
12,816
(21,907)
28,195
12,676
-
34,907
46,068
371,280
19,996
25,183
1,052,477
142,814
12,676
3,296
57,888
28,297
-
3,989
3,547
3,103
3,989
3,325
-
3,324
-
-
-
-
-
-
1,393,918
221,807,835
49,574
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,062,127
54,655
44,080
55,995
216,485,885
2,416,340
49,393
371,280
23,320
25,183
1,052,477
142,814
12,676
3,296
57,888
221,857,409
B al an ce
Gra nte d as
On e xer cis e
Ne t ch an ge
Bal an ce
3 0 Jun e 2 0 06
r emu n era tio n
o f op tio n
Othe r
1 Jul y 2 00 7*
424,791
33,552
21,053
6,456
-
-
39,336
100,000
4,369
-
96,415
-
3,296
2,247
731,515
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
589,509
12,160
8,487
7,345
1,014,300
45,712
29,540
13,801
216,501,147
216,501,147
1,210,113
1,210,113
7,916
224,405
7,998
47,252
324,405
12,367
1,074,384
1,074,384
18,204
-
-
20,734
114,619
-
3,296
22,981
219,682,402
220,413,917
*
In the case of retired directors, th e closing b alance represents the num ber of shares at the date the director retired from the Board.
** In addition, the McCarthy Family Superannuation Fund in which B McCart hy h as an interest, holds 410,550 (2007: 4 10,550) shares in the C om pany.
102
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Stapled Preference Shar es (SPS)
There were no SPS held, acquired or disposed of in the financial year ended 29 June 2008 by direc tors or key management personnel.
( B) RIGHTS OVER SHARE HO LDINGS OF DIRECTORS AND KEY MANAGEMENT PERSO NNEL
Details of s hares provided as remuneration is in section 5.2 of the remuneration report.
Directors
DE Kirk
Key management per sonnel
B McCarthy
G Hambly
J Matthews
J W ithers
S Narayan
Total
*** Includes forfeitures
Directors
DE Kirk
Key management per sonnel
B McCarthy
G Hambly
J Matthews
J W ithers
S Narayan
Total
*** includes forfeit ures
Ope ni ng Ba la n ce
Gra nte d a s
Ne t ch an ge
C lo sin g Bal an ce
1 Jul y 2 00 7
re mu ne ra tio n
Othe r * **
29 Ju ne 20 08
116,297
623,214
-
292,299
99,446
3,323
-
80,651
91,649
-
-
-
(50,577)
-
739,511
292,299
129,520
94,972
-
120,613
195,518
(59,283)
256,848
339,679
1,283,331
(109,860)
1,513,150
Ope ni ng Ba la n ce
Gra nte d a s
Ne t ch an ge
C lo sin g Bal an ce
3 0 Ju n e 2 00 6
re mu ne ra tio n
Othe r * **
1 Ju ly 20 07
-
-
139,915
-
-
149,901
116,297
-
12,460
3,323
-
24,921
-
-
(52,929)
-
-
(54,209)
116,297
-
99,446
3,323
-
120,613
289,816
157,001
(107,138)
339,679
( C) LOANS TO KEY MANAGEMENT PERSONNEL
(i) Aggregates for key management personnel
There were no loans issued to directors of Fairfax Media Limited or to other key management personnel of the Group, including their
personally related parties, during the financial period ended 29 June 2008 (2007: nil).
(ii) Individuals with loans above $100,000 dur ing the financial year
There are no outstanding loans above $100,000 for the financial years ended 29 June 2008 and 1 July 2007.
103
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
( D) OTHER TRANSACTIONS WITH KEY MANAG EMENT PERSONNEL
A number of directors of Fairfax Media Limited also hold directorships with other corporations which provide and receive goods or
services to and from the Fairfax Group in the ordinary course of bus iness on normal terms and conditions. None of these directors
derive any direct personal benefit from the transactions between the Fairfax Group and these corporations.
Transactions were entered into during the financial year with the directors of Fairfax Media Limited and its controlled entities or with
director-related entities, which:
• occurred within a normal employee, customer or supplier relationship on terms and conditions no more favourable than those whic h it
is reasonable to expect would have been adopted if dealing with the director or director-related entity at arm’s length in the same
circumstances;
• do not have the potential to adversely affect decisions about the allocation of scarce resources or discharge the responsibility of the
directors; or
• are minor or domestic in nature.
During the year Fairfax Media Limited entered into arms length trans actions with Lazard LLC resulting in fees paid to Lazard for the year
of $3.3 million (2007: $3.3million). Mr Mark Burrows, who resigned as Fairfax Group Deputy Chairman on 31 J anuary 2008, is Managing
Director of Lazard LLC and Chairman of Lazard Australia.
36. Related party transactions
( A) ULTIMATE PARENT
Fairfax Media Limited is the ultimate parent company.
( B) CONTROLLED ENTITIES
Interests in controlled entities are set out in Note 30.
( C) KEY MANAGEMENT PERSO NNEL
Disclos ures relating to key management personnel are set out in Note 35.
( D) TRANSACTIONS WITH RELATED PARTIES
The following transactions occurred with related parties on normal market terms and conditions:
Consolidated
29 June 2008
1 July 2007
Company
29 June 2008
1 July 2007
Sa le s to
Purc ha se s
Amo un t ow e d
Amo un t ow ed
r el ate d
fr om r el ate d
b y re la te d
to re la ted
pa rtie s
$' 00 0
pa rtie s
$'0 0 0
pa rtie s
$'0 0 0
p a rtie s
$ '0 00
4,573
100
13,736
10,578
-
-
20
-
322
198
-
-
239
311
-
-
Fairfax Media Limited has undertaken transac tions with its controlled entities during the year inc luding the issue and receipt of loans
and management fees. On consolidation, all such transactions have been eliminated in full.
104
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
37. Notes to the cash flow statements
( A) RECONCILIATION OF NET PROFIT AFTER INCOME TAX
EXPENSE TO NET CASH INFLO W FROM OPERATING ACTIVITIES
Net prof it for the financ ial year
386,878
263,510
59,186
721,585
C o ns ol id ate d
C o nso l id ate d
C o mp an y
C o mp an y
2 9 Ju ne 2 00 8
1 J ul y 20 0 7
29 Ju ne 20 0 8
1 Ju ly 20 07
No te
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
Non-cash items
Depreciation and amortisation and asset impairment
Amortis ation of PRESSES issue costs
Share of profits of associates and joint ventures
not received as dividends or distributions
Straight-line rent adjustment
Net (gain)/loss on disposal of property, plant and equipment
Net gain on disposal of investments
Net gain on disposal of other assets
Fair value adjustment to derivatives
Net foreign currency (gain)/loss
Share based payment expense
Non-cash superannuation expense/(income)
Impairment of non-current assets
Changes in oper ating assets and liabilities,
net of effects from acquisitions
Decrease/(increase) in trade receivables
(Increase)/decrease in other receivables
Decrease in inventories
Decrease in other assets
(Decrease)/increase in payables
(Decrease)/increase in provisions
Increase/(decrease) in tax balances
3(B)
108,295
111,281
9,514
-
464
(27)
5,080
(2,430)
-
(1,400)
(1,115)
(5,410)
4,429
1,461
1,382
377
(18,455)
3,785
6,286
(37,350)
(34,023)
1,913
(1,723)
169
(41,859)
(13,227)
(6,310)
(892)
214
822
(156)
17,204
(4,939)
(9,848)
3,472
-
4,910
64,869
(23,081)
-
-
-
42
-
-
-
-
4,429
-
-
785
1,279
-
-
1,264
1,259
(53,391)
12,635
464
-
-
5
-
-
-
-
822
-
3,046
(477)
(158)
-
-
(4,335)
457
(27,396)
Net cash inflow from operating activities
419,676
364,880
24,367
706,648
( B) RECONCILIATION OF CASH AND CASH EQUIVALENTS
Reconc iliation of cash at end of the financial year (as shown in the Statement of Cash Flows) to the related items in the financial
statements is as follows:
Cash on hand and at bank
Bank overdraft
Total cash at end of the financial year
93,864
-
93,864
366,307
-
366,307
680
-
680
687
-
687
( C) NON-CASH INVESTING AND FINANCING ACTIVITIES
Dividends satisfied by the issue of shares under the dividend reinvestment plan are shown in Note 23(A).
105
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
38. Financial and capital risk management
Financial risk management
The Group's principal financial instruments, other than derivatives, comprise cash, short term deposits, bills of exchange, bank loans
and capital markets issues. The main purpose of these financial instruments is to manage liquidity and to raise finance for the Group's
operations. The Group has various other financial instruments, such as trade and other receivables and trade and other payables,
which arise directly from its operations.
The Group uses derivatives in accordance with Board approved policies to reduce the Group's exposure to fluctuations in interest
rates and foreign exchange rates. These derivatives create an obligation or right that effectively transfers one or more of the risks
associated with an underlying financial instrument, asset or obligation. Derivative instruments that the Group uses to hedge risks such
as interest rate and foreign currency movements include:
•
•
•
•
cross currency swaps;
interest rate swaps;
forward foreign currency contracts; and
interest rate option contracts.
The Group's risk management activities for interest rate and foreign exchange exposures are carried out centrally by Fairfax Media
Group Treasury department. The Group Treasury department operates under policies as approved by the Board. The Group Treasury
department operates in co-operation with the Group's operating units so as to maximise the benefits associated with centralised
management of Group risk factors.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the
return to shareholders through the optimisation of net debt and total equity balances.
The capital structure of Group entities is monitored using debt to EBITDA (earnings before interest, tax, depreciation and amortisation)
ratio. The ratio is calculated as debt divided by EBITDA. Debt is calculated as total interest bearing liabilities.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return equity
to shareholders, issue new shares or sell assets to reduce debt. The Group continuously reviews the capital structure to ensure:
•
•
•
• where excess funds arise with respect to the funds required to enact the Group's business strategies, consideration is given to
sufficient finance for the business is maintained at a reasonable cost;
sufficient funds are available for the business to implement its capital expenditure and business acquisition strategies;
distributions to shareholders are maintained within stated dividend policy requirements; and
possible returns of equity to shareholders.
The Group has a dividend payout policy of approximately 80% of net profit through the economic cycle, subject to the cash needs of
the business.
During 2008, the Group's strategy was to maintain the debt to EBITDA ratio around 3.0 to 3.5 times (2007: 3.0 to 3.5 times) and maintain
an investment grade credit rating.
The debt to EBITDA ratio for the Group at 29 June 2008 and 1 July 2007 is as follows:
Interest bearing liabilities - current
Interest bearing liabilities - non-current
Total interest bearing liabilities
EBITDA *
Debt to EBITDA ratio
Note
21
21
Consolidated
Consolidated
2008
$'000
2007
$'000
15,816
12,237
2,496,133
2,335,498
2,511,949
840,573
2,347,735
747,000
3.0
3.1
* For the purposes of the debt to EBITDA ratio, operating EBITDA is adjusted for specific items of a non-recurring nature. In respect
of the first 12 month period after the acquisition of any acquired business, EBITDA will include acquired EBITDA in respect of the
acquired business for any period not covered in the consolidated EBITDA of the Group.
106
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Risk fact ors
The key financial risk factors that arise from the Group's activities, including the Group's policies for managing these risks are
outlined below.
Market risk is the risk that the fair value or future cas h flows of the Group's financial instruments will fluc tuate because of changes
in market prices. The market risk factors to which the Group is exposed to are discussed in further detail below.
( A) INTEREST RATE RISK
Interest rate risk refers to the risks that the value of a financial instrument or future cash flows associated with the instrument will
fluctuate due to movements in market interest rates.
Interest rate risk arises from interest bearing financial ass ets and liabilities that the Group utilises. Non-derivative interest bearing assets
are predominantly short term liquid assets. Long term debt issued at fixed rates exposes the Group to fair value interest rate risk.
The Group's borrowings which have a variable interest rate attached give rise to cas h flow interest rate risk.
The Group's risk management policy for interest rate ris k seeks to reduce the effects of interest rate movements on its asset and
liability portfolio through management of the exposures.
The Group maintains a mix of foreign and local currency fixed rate and variable rate debt, as well as a mix of long term debt versus
short term debt. The Group primarily enters into interest rate swap, interest rate option and cross currency swap agreements to manage
these risks. The Group designates which of its financial assets and financial liabilities are expos ed to a fair value or cash f low interest
rate risk, such as financial assets and liabilities with a fixed interest rate or financial assets and financial liabilities with a floating interest
rate that is reset as market rates change.
The Group hedges the currency risk on all foreign currency borrowings by entering into c ross currency s waps , which have the
economic effect of converting foreign currency borrowings to local currency borrowings . The derivative c ontracts are carried at fair
value, being the market value as quoted in an active market.
Refer to Note 16 for further details of the Group's derivative financial instruments and details of hedging activities.
At balance date, the Group had the following mix of financial as sets and financial liabilities exposed to interest rate risks:
Consolidated
As at 29 June 2008
Financial assets
Cash and cash equivalents
Trade and other rec eivables
Available for sale investments
Held to maturity inves tments
Other financial assets
Derivatives
Total financial assets
Fl oa tin g
ra te
$' 00 0
93,864
-
-
14,686
-
21,544
130,094
Fixe d
ra te
$'0 0 0
-
-
-
-
-
37,860
37,860
N on -
in tere st
be ar in g
$'0 0 0
-
482,355
3,547
-
122
-
486,024
Tota l
$ '0 00
93,864
482,355
3,547
14,686
122
59,404
653,978
107
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Floating
rate
$'000
Fixed
rate
$'000
Non-
interest
bearing
$'000
Total
$'000
-
-
330,045
330,045
1,022,527
26,729
-
-
28,530
24,884
492,947
570,249
199,682
-
-
146,401
1,077,786
94,390
1,434,163
19,737
-
-
-
-
-
-
-
-
1,047,411
519,676
570,249
199,682
28,530
146,401
2,511,949
114,127
1,172,176
1,453,900
330,045
2,956,121
Floating
rate
$'000
366,307
-
-
16,014
-
-
382,321
Non-
interest
bearing
$'000
-
392,713
1,492
-
17,061
-
Total
$'000
366,307
392,713
1,492
16,014
17,061
165
411,266
793,752
Fixed
rate
$'000
-
-
-
-
-
165
165
-
-
289,519
289,519
1,109,593
-
-
-
31,317
28,544
257,434
554,976
199,589
-
-
166,282
1,140,910
86,360
1,206,825
4,088
-
-
-
-
-
-
-
-
1,138,137
257,434
554,976
199,589
31,317
166,282
2,347,735
90,448
1,227,270
1,210,913
289,519
2,727,702
Financial liabilities
Payables
Interest bearing liabilities:
Bank borrowings and loans
Senior notes
Eurobonds
Medium term notes
Finance lease liability
Redeemable preference shares (RPS)
Total interest bearing liabilities
Derivatives
Total financial liabilities
Consolidated
As at 1 July 2007
Financial assets
Cash and cash equivalents
Trade and other receivables
Available for sale investments
Held to maturity investments
Other financial assets
Derivatives
Total financial assets
Financial liabilities
Payables
Interest bearing liabilities:
Bank borrowings and loans
Senior notes
Eurobonds
Medium term notes
Finance lease liability
Redeemable preference shares (RPS)
Total interest bearing liabilities
Derivatives
Total financial liabilities
108
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
Company
As at 29 June 2008
Financial assets
Cash and cash equivalents
Trade and other rec eivables
Total financial assets
Financial liabilities
Payables
Total financial liabilities
Company
As at 1 July 2007
Financial assets
Cash and cash equivalents
Trade and other rec eivables
Total financial assets
Financial liabilities
Payables
Total financial liabilities
Fl oa tin g
ra te
$' 00 0
Fixe d
ra te
$'0 0 0
N on -
in tere st
be ar in g
$'0 0 0
Tota l
$ '0 00
680
-
680
-
-
-
398,566
398,566
-
1,274,487
1,274,487
680
1,673,053
1,673,733
-
-
15,900
15,900
15,900
15,900
Fl oa tin g
ra te
$' 00 0
Fixe d
ra te
$'0 0 0
N on -
in tere st
be ar in g
$'0 0 0
Tota l
$ '0 00
687
-
687
-
-
-
398,566
398,566
-
1,356,325
1,356,325
687
1,754,891
1,755,578
-
-
14,640
14,640
14,640
14,640
Sensitivity analysis
The table below shows the effect on net profit and equity after income tax if interest rates at balance date had been 10% higher or
lower with all other variables held constant, taking into account all underlying exposures and related hedges. Concurrent movements
in interest rates and parallel shifts in the yield curves are assumed.
A sensitivity of 10% has been selected as this is considered reasonable given the current level of both short term and long term
Australian interest rates. A 10% s ensitivity would move short term interest rates at 29 June 2008 from around 7.82% to 8.60%
representing a 78 basis point shift.
In 2008, 92% (2007: 92%) of the Group's debt, taking into ac count all underlying exposures and related hedges was denominated in
Australian Dollars; therefore, only the movement in Australian interest rates is used in this sensitivity analysis.
Based on the sensitivity analysis, if interest rates were 10% higher, net profit would be impacted by the interest expense being higher
on the Group's net floating rate Australian Dollar positions during the year.
Consolidated
If interest rates were 10% higher with all other variables
held constant - increase/(decrease)
If interest rates were 10% lower with all other variables
held constant - increase/(decrease)
Imp a ct on p ost- ta x pr ofit
Imp ac t o n eq ui ty
2 00 8
$' 00 0
20 0 7
$'0 0 0
20 0 8
$'0 0 0
20 07
$ '0 00
(12,455)
(2,759)
(1,761)
(1,427)
12,455
2,759
1,761
1,427
109
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
( B) FOREIGN CURRENCY RISK
Foreign currency risk refers to the risk that the value or the cash flows arising from a financial commitment, or recognised asset or
liability will fluctuate due to changes in foreign c urrency rates. The Group's foreign currency exchange risk arises primarily from:
•
borrowings denominated in foreign currency; and
•
firm commitments and/or highly probable forecast transactions for rec eipts and payments settled in foreign currencies and prices
dependent on foreign currencies respec tively.
The Group is expos ed to foreign exchange ris k from various currency exposures, primarily with respect to:
• United States Dollars;
• New Zealand Dollars;
• Euro;
• British Pounds Sterling;
• Swiss Franc s;
• Singapore Dollars; and
• Malaysian Ringgit.
Forward foreign exchange contracts are used to hedge the Group's known non-debt related foreign currency risks. These contracts
generally have maturities of less than twelve months after the balance sheet date and consequently the net fair value of the gains and
losses on thes e contracts will be transferred from the cash flow hedging reserve to the income statement at various dates during this
period when the underlying exposure impacts earnings. The derivative contracts are c arried at fair value, being the market value as
quoted in an active market.
The Group's risk management policy for foreign exchange is to only hedge known or highly probable future transactions. The policy
only permits hedging of the Group's underlying foreign exchange exposures.
Benefits or costs arising from currency hedges for revenue and expense transactions that are designated and documented in a hedge
relationship are brought to account in the income statement over the lives of the hedge transactions depending on the effectiveness
testing outcomes and when the underlying exposure impacts earnings. For transactions entered into that hedge specific c apital or
borrowing commitments, any cost or benefit resulting from the hedge forms part of the initial asset or liability carrying value.
When entered into, the Group formally designates and documents the financ ial instrument as a hedge of the underlying exposure, as
well as the risk management objectives and strategies for undertaking the hedge transactions. The Group formally assess es both at
the inception and at least semi-annually thereafter, whether the financial instruments that are used in hedging transactions are effective at
offsetting changes in either the f air value or cash flows of the related underlying exposure. Because of the high degree of effectiveness
between the hedging instrument and the underlying expos ure being hedged, fluctuations in the value of the derivative instruments are
generally offset by changes in the fair values or cash flows of the underlying exposures being hedged. Any ineffective portion of a
financial instrument's c hange in fair value is immediately recognised in the income statement and this is mainly attributable t o financial
instruments in a fair value hedge relationship. Derivatives entered into and not documented in a hedge relationship are revalued with
the changes in fair value recognis ed in the income statement. All of the Group's derivatives are straight forward over-the-counter
instruments with liquid markets.
Refer to Note 16 for further details of the Group's derivative financial instruments and details of hedging activities.
Sensitivity analysis
The tables below show the effect on net profit and equity after income tax as at balance date from a 10% weaker/stronger base
currency movement in exchange rates at that date on a total derivative portfolio with all other variables held cons tant.
A sensitivity of 10% has been selected as this is considered reasonable given the current level of exchange rates and the volatility
observed both on a historical basis and market expectations for potential future movement. The Group's foreign c urrency risk from the
Group's long term borrowings denominated in foreign currencies has no significant impact on profit from foreign currency movements
as they are effectively hedged.
110
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(a) AUD / NZD
Comparing the Australian Dollar exchange rate against the New Zealand Dollar, a 10% weaker Australian Dollar would result in an
exchange rate of 1.1354 and a 10% stronger Australian Dollar in an exchange rate of 1.3878 based on the year end rate of 1.2616.
This range is considered reasonable given over the last five years, the Australian Dollar exchange rate against the New Zealand Dollar
has traded in the range of 1.0421 to 1.2692.
Consolidated
If the AUD exchange rate was 10% weaker against the NZD with all other
variables held constant - increase/(decrease)
If the AUD exchange rate was 10% stronger against the NZD with all other
variables held constant - increase/(decrease)
* Hedging reserves includes both the cash flow hedge reserve and net investment hedge reserve
Impact on post-tax profit
(hedging reserves) *
Impact on equity
2008
$'000
368
81
2007
$'000
2008
$'000
2007
$'000
903
(26,392)
(21,971)
(994)
21,797
17,976
(b) AUD / USD
Comparing the Australian Dollar exchange rate against the United States Dollar, a 10% weaker Australian Dollar would result in an
exchange rate of 0.8645 and a 10% stronger Australian Dollar in an exchange rate of 1.0566 based on the year end rate of 0.9605.
This range is considered reasonable given over the last five years, the Australian Dollar exchange rate against the United States Dollar
has traded in the range of 0.6339 to 0.9653.
Consolidated
If the AUD exchange rate was 10% weaker against the USD with all other
variables held constant - increase/(decrease)
If the AUD exchange rate was 10% stronger against the USD with all other
variables held constant - increase/(decrease)
Impact on post-tax profit
(cash flow hedge reserve)
Impact on equity
2008
$'000
116
(95)
2007
$'000
2008
$'000
2007
$'000
-
-
1,836
782
(1,509)
(602)
(c) AUD / EUR
Comparing the Australian Dollar exchange rate against the Euro, a 10% weaker Australian Dollar would result in an exchange rate
of 0.5472 and a 10% stronger Australian Dollar in an exchange rate of 0.6688 based on the year end rate of 0.6080. This range is
considered reasonable given over the last five years, the Australian Dollar exchange rate against the Euro has traded in the range of
0.5607 to 0.6460.
Consolidated
If the AUD exchange rate was 10% weaker against the Euro with all other
variables held constant - increase/(decrease)
If the AUD exchange rate was 10% stronger against the Euro with all other
variables held constant - increase/(decrease)
Impact on post-tax profit
(cash flow hedge reserve)
Impact on equity
2008
$'000
-
(53)
2007
$'000
16
1
2008
$'000
2007
$'000
(787)
906
643
(755)
111
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
(d) NZD / EUR
Comparing the New Zealand Dollar exchange rate against the Euro, a 10% weaker New Zealand Dollar would result in an exchange rate
of 0.4349 and a 10% stronger New Zealand Dollar in an exchange rate of 0.5316 based on the year end rate of 0.4833. This range is
considered reasonable given over the last five years, the New Zealand Dollar exchange rate against the Euro has traded in the range of
0.4721 to 0.6127.
Im pa ct o n p os t-tax p rofi t
(c as h flo w h ed g e re se rve )
Imp a ct on e qu ity
2 0 08
$ '0 00
2 00 7
$ '00 0
20 08 *
$ '00 0
20 07 *
$' 00 0
-
-
-
-
923
(393)
(753)
481
Consolidated
If the NZD exchange rate was 10% weaker against the Euro with all other
variables held constant - increase/(dec rease)
If the NZD exchange rate was 10% stronger against the Euro with all other
variables held constant - increase/(dec rease)
*
Amounts disclosed in Australian Dollar terms
The Company is not exposed to any foreign currency risks on borrowings .
( C) CREDIT RISK
Credit risk is the risk that a c ontracting entity will not complete its obligations under a financial instrument and cause the Group to make
a financial loss. The Group has exposure to credit risk on all financial assets inc luded in the Group's balance sheet. To help manage
this risk, the Group:
•
has a polic y for establishing c redit limits for the entities it deals with;
• may require collateral where appropriate; and
• manages expos ures to individual entities it either transacts with or enters into derivative contracts with (through a system of
credit limits).
The Group is expos ed to c redit risk on financial instruments and derivatives. For credit purposes, there is only a credit risk where the
contrac ting entity is liable to pay the Group in the event of a closeout. The Group has policies that limit the amount of credit exposure to
any financial institution. Derivative counterparties and cash transactions are limited to financial ins titutions that meet minimum credit
rating c riteria in accordanc e with the Group's policy requirements.
The Group's credit risk is mainly concentrated across a number of customers and financial institutions. The Group does not have any
significant credit ris k exposure to a single or group of customers or individual institutions.
Financial assets are considered impaired where there is objective evidence that the Group will not be able to collect all amounts due
according to the original trade and other receivable terms. Factors considered when determining if an impairment exists include ageing
and timing of expec ted receipts and the credit worthiness of counterparties. A provision for doubtful debts is created for the difference
between the assets carrying value and the present value of estimated future cash flows. The Group's trading terms do not generally
include the requirement for customers to provide collateral as security for financial assets.
Refer to Note 7 for an ageing analysis of trade receivables and the movement in the provision for doubtful debts. All other financial
assets are not impaired and are not past due. Based on the c redit history of thes e classes, it is expected that these amounts will be
received when due.
( D) LIQUIDITY RISK
Liquidity risk is the risk that the Group cannot meet its financial commitments as and when they fall due.
To help reduce this risk the Group:
112
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
•
•
•
has a liquidity policy which targets a minimum level of committed facilities and cash relative to EBITDA;
has readily accessible funding arrangements in plac e; and
staggers maturities of financial instruments.
The contractual maturity of the Group's f ixed and floating rate derivatives, other f inancial assets and other financial liabilities are shown
in the tables below. The amounts represent the future undiscounted principal and interest cash flows and therefore may not equate
Cross currency swaps - foreign leg (fixed)**
67,392
214,812
to the values disclosed in the balance sheet.
As at 29 June 2008
Financial liabilities*
Payables
Bank borrowings and loans
Notes and bonds
Finance leas e liability
Redeemable Preference Shares (RPS)
Derivatives - inflows*
Cross currency swaps - foreign leg (variable)**
Forward foreign currency contracts **
Derivatives - outflows*
Cross currency swaps - AUD leg (fixed)**
Cross currency swaps - AUD leg (variable)* *
Cross currency swaps - NZD leg (variable)**
Forward foreign currency contracts **
As at 1 July 2007
Financial liabilities*
Payables
Bank borrowings and loans
Notes and bonds
Finance leas e liability
C ons olida ted
C om pa ny
(N om ina l c as h flows)
(N om ina l ca s h flows)
1 ye ar
o r le ss
$ '00 0
1 to 2
y ea rs
$' 00 0
2 to 5
ye ars
$ '0 00
M ore tha n
5 ye ars
$ '00 0
1 ye ar
o r le ss
$ '00 0
1 to 2
y ea rs
$' 00 0
(330,045)
-
-
-
(15,900)
(101,272)
(513,356)
(640,431)
(27,178)
(72,787)
(72,787)
(972,424)
(512,577)
(7,847)
(9,210)
(8,144)
(26,397)
(22,023)
(156,630)
-
-
875
139,721
875
-
764,822
2,624
-
485,651
26,927
-
(32,703)
(205,950)
(256,549)
(154,866)
(51,758)
(22,632)
(137,044)
(51,758)
(22,632)
(522,428)
(67,897)
(194,354)
(293,491)
-
-
-
C ons olida ted
C om pa ny
(N om ina l c as h flows)
(N om ina l ca s h flows)
1 ye ar
o r le ss
$ '00 0
1 to 2
y ea rs
$' 00 0
2 to 5
ye ars
$ '0 00
M ore tha n
5 ye ars
$ '00 0
1 ye ar
o r le ss
$ '00 0
1 to 2
y ea rs
$' 00 0
(289,519)
(90,865)
(57,709)
-
(89,366)
(57,709)
-
(1,199,488)
-
(38,547)
(14,640)
-
(963,177)
(255,989)
(7,673)
(7,920)
(25,732)
(31,566)
Redeemable Preference Shares (RPS)
(10,776)
(10,776)
(180,168)
-
Derivatives - inflows*
Cross currency swaps - foreign leg (fixed)**
Cross currency swaps - foreign leg (variable)**
Forward foreign currency contracts **
Derivatives - outflows*
Cross currency swaps - AUD leg (fixed)**
Cross currency swaps - AUD leg (variable)* *
Cross currency swaps - NZD leg (variable)**
Forward foreign currency contracts **
54,754
54,754
924,394
255,989
-
22,379
(23,792)
(30,430)
(23,616)
(24,227)
-
-
-
-
(23,792)
(426,853)
(510,840)
(30,430)
(23,616)
-
(70,849)
(354,516)
-
-
-
-
-
-
* For floating rate instruments, the amount disclosed is determined by reference to the interest rate at the last repricing date.
** Contractual amounts to be exchanged representing gross cash flows to be exchanged.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
113
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
( E) FAIR VALUE
The carrying amounts and fair values of financial assets and financial liabilities at balance date are:
Consolidated
Financial assets
Cash and cash equivalents
Receivables
Derivative assets
Available for sale investments
Held to maturity inves tments
Other financial assets
Financial liabilities
Payables
Interest bearing liabilities
- bank borrowings
- Eurobonds
- senior notes
- medium term notes
- lease liability
- Redeemable Preference Shares (RPS)
Derivatives
Company
Financial assets
Cash and cash equivalents
Receivables
Financial liabilities
Payables
C arry in g v al ue
Fa ir va lu e Ca rry in g va lu e
Fa ir va lu e
2 0 08
$ '0 00
2 00 8
$ '00 0
2 00 7
$ '00 0
2 00 7
$' 00 0
93,864
482,355
62,936
3,547
14,686
122
657,510
93,864
482,355
62,936
3,547
14,686
122
657,510
366,307
392,713
173
1,492
16,014
17,061
793,760
366,307
392,713
173
1,492
16,014
17,061
793,760
330,045
330,045
289,519
289,519
1,047,411
1,047,411
1,138,137
1,138,137
570,249
519,676
199,682
28,530
146,401
122,257
573,296
522,280
200,000
38,897
148,623
122,257
554,976
257,434
199,589
31,317
166,282
91,792
557,295
258,922
200,000
41,398
169,496
91,792
2,964,251
2,982,809
2,729,046
2,746,559
680
1,673,053
680
1,673,053
687
1,754,891
687
1,754,891
1,673,733
1,673,733
1,755,578
1,755,578
15,900
15,900
15,900
15,900
14,640
14,640
14,640
14,640
Market values have been used to determine the fair value of listed available for sale investments.
The fair value of the senior notes and lease liabilities have been calculated by discounting the future cash flows by interest rates for
liabilities with similar risk profiles. The discount rates applied range from 5.75% to 13.38%.
The carrying value of all other balances approximate their fair value.
114
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
39. Segment reporting
The economic entity operates predominantly in two geographic segments, Australia and New Zealand, and predominantly in one
business segment, publishing.
The publishing business comprises news, information and entertainment publishing and advertising sales in newspaper, magazine and
electronic formats.
( A) RESULTS BY G EOGRAPHIC SEGMENT
29 June 2008
Segment revenue
Total revenue
Au stra li a
N ew Zea la n d
Un a ll oca te d
$' 00 0
$'0 0 0
$'0 0 0
C on so li da ted
e nti ty
$ '0 00
2,322,100
2,322,100
586,863
586,863
25,044
25,044
2,934,007
2,934,007
Share of net profits of assoc iates and joint ventures
8,493
242
-
8,735
Total segment revenue
2,330,593
587,105
25,044
2,942,742
Segment profit from continuing operations before income tax expense
Unallocated expenses
498,738
-
211,310
-
25,044
(211,919)
735,092
(211,919)
Net profit from continuing operations before income tax expense
498,738
211,310
(186,875)
523,173
Income tax expense
Net profit after income tax expense
Signific ant items, net of tax
-
-
(135,683)
(135,683)
498,738
211,310
(322,558)
387,490
8,427
-
-
8,427
Net profit after income tax expense excluding significant items
507,165
211,310
(322,558)
395,917
1 July 2007
Segment revenue
Total revenue
1,614,488
558,292
5,760
2,178,540
1,614,488
558,292
5,760
2,178,540
Share of net profits of assoc iates and joint ventures
2,659
302
-
2,961
Total segment revenue
1,617,147
558,594
5,760
2,181,501
Segment profit from continuing operations before income tax expense
Unallocated expenses (including PRESSES)
255,731
-
193,696
-
5,759
(116,964)
455,186
(116,964)
Net profit from continuing operations before tax
255,731
193,696
(111,205)
338,222
Income tax expense
Net profit after income tax expense
Signific ant items, net of tax*
-
-
(76,601)
(76,601)
255,731
193,696
(187,806)
261,621
7,260
-
-
7,260
Net profit after income tax expense excluding significant items
262,991
193,696
(187,806)
268,881
* Significant items at 1 J uly 2007 include minority interest s hare of $3.0 million.
115
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
( B) ASSETS AND LIABILITIES BY GEO GRAPHICAL SEGMENT
29 June 2008
Assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Net assets
1 July 2007
Assets
Segment assets
Unallocated assets
Total assets
Liabilities
Segment liabilities
Unallocated liabilities
Total liabilities
Net assets
C on so li da ted
Au stra lia
Ne w Zea la nd
$'0 00
$ '0 00
e nti ty
$ '0 00
6,489,637
1,674,903
550,518
110,913
6,014,016
1,869,244
487,250
84,573
8,164,540
128,561
8,293,101
661,431
2,666,336
3,327,767
4,965,334
7,883,260
117,282
8,000,542
571,823
2,467,725
3,039,548
4,960,994
( C) OTHER DETAILED SEGMENT DISCLOSURES
Equity method investments included in s egment assets
Ac quisition of property, plant and equipment, intangible assets and other
non-current assets
Depreciation
Amortis ation
Non-cash expenses other than depreciation and amortis ation
Au stra li a
N ew Zea la n d
Au stra li a
N ew Zea la nd
2 9 Ju ne 2 00 8
2 9 Ju ne 20 0 8
1 Ju l y 20 0 7
1 Ju ly 20 07
$' 00 0
$'0 0 0
$'0 0 0
$ '0 00
43,926
1,764
16,332
2,146
115,508
73,764
20,367
97,345
34,540
10,930
3,234
13,302
68,251
62,072
19,650
167,083
36,583
10,096
2,193
10,559
116
Notes to the Financial Statements
Fairfax Media Limited and Controlled Entities for the period ended 29 June, 2008
40. Events subsequent to balance sheet date
Subsequent to year end, NZ$45.2 million (A$35.2million) was paid to the previous owners of Trade Me Limited as part of the second
year earn out agreement. A provision was recognised as at 29 June 2008 (refer Note 22) and has been ac counted for as an additional
acquisition cost and added to the carrying amount of the investment in Trade Me Limited as goodwill.
On 20 August 2008, the Company announced it had agreed to sell, subject to regulatory approvals, Southern Star Group Limited's
75% interest in UK based Carnival Film & Television Ltd together with certain library and distribution rights of Carnival productions
currently held by Southern Star, for a total sale price of approximately £22.3 million. The proceeds are expected to rec over the
carrying values at balanc e date based on the preliminary purc hase accounting.
Subsequent to year end, the Group announced a business improvement program and initiatives to improve the overall productivity
and performance of the busines s. The restructure is expected to deliver around $50 million in annualised cost savings with approximately
$25 million flowing in to the 2009 financial year. It is anticipated that there will be a one off cost in the 2009 financial year of approximately
$50 million.
117
Directors’ Declaration
In accordanc e with a resolution of the directors of Fairfax Media Limited, we state that:
1. In the opinion of the directors:
(a) The financial report and the additional disclosures included in the Directors' Report designated as audited, of the Company and of
the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company's and consolidated entity's financ ial position as at 29 June 2008 and of their
performance for the period ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2. This declaration has been made after receiving the declaration required to be made to the directors in accordance with s ection 295A
of the Corporations Act 2001 for financial period ended 29 June 2008.
In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the
3.
closed group identified in Note 30 will be able to meet any obligations or liabilities to whic h they are or may become subject to, by
virtue of the Deed of Cross Guarantee.
On behalf of the Board
Ronald Walker
Chairman
David Kirk
Chief Exec utive Officer and Director
26 September 2008
118
Shareholder Information
Fairfax Media Limited
TWENTY LARG EST HOLDERS O F SECURITIES AT 4 SEPTEMBER 2008
ORDINARY SHARES (FXJ)
National Nominees Limited
Marinya Media Pty Ltd
J P Morgan Nominees Australia Limited
HSBC Cus tody Nominees (Australia) Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
Citic orp Nominees Pty Limited
Cogent Nominees Pty Limited
ANZ Nominees Limited
Citic orp Nominees Pty Limited
Citic orp Nominees Pty Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
Citic orp Nominees Pty Limited
UBS Nominees Pty Ltd
Australian Foundation Investment Company Limited
Argo Investments Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
AMP Life Limited
Citic orp Nominees Pty Limited
Citic orp Nominees Pty Limited
STAPLED PREFERENCE SECURITIES (SPS) (FXJPB)
J P Morgan Nominees Australia Limited
National Nominees Limited
Cogent Nominees Pty Limited
Pan Australian Nominees Pty Limited & Pan Australian Nominees Pty Limited
Citic orp Nominees Pty Limited
ANZ Nominees Limited
Goldman Sachs J B Were Pty Ltd
HSBC Cus tody Nominees (Australia) Limited - A/C 3
Citic orp Nominees Pty Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
Questor Financial Services Limited
Cogent Nominees Pty Limited
Equity Trustees Limited
HSBC Cus tody Nominees (Australia) Limited
Mleq Nominees Pty Limited
CS Fourth Nominees Pty Ltd
ANZ Trustees Limited
Executor Trustee Australia Limited
Perpetual Trustees Consolidated Limited
Australian Executor Trustees Limited
DEBENTURES
National Financial Services Corp.
N um be r o f
s ec ur itie s
220,373,027
211,632,469
124,566,785
99,331,265
69,930,683
53,410,854
51,329,679
35,984,128
29,835,552
19,061,605
14,974,833
13,073,715
10,226,846
10,007,763
9,704,628
9,661,961
9,229,651
9,209,774
8,607,719
8,514,999
1,018,667,936
609,417
310,300
249,076
227,061
165,772
162,472
150,000
95,774
78,980
66,158
54,233
48,700
25,750
20,099
20,000
18,500
14,000
13,380
12,930
10,940
2,353,542
281
%
14.56%
13.98%
8.23%
6.56%
4.62%
3.53%
3.39%
2.38%
1.97%
1.26%
0.99%
0.86%
0.68%
0.66%
0.64%
0.64%
0.61%
0.61%
0.57%
0.56%
67.30%
20.31%
10.34%
8.30%
7.57%
5.53%
5.42%
5.00%
3.19%
2.63%
2.21%
1.81%
1.62%
0.86%
0.67%
0.67%
0.62%
0.47%
0.45%
0.43%
0.36%
78.45%
100
121
Shareholder Information
Fairfax Media Limited
O PTIONS
There were no options exercis able at the end of the financial year.
SUBSTANTIAL SHAREHO LDERS
Substantial s hareholders as shown in substantial shareholder notices received by the c ompany as at 4 September 2008 are:
Marinya Media Pty Ltd
Perpetual Limited
Commonwealth Bank of Australia
Maple-Brown Abbott Limited
452 Capital Pty Limited
Portfolio Partners Limited and Aviva Group entities
Lazard Asset Management Pacific Co
National Australia Bank Limited Group
DISTRIBUTION SCHEDULE OF HO LDINGS AT 4 SEPTEMBER 2008
Ord in ary Sh are s
216,519,035
111,919,395
111,604,183
103,258,293
91,502,444
47,144,759
76,230,110
76,191,251
No . o f se cu ri tie s
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total number of holders
Number of holders holding les s than a marketable parcel
VO TING RIGHTS
No . of
ord in a ry
No . of
S PS
sha re ho ld e rs
ho ld e rs
N o. o f
d eb en tu re
h ol de rs
N o. o f
o p tio n
ho l de rs
11,904
24,742
7,692
5,577
402
50,317
1,309
895
98
26
4
7
1,030
-
1
-
-
-
-
1
-
-
-
-
-
-
-
-
Voting rights of ordinary shareholders are governed by Rules 5.8 and 5.9 of the Company’s Constitution which provide that every
member present personally or by proxy, attorney or representative shall on a show of hands have one vote and on a poll, shall have
one vote for every share held. SPS, debentures and options do not carry any voting rights.
122
Five Year Performance Summary
Fairfax Media Limited and Controlled Entities
Total revenue
Revenues from operations
Earnings before depreciation, interes t
and tax (EBITDA)
Depreciation
Earnings before interest and tax
Net interest expense
Profit before tax
Income tax expense/(benefit)
Net prof it attributable to members of the Company
Net prof it before s ignificant items
Total equity
Total ass ets
Total borrowings
Number of shares and debentures
Number of shareholders
Number of PRESSES holders
Number of SPS holders
EBITDA to operating revenue
Basic earnings per share
Basic earnings per share before significant items
Operating cash flow per share
Dividend per share
Dividend payout ratio
Interest cover based on EBITDA
before significant items
Gearing
Return on equity
A IF RS
2 00 8
2,934.0
2,900.9
818.3
108.3
710.0
186.9
523.2
135.7
386.9
395.3
4,965.3
8,293.1
2,511.9
1,513.5
50, 184
-
1,010
28.2
24.6
25.1
27.7
20.0
81.3
4.4
50.6
8.0
AIFR S
2 00 7
2,178.5
2,111.4
560.7
111.3
449.4
111.2
338.2
76.6
263.5
267.8
4,961.0
8,000.5
2,347.7
1,479.6
50,843
-
733
26.6
22.7
23.2
24.7
20.0
88.1
5.3
47.3
5.4
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
m
%
cents
cents
cents
cents
%
Times
%
%
AIFR S
AIFR S
R es tate d
A GAAP
20 0 6
20 0 5
20 04
1,909.9
1,907.8
1,880.2
1,873.4
1,783.0
1,767.7
493.5
79.8
413.7
97.1
316.6
88.5
227.5
234.3
2,136.8
4,087.1
1,507.9
939.1
40,301
-
564
26.0
24.4
24.5
30.7
19.5
79.9
5.1
70.6
11.0
511.4
80.1
431.3
76.6
354.7
90.8
263.2
237.6
2,168.7
3,592.8
1,048.4
924.5
38,089
5,835
-
27.5
26.6
25.8
37.2
23.5
88.3
6.5
42.2
11.0
433.0
85.3
347.7
71.9
275.8
(1.0)
276.0
207.6
2,068.7
3,531.2
1,117.6
906.9
37,899
5,984
-
24.5
29.1
21.4
24.1
16.5
56.7
6.3
52.7
13.3
123
Directory
Fairfax Media Limited
ANNUAL GENERAL MEETING
The annual general meeting will be held at 10.30am on
Thursday 13 November 2008 at the Palladium at Crown, Level
1, Crown Towers, 8 Whiteman Street, Southbank, Melbourne
VIC 3006.
FINANCIAL CALENDAR
For financial year 2007/08
STOCK EXCHANGE LISTING
The Company’s ordinary shares are listed on the Australian
Stock Exchange - “FXJ”. The Stapled Preference Securities
(Fairfax SPS) are listed on the Australian Stock Exchange–
“FXJPB”.
The NZ redeemable preference shares are listed on the New
Zealand Debt Exchange – “FXFFA”.
Books close for final dividend
Final dividend paid
Stapled preference security dividend
Annual general meeting
2 September 2008
2 October 2008
31 October 2008
13 November 2008
Estimated for financial year end 2008/09
WEBSITE
Corporate information and the Fairfax annual report can be
found via the Company’s website at www.fxj.com.au. The
Company’s family of websites can be accessed through
www.fairfax.com.au.
Interim result and dividend
announcement
Books close for interim dividend
Interim dividend paid
Stapled preference security dividend
Preliminary final result and dividend
announcement
Final dividend paid
Stapled preference security dividend
Annual general meeting
February 2009
March 2009
April 2009
April 2009
August 2009
October 2009
October 2009
November 2009
COMPANY SECRETARY
Gail Hambly
REGISTERED OFFICE
Level 5,
1 Darling Island Road,
Pyrmont NSW 2009
Ph: +61 2 9282 2833
Fax: +61 2 9282 1633
SHARE REGISTRY
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Ph: 1300 888 062 (toll free within Australia)
Ph: +61 2 8280 7670
Fax: +61 2 9287 0303
Email: registrars@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
IMPORTANT INFORMATION ABOUT THE FAIRFAX ANNUAL
REPORT
A soft copy of the annual report is available at
www.fxj.com.au. To obtain a hard copy of the report, contact
Link Market Services - see contact details under Share
Registry.
REMOVAL FROM ANNUAL REPORT MAILING LIST
Shareholders who do not wish to receive a copy of the annual
report should advise Link Market Services Limited in writing,
by fax or email - see Share Registry.
CONSOLIDATION OF SHAREHOLDINGS
Shareholders who wish to consolidate their separate
shareholdings into one account should advise the Share
Registry in writing.
DIRECT PAYMENT TO SHAREHOLDERS' ACCOUNTS
The Company pays dividends by direct credit to shareholders'
bank accounts or participation in the Dividend Reinvestment
Plan. The Company no longer issues cheques except in
exceptional circumstances. A direct credit form can be
downloaded or obtained from the Share Registry by going to
www.fxj.com.au and clicking on Shareholder Info Service,
or by contacting the Share Registry.
Payments are electronically credited on the dividend date and
confirmed by a mailed payment advice. Shareholders are
advised to notify the Share Registry (although it is not
obligatory) of their tax file number so that dividends can be
paid without tax being withheld.
124
Publications and Websites
FAIRFAX MEDIA
AUSTRALIAN PUBLICATIONS
Metropolitan Newspapers
The Sydney Morning Herald
The Sun-Herald
The Age
The Sunday Age
The Canberra Times
Community Newspapers (NSW)
The Herald –Newcastle
Illawarra Mercury
Central Coast Sun Weekly
Lakes Mail
Port Stephens Examiner
Wollongong Advertiser
St George & Sutherland Shire Leader
Cooks River Valley Times
Auburn Review
The Campbelltown Macarthur
Advertiser
Camden Advertiser
Wollondilly Advertiser
Fairfield City Champion
Liverpool City Champion
Bankstown-Canterbury Torch
Blacktown City Sun
Parramatta Sun
Penrith City Star
St Mary’s Star
Hills News
South Western Rural
Northern News
Sun Guardian
Community Newspapers (VIC)
Melbourne Weekly Magazine
The Melbourne Times
Melbourne Weekly Bayside
Emerald Hill Weekly
Melbourne Weekly Eastern
Heidelberg & Diamond Valley
Weekly
Northern Weekly
Hume Weekly
(Melbourne’s Weekly Magazine)
CITY
Knox Journal
Maroondah / Yarra Ranges Journal
The Journal
Monash Journal
Cranbourne Journal
Berwick / Pakenham Journal
Macedon Ranges / Sunbury
Telegraph
Werribee Banner / Point Cook
Banner
Moreland Community News
Moonee Valley Community News
The Mail /Altona Laverton Mail/
Williamstown Advertiser
Melton / Moorabool Express
Telegraph
The Advocate / North-West Advocate
Frankston / Hastings Independent
Mornington and South Peninsula
Mail
Chelsea, Mordialloc, Mentone
Independent
Holiday Magazine
Holiday Bass Coast & Gippsland
Regional Publishing (NSW)
Armidale Express
Armidale Express Extra
Armidale: InTune Magazine
Batemans Bay Post/Moruya Examiner
Bathurst Western Advocate
Bathurst Western Times
Bega District News
Bellingen Shire Courier Sun
Blayney Chronicle
Blue Mountains Gazette
Blue Mountains Wonderland
Bombala Times
Boorowa News
Border News
Bowral Highlands Post
Bowral: Property Press
Bowral: Southern Highland News
Braidwood Tallaganda Times
Camden Haven Courier
Canowindra News
Central Western Daily
Cessnock Advertiser
Cobar Age
Coffs Harbour Independent
Coleambally: Colypoint Observer
Colour World
Cooma Monaro Express/Jindabyne
Summit Sun
Cootamundra Herald
Country Leader
Cowra Guardian
Crookwell Gazette
Daily Liberal
Dubbo Daily Liberal
Dubbo Mailbox Shopper
Dungog Chronicle
Eastern Riverina Observer
Eden Imlay Magnet
Eurobodalla Shire Independent
Eurobodalla TV Guide
Express Extra
Forbes Advocate
Forster: Great Lakes Advocate
Gilgandra Weekly
Glen Innes Examiner
Gloucester Advocate
Goodiwindi Argus
Goulburn Post
Goulburn: The Post Weekly
Great Lakes Advocate
Grenfell Record
Griffith: The Area News
Guyra Argus
Harden Murrumburrah Express
Hastings Gazette
Hawkesbury Courier
Hawkesbury Gazette
Henty: Eastern Riverina Chronicle
Hunter Valley News
Hunter Valley Town + Country
Junee: Southern Cross
Inverell Times
Kempsey: Macleay Argus
Kempsey: Macleay Valley Happenings
Laurieton: Camden Haven Courier
Leeton: The Irrigator
Lightning Ridge News
Lithgow Mercury
Macksville: Midcoast Observer
Macleay Argus
Macleay Valley Happynings
Mailbox Shopper
Maitland: Lower Hunter Star
Maitland Mercury
Manning Great Lakes Extra
Manning River Times
Merimbula News Weekly
Midcoast Happenings
Midstate Observer
Moree: Border News
Moree Champion
Moruya Examiner
Mudgee Guardian
Mudgee Weekly
Muswellbrook Chronicle
Muswellbrook: Hunter Valley News
Nambucca Guardian News
Nambucca Heads: Hibiscus
Happynings
Narooma News
Narromine News
Newcastle Star
News of the Area
Newsweekly
North Coast SeniorLifestyle
North Coast Town + Country Magazine
Northern Daily Leader
Nowra: Shoalhaven + Nowra News
Nowra: South Coast Register
Nyngan Observer
Oberon Review
Orange Central Western Daily
Orange Midstate Observer
Parkes Champion Post
Port Macquarie Express
Port Macquarie News
Port Macquarie: Hastings Happenings
Queanbeyan Age
Sapphire Coaster
Scone Advocate
Shoalhaven and Nowra News
Singleton Argus
Snowy Times
South Coast Register
South Coast Senior Lifestyle
South Coast Weekly
South East Town + Country
Southern Weekly Magazine
Summit Sun
Sussex Inlet Times
Tallaganda Times
Tamworth: Northern Daily Leader
Tamworth Times
Taree: Manning Great Lakes Extra
Taree: Manning River Times
Tea Gardens/Hawks Nest: NOTA
Tenterfield Star
The Australian Senior
The Magnet
125
Publications and Websites
The Rural
Thornton: Weekend Hunter Star
Town & Country
Ulladulla: Milton Ulladulla Times
Upper Hunter TV Guide
Wauchope: Hastings Gazette
Wagga Wagga: Daily Advertiser
Wagga Wagga: Weekend Advertiser
Wagga Wagga: The Rural
Wagga Wagga: The Riverina Leader
Walcha News
Warren Advocate
Wellington Times
Western Advocate
Western Times
Western Magazine
Wingham Chronicle
Yass Tribune
Young Witness
Regional Publishing (VIC, TAS, SA,
WA)
Ararat Advertiser
Ballarat Courier
Ballarat News
Bendigo Advertiser
Bendigo Miner
Colac Extra
Corangamite Extra
Country Mail – Albury/Wodonga
Gippsland Farmer
Gippsland Times
Gippsland Times
Hepburn Shire Advocate
Latrobe Valley Express
Moe & Narracan News
Morwell Press Centre
Stawell Times News
The Border Mail, Albury/Wodonga
The Express – Albury/Wodonga
The Great Southern Tourist News -
Victoria
The Moyne Gazette
The Warrnambool Extra
The Warrnambool Standard
Traralgon Journal
Wimmera Mail Times
East Coast & Diary News
Launceston Advertiser
Launceston Examiner
Meander Valley News
Northern Midlands Community News
Sunday Examiner, Tasmania
Tamar Community Times
Tasmanian Independent Publishing
Tasmanian Travelways
Central Coast Times, Burnie
Devonport Times
The Advocate, Burnie
Western Herald, North West Tasmania
Barossa and Light Herald
Eyre Peninsula Tribune, Cleve
Flinders News, SA
Murray Valley Standard
On The Coast, Victor Harbor
Port Lincoln Times
Roxby Downs Sun
The Islander, Kangaroo Island
126
The Northern Argus, Clare Valley
The Recorder, Port Pirie
The Transcontinental, Port Augusta
Victor Harbor Times
West Coast Sentinel, Ceduna
Whyalla News
Augusta Margaret River Mail
Avon Advocate, Northam
Bunbury Mail
Busselton-Dunsborough Mail
Central Districts Advocate, Northam
Collie Mail
Donnybrook Bridgetown Mail
Esperance Express
Golden Mail, Kalgoorlie
Harvey Mail
Mandurah Mail
Merredin-Wheatbelt Mercury
Murray Mail
Senior Post, WA
The Wagin Argus
Xpress Magazine, WA
Agricultural and Queensland
Regional Publishing
National
Australasian Flowers
Australian Cotton Outlook
Australian Dairyfarmer
Australian Farm Journal
Australian Horticulture
Australian Landcare
Australian Nursery Manager
Country Music Capital News
Dairy Info. Guide
Directory of Australian Country Music
Flower Register
Good Fruit + Vegetables
Horse Deals
Hortguide
Irrigation and Water Resources
Lotfeeding
National GrapeGrowers and Vignerons
Official Guide to Tamworth Country
Music Festival
Turfcraft
New South Wales
Farm Equipment Trader
Farming Small Areas
NSW Ag Today
The Land
Queensland
North Queensland Register
Queensland Country Life
Queensland Grains Outlook
Queensland Smart Farmer
South Australia
Smart Farmer
Stock Journal
The Grower
Victoria
Stock and Land
Western Australia
Farm Weekly
Ripe
Field Days and Events
Commonwealth Bank Ag-Quip
Elders FarmFest
Farming Small Areas Expo
Hunks and Spunks
Murrumbidgee Farm Fair
Northern and Southern Beef Weeks
NSW Beef Spectacular
Pro-Ag
Queensland Country Life Beef Week
Star Maker Quest
Tamworth Country Music Festival
New Zealand Agricultural Publishing
Ag Trader
Horticulture News
Lifestyle Farmer
New Zealand Grapegrower
Straight Furrow
The Dairyman
Field Days
Central District Field Days
Queensland Regional Publishing
d'fine Redland Lifestyle
Goondiwindi Argus
Senior Lifestyle Bayside
Southern Bay News
The Bayside Bulletin
The Northwest Star
The Redlands Directory
The Redland Times
USA Agricultural Publications
American Agriculturist
Californian Farmer
Carolina-Virginia Farmer
Dakota Farmer
Direct-fed Microbila, Enzyme + Forage
Additive Compendium
The Farmer
The Farmer-Stockman
Feedstuffs
Feed Additive Compendium Annual
Feedstuffs Reference Issue
Farm Futures
Indiana Prairie Farmer
Kansas Farmer
Michigan Farmer
Mid-South Farmer
Missouri Ruralist
Nebraska Farmer
Ohio Farmer
Prairie Farmer
Southern Farmer
Tack 'n' Togs
Wallaces Farmer (Iowa)
Western Farmer-Stockman
Wisconsin Agriculturist
Farm Shows
Farm Progress Show
Hay Expo
Husker Harvest Days
New York Farm Show
Publications and Websites
TRADEME
www.trademe.co.nz
www.trademeproperty.co.nz
www.trademejobs.co.nz
www.tradememotors.co.nz
www.travelbug.co.nz
www.findsomeone.co.nz
www.findsomeone.com.au
www.findsomeone.ca
www.safetrader.co.nz
www.smaps.co.nz
FAIRFAX BUSINESS MEDIA
Australia Publications
The Australian Financial Review
The Australian Financial Review –
Weekend Edition
AFR BOSS
The Australaian Financial
Review Magazine
AFR Smart Investor
Life&LeisureLuxury
Life & Leisure The Sophisticated
Traveller
Asset
BRW
CFO
MIS Australia
Online
www.afr.com
www.afrmarketwrap.com
www.brw.com.au
www.misaustralia.com
www.afrsmartinvestor.com.au
www.afrmagazine.com
www.afrboss.com
www.cfoweb.com.au
www.assetmag.com.au
Data
Connect4
MarketBase
AssetLink
Fairfax Business Research
Education
Financial Essentials
Asia Publications
MIS Asia
MIS Asia 100
Strategic 100
CIO Asia
Computerworld Singapore
Computerworld Malaysia
Asia On-line
www.mis-asia.com
New Zealand Publications
CIO
Computerworld
NZ Gear Guide
NZ PCWorld
Resellernews
MIS100
New Zealand On-line
www.cio.co.nz
www.computerworld.co.nz
www.jobuniverse.co.nz
www.pcworld.co.nz
www.reseller.co.nz
FAIRFAX RADIO NETWORK
Metropolitan News Talk
2UE Sydney
3AW Melbourne
4BC Brisbane
6PR Perth
Metropolitan Music
Magic 1278 Melbourne
4BH Brisbane
96fm Perth
Regional
4BU & Hitz FM Bundaberg
5RM & Magic FM the Riverland
5CC & Magic FM Port Lincoln
5AU / 5CS & Magic FM Spencer Gulf
Narrowcast
KIX AM / FM Bundaberg
Hervey Bay, Maryborough, Gladstone,
Rockhampton, Mackay, Townsville,
Emerald,the Coalfields, Spencer Gulf,
the Claire Valley, Port Lincoln and the
Riverland
FAIRFAX DIGITAL
News
www.smh.com.au
www.Theage.com.au
www.Brisbanetimes.com.au
www.WAtoday.com.au
www.Sunherald.com.au
Fairfax Digital Regional Network
(formerly Yourguide.com.au)
www.farmonline.com.au
www.lifeislocal.com.au
www.ruralpress.com
www.agquip.com.au
www.autoguide.com.au
www.businessquickfind.com.au
www.buyersguide.com.au
www.canberratimes.com.au
www.examiner.com.au
www.farmonline.com.au
www.farmprogress.com
www.feedstuffs.com
www.fridaymag.com.au
www.holidaysaway.net
www.jobsguide.com.au
www.lifestyle-farmer.co.nz
www.localdirectory.com.au
www.plantorder.com
www.propertyguide.com.au
www.river949.com.au
www.rpinteractive.com.au
www.ruralbookshop.com.au
www.ruralpropertyguide.com.au
www.ruralpresssales.com
www.tackntogs.com
www.yourguide.com.au
Business and Finance
www.Businessday.com.au
www.Mysmallbusiness.com.au
www.Investsmart.com.au
www.Tradingroom.com.au
www.Moneymanafger.com.au
www.Execstyle.com.au
Lifestyle and Entertainment
www.Cuisine.com.au
www.Birsbanetimes.com.au/
goodfoodguide
www.Essentialbaby.com.au
www.Thevine.com.au
Sport
www.Rugbyheaven.com.au
www.Realfooty.com.au
wwwLeaguehq.com.au
Travel/Accommodation
www.stayz.com.au
Property
www.Domain.com.au
www.apm.com.au (Australian Property
Monitors)
127
Publications and Websites
Automotive
www.Drive.com.au
www.Countrycars.com.au
www.Autoguide.com.au
Dating
www.rsvp.com.au
Employment
www.mycareer.com.au
www.thebigchair.com.au
Video
Fairfax Digital Video
FAIRFAX MAGAZINES
Good Weekend
Sunday Life
the(sydney)magazine
theage(melbourne)magazine
Travel + Leisure Australia
Television
Style HQ Collection – Custom
Publishing
The Chase
Fashion Capital
Queens Plaza
FAIRFAX NEW ZEALAND
Metropolitan Newspapers
The Dominion Post
The Christchurch Press
Waikato Times
Regional Newspapers
Manawatu Standard
Taranaki Daily News
The Marlborough Express
The Nelson Mail
The Southland Times
The Timaru Herald
National Newspapers
Sunday Star-Times
Sunday News
Turf Digest, Best Bets
The Independent
128
Mid Canterbury Herald
Taieri Herald
The Christchurch Mail
The Invercargill Eye
The Leader – Nelson City Leader
The Leader – Richmond & Waimea
Leader
The Marlborough Midweek
The Mirror
The Northern Outlook
The Saturday Express
Waitaki Herald
Websites
www.stuff.co.nz
www.rugbyheaven.co.nz
www.businessday.co.nz
www.nzx.com
www.cuisine.co.nz
www.nzhouseandgarden.co.nz
www.nzgardener.co.nz
Real Estate and Motoring
Auto Xtra
Location – Waikato Edition
North Shore & Hibiscus Coast Homes
Outlook Real Estate
Property Weekly South Eastern Otago
Southern Homes
West & Central Homes
Magazines
Alive
Avenues
Boating New Zealand
Cuisine
Fish & Game New Zealand
New Zealand Fishing News
New Zealand Gardener
New Zealand Growing Today
New Zealand Horse & Pony
New Zealand Trucking
NZ Autocar
NZ House & Garden
NZ Life & Leisure
Real
Sky Sport The Magazine
Stars (host Sunday News)
Sunday (host Sunday Star-Times)
The Cut
The TV Guide
Truck & Machinery Trader
World
Your Weekend
Community Newspapers
Auckland & Northland Community
Newspapers
Auckland City Harbour News
Central Leader
Dargaville & Districts News
East & Bays Courier
Eastern Courier
Look North
Manukau Courier
North Harbour News
North Shore Times
Northern News
Nor-West News
Papakura Courier
Rodney Times
The Bay Chronicle
Waiheke MarketPlace
Western Leader
Whangarei Leader
Waikato/Bay of Plenty/Hawke’s Bay
Community Newspapers
Cambridge Edition
Franklin County News
Hamilton Press
Hauraki Herald
HB Country Scene
Matamata Chronicle
North Waikato News
Piako Post
Rotorua Review
Ruapehu Press
Rural Delivery
South Waikato News
Taupo Times
The Hastings Mail
The Napier Mail
Urban & Country
Taranaki/Manawatu Community
Newspapers
Central District Times
Central Districts Farmer
Feilding Herald
North Taranaki Midweek
Rangitikei Mail
South Taranaki Star
The Tribune
Wellington Community Newspapers
Horowhenua Mail
Kapi-Mana News
Kapiti Observer
The Hutt News
The Wellingtonian
Upper Hutt Leader
Wairarapa News
The New Zealander (International)
South Island Community Newspapers
Central Canterbury News
Clutha Leader
D-Scene
High Country Herald
Kaikoura Star
Motueka-Golden Bay News
Newslink
Otago Southland Farmer