2011 AnnuAl R epoR t
I N F O R M A T I O N
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ABn 15 008 663 161
Our competitive edge is extended through our multi‑media
platform approach that engages with high quality audiences
throughout the day.
This approach allows Fairfax Media to create advertising
opportunities that leverage this unique audience.
MORNING
In the morning our
audiences catch the
overnight headlines and
stories that set the news
agenda for the day.
DAY
Newspaper
Radio
Smartphone
Tablet
Online
Across Regional,
Metropolitan
and Agricultural
markets in Australia
and New Zealand,
we publish over
430 newspapers
and magazines.
15 radio stations
and 13 narrowcast
licences in
Australia
including the
largest news talk
network in the
country.
Over two million
news and product
applications
downloaded.
Over 200,000
news tablet
applications
downloaded.
The number
one news and
information
websites in
Australia and
New Zealand.
Online
Transactions
Want to buy or sell a
home or a car, looking
for a job, auction some
goods, rent a holiday
house, find a baby sitter,
tender for a contract
or find a date? Our
audiences can do it online.
See page 121 for a concise listing of all
Fairfax Media Limited media assets.
Throughout the day our
audiences keep up to date
with what is happening in
the world around them.
EVENING
In the evening, as our
audiences relax, they have
the time to view in more
depth the news of the day.
Smartphone
Smartphone
Tablet
Quick update
on what has
happened
during the
day.
Quick update on
what has happened
during the evening.
More time to
have a deeper
read of the
stories making
the news.
Online
Video
Building on
our number one
position online,
audiences grow at
lunchtime to view
our online news
and information
videos.
Online
Transactions
Want to buy or sell a
home or a car, looking
for a job, auction some
goods, rent a holiday
house, find a baby sitter,
tender for a contract
or find a date? Our
audiences can do it online.
Smart TV
Viewing of
the news
applications
created for
the new
generation
TV’s.
FAIRFAX MeDIA lIMIteD ANNUAL REPORT 2011
FAIRFAX MeDIA lIMIteD ANNUAL REPORT 2011
1
1
cHAIRMAN’s
RepORT
This has been a challenging
year for the media sector, with
initial expectations that the
benign operating conditions that
characterised the 2010 year would
continue quickly displaced when
consumer and advertiser sentiment
turned sharply negative in November.
The subsequent prolonged downturn put Fairfax Media to the test
as we were required to aggressively respond to cyclical factors,
while continuing to address the challenge of structural change in
some parts of our business.
I am pleased to report that your Company responded well to the
challenge. We had taken tough measures in 2008 and 2009 in an
effort to ensure that the Company was well placed to withstand
changes in our markets, and the highly creditable operating
results reported for the financial year are testament to three key
decisions and areas of focus.
Most importantly, our decision to diversify our operations away
from dependence on metropolitan newspapers continues to serve
us well. You have heard us say before that your Company is now
diversified across technologies and channels, reaching larger
audiences than at any time in its history. The benefit of this spread
of operations was tangibly demonstrated by our two largest
operating divisions – Australian Regional Media and Online –
which delivered growth in both revenue and operating profits for
the year notwithstanding the tough operating environment.
Faced with changing market conditions we have continued to
seek cost and productivity improvements. We have reduced costs
across our business by 10 per cent over the last three years,
and there was no cost growth at all during the second half of the
financial year. We are committed to making substantial additional
cost savings over the next two years.
The third area of key strategy change has been to reduce our
debt levels. Considerable improvement has been made and
the Company is now one of the least geared in our industry.
It is planned that as asset sales are affected, further reductions
in gearing will occur.
ResulTs HIgHlIgHTs
After recording a strong rebound in profitability in 2010, the
2011 financial year was one of consolidation as we responded
to the more difficult operating environment. While these operating
results were pleasing in the context of a difficult year, our reported
statutory profits, expressed after significant items, showed a
loss of $390.9 million. Nonetheless, underlying financial results
showed only modest declines, with highlights including:
•
•
•
a net profit after tax and SPS dividend of $273.7 million; down
1.8 per cent on the prior year
earnings per share of 11.6 cents, down 1.7 per cent on last year
operational cashflow increasing 8.5 per cent
•
final dividend increase of 7 per cent to 1.5 cents per share;
bringing total dividends for the year to 3.0 cents a share.
The significant items related largely to a review undertaken
as part of the year end accounting and audit processes of the
carrying value of intangible assets on the Balance Sheet. This
analysis was undertaken with reference to the present value of
expected future cashflows. Based on this review, the Company
has written down the value of mastheads, customer relationships
and goodwill by $650.7 million after tax. Following this writedown,
which does not impact the Company’s cash balance or debt
covenant compliance, the carrying value of the Company’s
intangible assets is $5.3 billion.
execuTIve leAdeRsHIp
In December 2010, Mr Brian McCarthy resigned from his role as
Chief Executive Officer and Managing Director of the Company.
At this time, Mr. Greg Hywood, at the time a Non-Executive
Director, assumed the role of Chief Executive, initially on an
acting basis before the completion of a global executive search
led to his candidacy being confirmed on a full time basis.
Mr McCarthy had been with Rural Press and then Fairfax Media
for 34 years, and his leadership played a key role in steering the
Company through the Global Financial Crisis. He also achieved
considerable success in driving cultural change.
Fairfax Media was fortunate to have available an executive of the
calibre of Mr Hywood. At the time of his appointment as acting
Chief Executive, Mr Hywood had served on the Fairfax Board for
a little over two months, but this was just the latest chapter in his
involvement with the Company.
A Walkley Award winning journalist, Mr Hywood had held a number
of senior management positions at Fairfax Media, including
Publisher and Editor in Chief of each of The Australian Financial
Review, The Sydney Morning Herald/Sun Herald and The Age. He
also held the position of Group Publisher Fairfax magazines.
We believe that in Mr Hywood, your Company has an executive
with the right background and skills to respond to the exciting
opportunities and challenges ahead.
BAlANce sHeeT
Ensuring that Fairfax Media has a balance sheet appropriate
for capital market conditions and the operating environment
is a primary concern of your Board.
2
UNDERlYING NET
PROfIT AfTER TAx*
$273.7m
Down 1.8% from last year
STATUTORY NET
lOSS AfTER TAx
$390.9m
TOTAl DIVIDENDS
3.0 cents
fully franked
Up 20% from last year
With this in mind, achieving a reduction in debt levels was a
significant focus during the year. Adjusting for the repurchase
of $300 million in Stapled Preference Shares, net debt decreased
$247 million to $1.49 billion during the year as substantial free
cashflow was dedicated to debt repayment.
We are now well positioned. The Company is comfortably
within all debt covenants and we are highly confident that debt
maturities in 2012 and 2013 will be fully covered by cash flow
from business operations together with unused credit facilities
currently in place.
Nevertheless, your Board is committed to further reducing
debt levels over the medium term.
sTRATegy ANd BusINess MIx
Following finalisation of the Company’s Strategic Plan in
November, our focus has been on positioning Fairfax Media
for long term growth. A comprehensive transformation of our
Metropolitan Media Business, which is expected to yield tangible
results by 2013, is a central element of this program.
We are also prepared to make changes to our mix of businesses
if we believe that doing so would maximise shareholder value.
During the year, we commenced a process of exploring the sale
of our metropolitan and regional radio assets. Fairfax Radio is a
leading national radio network with strong established brands and
a loyal listener and advertiser base in each of its key markets.
However, the radio business is not integrated with other business
activities of Fairfax Media, and the decision to explore a sale
followed strong expressions of interest from prospective acquirers.
Following the end of the financial year, we have separately
announced an intention to pursue the partial float of Trade Me
on the New Zealand Stock Exchange, with Fairfax Media to
retain a shareholding of between 65 and 70 per cent. We believe
that Trade Me has developed to the point that it is poised to
flourish as a listed company, while providing the business with
independent access to capital markets in order to fund growth
which will be in the interests of both Fairfax Media and Trade Me.
Notably, your Company retains full flexibility in relation to these
sale and float processes. We will only proceed with one or both
transactions if shareholder interests are being well served, and
our price requirements are met.
* Refer to the reconciliation of underlying to statutory results on page 36.
dIvIdeNd
On the basis of solid operating results and the health of the
Company’s balance sheet, the Board decided to pay an interim
dividend of 1.5 cents in March 2011 and a final dividend of 1.5
cents per share, fully franked.
The total dividend payout ratio for the year was 25.6 per cent,
an increase on 21 per cent last year.
The Board closely monitors the dividend payout ratio, with a view
to moving the dividend payout ratio higher as conditions allow.
Successful completion of at least one of the Fairfax Radio or
Trade Me transactions will allow the Company’s debt balance to
be further reduced, and the dividend payout ratio to be revisited.
gOveRNANce ANd susTAINABIlITy
An important governance development for the Company this
year was the establishment of a Sustainability & Corporate
Responsibility Board Committee. This is a significant move,
bringing a more focused approach to work already undertaken
across the group, and assisting the Board to play a leadership
role in finding new ways for the Company to improve on its
corporate social responsibility.
Corporate social responsibility is an area that we take extremely
seriously. As a media company, it is particularly important that we
remain vigilant in maintaining our high standards of editorial integrity.
We look forward to the Sustainability & Corporate Responsibility
Board Committee playing a lead role in delivering on this objective.
OuR peOple
On behalf of the Board I would like to sincerely thank the employees
of Fairfax Media for all their efforts throughout this challenging year.
The fantastic content we generate every single day is the backbone
of our Company. Whether it is the local reporting of a school event
in a town in regional Australia, the heartrending coverage of the
catastrophic earthquake in Christchurch or the breaking of a political
scandal in Canberra, our people are there to report and provide our
audiences with the best coverage.
Roger Corbett, AO
Chairman
FAIRFAX MeDIA lIMIteD ANNUAL REPORT 2011
3
cHIeF execuTIve
OFFIceR’s RepORT
It is a pleasure to report to you for
the first time as the chief executive
of Fairfax Media. I am honoured to
be in the role and I am committed
to ably leading this Company through
the important years of constructive
change that must lie ahead for us.
To better appreciate the year just past and what has been
achieved by your Company, it is perhaps helpful to see it as
a year with two distinct halves in terms of performance. The
year until November 2010 saw a reasonably strong economy
and business traded well as a result. From November, the
combination of interest rate change and other wider global
and domestic influences saw sentiment affected and quite
marked weakening in activity.
While you and I demand stronger performance, I believe
what has been achieved in the face of the prevailing
economic headwinds has been more than creditable.
Our revenues held up well in the difficult market, our cost control
was tight and well maintained and it is clear that our multi-platform
strategy is gaining traction. The Company’s underlying operating
profit after tax of $273.7 million, a decrease of only 1.8 per cent
on last year and the strong 8.5 per cent increase in trading cash
flow are testaments to these attributes.
We are managing this market because we have a plan and we
are implementing it. We are managing it because we have very
strong regional and agricultural businesses and because we are
making the changes that have to be made across the business.
We are managing it because we have been in profitable digital
businesses for a long time and they are growing.
In the last six months we have refreshed the corporate structure
and with it the management team. We now have the right
structure and the right people in place and they are getting on
with the job.
The structural changes have included bringing the digital business
of our metropolitan mastheads under the same management as
the print publications for the first time. Executive leadership of the
Company was also reshaped, with a number of new appointments
to divisional management.
The operating businesses of the Company are now under
the leadership of:
• Allan Browne – Australian Regional Media
•
Jack Matthews – Australian Metropolitan Media
• Grant Cochrane – Agricultural Media
• Nic Cola – Marketplaces
• Bob Lockley – Printing
• Graham Mott – Broadcasting
• Allen Williams – New Zealand Media
•
Jon Macdonald – Trade Me.
We also welcome Brett Clegg, our new chief executive of the
Financial Review Group, who rejoined our Company following
the end of the financial year.
The executive team has identified three priorities for the next
two years as we set about delivering on our strategic goals.
The first area of focus is a transformational remodelling of our
metropolitan publishing business to boost its profitability and
respond to structural decline in print publishing in metropolitan
media markets. We have already made substantial progress.
Now led by Jack Matthews, the metropolitan publishing division
is growing the cross-platform presence of our mastheads.
The highly successful launch of market-leading iPad applications
for The Age and the Sydney Morning Herald is just one of several
developments in this area.
We have also re-engineered the sales teams to facilitate
cross-platform sales, generated $10 million in annual savings
through outsourcing sub-editing, and achieved further efficiencies
through the introduction of cross-platform editing.
There are more changes to come this year including changes
to our pricing strategy across platforms and extracting efficiencies
from printing, distribution and circulation. These initiatives are
expected to make a substantial contribution to our recently
announced plans to achieve permanent cost reductions across
Fairfax Media of $85 million per annum by June 2013.
4
UNDERlYING
EBITDA*
$607.4m
CASh flOw
fROM TRADING*
$624.3m
NET DEBT
REDUCED BY
$247.3m
Down 5.0% from last year
Up 8.5% from last year
From last year (after SPS)
However, it is not just in the metropolitan publishing business that
we are seeking to change business models and drive improvement.
Our second area of priority is improved operating performance
across the group. Contributing to this goal will be a strategic review
of the Financial Review Group, accelerated rollout of an enhanced
digital presence for our regional mastheads, and, in due course, a
relaunch of our positioning in auto and employment classifieds. We
are also taking a more active approach to selective brand extension
into adjacent areas, such as events.
Finally, delivering on our strategy will involve a degree of
reshaping of the businesses within the Company to improve
the long term growth rate of the group. We want to increase our
exposure to growth businesses, through investing in growth and
bolt-on acquisitions, always with one eye on maintaining and
improving our balance sheet strength. The processes that we
have announced to potentially sell our broadcasting assets, and
to undertake a partial IPO of Trade Me, are consistent with this
strategy. We are particularly excited by the opportunities that will
be available to Trade Me – which is a very strong business – once
it has independent access to capital markets. We have also made
small recent acquisitions in digital transactional businesses in
travel and tendering and while major acquisitions are not currently
on our agenda, we are certainly prepared to consider additional
initiatives to leverage our existing digital presence and gain
exposure to additional high-growth niches.
While the last six months has seen much needed change, one
thing hasn’t changed and is at the core of Fairfax Media – our
unwavering focus and commitment to quality independent
journalism. This is what we do. It is our competitive advantage.
We use journalism and content to create audiences in print, on
air, online, and on screen. And we sell those audiences through
advertising, transactions and subscriptions. And technology is
on our side.
Consider what has been achieved. Fairfax has been
responding decisively to domestic and global structural
changes in the media, and we are doing it as we move
through a prolonged cyclical downturn.
Some question the Fairfax future and indeed the future of
many media companies. Those inside your business do not
hold those concerns.
So in summary at the end of the 2010/2011 financial year your
Company has strong cashflows and a strong balance sheet. We
are in a more than reasonable debt position and will decrease
debt further. We have some of the best digital businesses in the
country and a regional business envied by many.
We are proud to have the best high quality independent
journalism in the country and we are committed to ensuring it
stays that way. We have hard work ahead of us including getting
the metropolitan business right for the new media world but we
know what has to be done and we are doing it.
In closing I would like to pay tribute to all our employees, but in
particular those who have had to contend with some extraordinary
events this year. Our employees have had to contend with natural
perils including floods in Queensland and Victoria and the tragic
earthquake in Christchurch. These were shocking events for the
communities that we serve, and I was proud of the dedication
shown by all of our people for reporting and distributing the
news in the midst of catastrophe.
Gregory Hywood
Chief Executive Officer and Managing Director
* Refer to the reconciliation of underlying to statutory results on page 36.
FAIRFAX MeDIA lIMIteD ANNUAL REPORT 2011
5
susTAINABIlITy & cORpORATe
sOcIAl RespONsIBIlITy
RepORT 2011
The Company has a 180 year legacy of good corporate
citizenship. This commitment to corporate social
responsibility goes back to the Company’s very
beginnings and fundamental purpose – to inform, inspire
and connect with its audience.
This year, the Company established its first Sustainability &
Corporate Responsibility Board Committee and adopted its
supporting Charter. The Committee’s objective is to advise and
assist the Board in setting an overall direction for the Company’s
commitment to operating its business sustainably, responsibly
and ethically. In practice, this means bringing together the work
already being undertaken across the group and finding ways
in which the Company can improve on its corporate social
responsibility activities through a more focused approach.
Sustainability means taking a long term view. It means
recognising the vital links between the Company’s financial
viability, delivering shareholder value and our responsibility to
the community, the environment, employees and maintaining
its high standard of editorial integrity.
This report provides an overview of the Company’s work
in each of these highlighted areas.
The Company recognises that its employees, customers,
audience and investors are all placing increased emphasis on
sustainability and are demanding more transparency about the
ways in which the Company delivers on its corporate social
responsibility objectives.
Over the next 12 months, the Company will be reviewing and
benchmarking its current corporate social responsibility activities
so that it can measure improvement and identify those areas in
which it is best able to extend its support and resources.
The Company is proud of its achievements to date and looks
forward to communicating more regularly with its stakeholders about
the diversity and quality of work being undertaken in this area.
edITORIAl INdepeNdeNce
ANd INTegRITy
In an era of media consolidation and increased concern about
media integrity, the Company’s commitment to editorial ethics
and transparency has never been more important. It is these
principles that underpin a robust democracy and exist at the
core of the Company’s values.
Nexus BeTweeN quAlITy
jOuRNAlIsM ANd deMOcRAcy
The Company has a fundamental responsibility to its readers
and listeners to publish and broadcast content that is accurate,
fair and balanced. Media organisations play an essential role in
holding Governments, individuals and organisations to account,
advocating for social justice and keeping the public informed of
local and global events.
This is an area of corporate social responsibility in which the
Company has a unique and powerful role to play.
jOuRNAlIsTIc INTegRITy
The Company has a broad range of processes and policies in
place to ensure that all employees understand and abide by
their ethical and legal obligations. A Code of Conduct binds all
employees of the Company and, in addition, there are specific
journalist codes of ethics and related policies.
The Company has undertaken to spend more resources on
training, equipment and recruiting investigative journalists
and other specialist editorial roles. The Company’s recent
announcement about the creation of a Readers’ Editor at The
Sydney Morning Herald and The Age was an important milestone
in building trust with audiences and promoting editorial integrity.
The Readers’ Editor acts as an independent advocate on issues
relating to editorial policy, ethics, standards and overall editorial
performance.
AdvOcAcy
The Company takes an active role in lobbying for changes to
the law which secure Australia’s right to editorial freedom and
transparent Government processes.
The Company was a founding member of Australia’s Right to
Know coalition. The Coalition’s biggest achievements to date
include its successful lobbying of the Government to introduce
more robust freedom of information laws and journalist ‘shield’
laws. These new laws provide important protection for journalists’
sources and, as a consequence, assist whistleblowers in the
public interest.
THe cHRIsTcHuRcH pRess: keepINg
cOMMuNITIes INFORMed ANd
cONNecTed duRINg dIFFIculT TIMes
On 22 February 2011, the city of Christchurch was hit by a
devastating earthquake, taking 181 lives and destroying hundreds
of residential homes and office buildings including the Company’s
editorial building in the centre of Christchurch. The Company lost
one of its employees in the earthquake and others were seriously
injured. Despite the chaos and despair, the Christchurch Press
immediately activated contingency plans and kept publishing
during the crisis. The team in Christchurch managed to publish
and home-deliver newspapers across Christchurch the day after
the quake. For many homes – left without power – their only
source of news and important updates was through the pages
of The Press. Putting out a newspaper in these circumstances
was an extraordinary effort and demonstrates the dedication
and commitment of The Press to its community. In August, The
Press was awarded newspaper of the year in the 25,000-90,000
circulation category at the 2011 Pacific Australasian Newspaper
Association (PANPA) Awards.
6
edITORIAl FReedOM ABROAd
The Company is also concerned with sponsoring and promoting
editorial freedom amongst its regional neighbours. For many
years, the Company has sponsored Tempo Semanal, a free and
independent newspaper published in East Timor. In addition to
donating a printing press, the Company also provides ongoing
editorial support and resources from among its senior journalists.
status families. The program provides resources and funding
to improve the literacy and numeracy of the students. Teachers
have access to weekly news quizzes and assignments that use
each edition of the Herald. The Company runs similar programs
in Victoria, reaching 95% of Victorian schools and helping to
encourage young people to develop a critical understanding
of the media and issues in the news.
cOMMuNITy
The Company operates in partnership with a diverse range
of charities and not-for-profit organisations to create shared
value. These relationships exist both nationally and within the
hundreds of local communities in which the Company operates.
The satisfaction of simultaneously delivering corporate and
social value through hard work is important to the Company’s
employees.
cHARITy FuNdRAIsINg ANd AdveRTIsINg suppORT
The Company donated approximately $18 million worth of free
or heavily discounted advertising to charities and not-for-profit
organisations. The Company also facilitates and sponsors a
range of major community events, which raised millions of
dollars for charities in 2011.
The Company has an expanding calendar of culture, entertainment,
food, wine and sporting events which collectively attract millions
of participants each year. With a proud history of delivering
world-class, vibrant and inspiring events, the Company has
been able to leverage the authority and leadership of its major
mastheads while having a positive impact on the community.
The Sun-Herald City2Surf presented by Westpac is the world’s
largest fun run, with a record 85,000 entrants participating in
2011. This is larger than the New York and London marathons
combined. This year, the City2Surf included its first elite
wheelchair start, which was an important milestone for the
disabled community. The 2011 City2Surf event raised over $3.4
million for more than 550 charities. From the Company, there
were 361 participants, who together raised almost $25,000.
In Melbourne, the Company recently announced the launch of
The Sunday Age City2Sea, which will take place for the first time
on Sunday, November 13, 2011. The main charity partner for the
City2Sea is Movember, a charity supporting men’s health.
wORkplAce gIvINg pROgRAM
The Company’s Australian employees participate in a workplace
giving program, More Than Words. This enables employees
to donate pre-tax dollars to nominated charities. To date, the
program has raised over $510,680. Our employees also regularly
participate in other specific fund raising activities. For example, in
2011, through the Company’s facilitated program, our employees
donated $57,284 to the Queensland Flood Relief Appeal, which
was matched by the Company and supplemented by a further
corporate donation of $75,000. Staff and Company donations
were also made to assist victims of the Victorian floods and
Christchurch earthquake.
To support the Company’s workplace giving program, a Fairfax
Charity Community Bulletin Board has been established.
Employees can post notices on the Board about charity and
community events to generate publicity or financial support.
pROMOTINg educATION ANd lITeRAcy
While the Company participates in a broad range of community
and charitable initiatives, it recognises the strategic benefit of
leveraging its existing resources and expertise in particular areas.
A good example is the Company’s extensive schools and literacy
support programs.
The NSW Priority Schools Program supports government schools
in the areas with the highest densities of low socio-economic
The Company also partners with other bodies to deliver programs
to improve youth literacy, including for example, the NSW and
Victorian Premiers’ Reading Challenges. In Victoria, more than
200,000 young people take part in the Challenge each year,
reading close to four million books collectively.
The Company was a foundational sponsor of the Sydney Story
Factory, a not-for-profit creative writing centre for children.
The initiative is targeted at disadvantaged children, especially
those from indigenous and non-English speaking backgrounds.
Volunteer tutors offer free help to tell stories of all kinds, giving
children the ability to express their thoughts and feelings, while
providing new ways of understanding the world around them.
Another youth focused initiative in Victoria was the Company’s
launch of The Under Age – a pilot program designed to give
aspiring journalists at secondary schools access to the skills and
expertise of The Age’s editorial employees. Every fortnight, 12
students meet at Media House to produce an online newspaper
at www.theunderage.com.au. Journalists and editors visit the
sessions regularly to share their expertise and knowledge.
eNvIRONMeNTAl susTAINABIlITy
The Company has demonstrated a strong commitment to taking
action on climate change and reducing its energy consumption.
There are varying levels of activity across the Company’s different
businesses, taking into account the nature of work undertaken
at each site, the size and age of the building and the resources
available to implement change.
TRAde Me Is cARBON NeuTRAl
Significant achievements have been made in some parts of
the Company’s business. For example, Trade Me, one of the
Company’s largest businesses, has continued to renew its carbon
neutral status each year since 2008. This means it measures its
carbon emissions, is committed to reducing its emissions and
offsets any residual emissions. To offset its emissions, Trade Me
last year purchased carbon credits (Verified Emission Reductions)
from New Zealand’s first Kyoto Protocol Joint Implementation
landfill gas methane capture project at the Awapuni landfill located
in Palmerston North.
pRINTINg
The Company’s printing operations are responsible for most of its
carbon footprint and consequently, particular emphasis is placed
on managing their environmental impacts. All waste newsprint,
aluminium plates, plastics, cardboard, ink and rags are recycled.
Recent data has confirmed that Australia is a global leader in
recovery of newsprint. For almost two decades, the proportion of
Australia’s old newsprint that is recovered each year has increased.
The most recent newsprint recycling report commissioned by the
Publishers National Environment Bureau (of which Fairfax is a
member) showed that 78.7% of Australian newsprint was recovered.
The average recycling rate for newsprint in Europe is 68.9%.
Newsprint for the Company’s newspapers is produced through a
combination of recycled paper and plantation softwood. No paper
is sourced from old growth forests.
In addition energy consumption has been reduced through the
installation of energy efficient equipment (such as insulation,
lighting controllers and sensor lights) and water saving actions
(such as modified cooling towers and flow restriction devices).
FAIRFAX MeDIA lIMIteD ANNUAL REPORT 2011
7
SUSTAINABIlITY & CORPORATE SOCIAl
RESPONSIBIlITY REPORT 2011 CONTINUED
MOvINg TO MORe eNeRgy eFFIcIeNT BuIldINgs
The Company’s workplace gender demographics are as follows:
Over the past few years, the Company has moved its two biggest
workplaces, in Sydney and Melbourne, into new and more energy
efficient buildings. The move from The Age’s Spencer Street
premises to Media House in Melbourne resulted in more than a
50 per cent reduction to our energy costs at that site – despite the
fact that the Company also consolidated various other worksites
and as a result now accommodates significantly more employees
at Media House.
edITORIAl cOveRAge
The Company recognises its unique ability to influence and
inspire action in relation to sustainability issues.
The Company places significant emphasis on reporting about
environmental issues and recruiting experienced and talented
journalists to write accurate and balanced content about climate
change issues and promote public debate.
Within the last year, the Company’s major metropolitan titles
published over 6,000 substantive stories on climate change and
environmental matters. In July, The Sunday Age launched a new
reader driven initiative, where readers were asked to set the
‘climate agenda’ by voting on the top 10 environmental questions
they wanted addressed in The Sunday Age.
•
•
•
the proportion of women on the Board is 22 per cent
the proportion of women in senior management positions
is 18 per cent
the proportion of women employed across the
organisation is 52 per cent.
The Company recognises it can do more in this area and
there are a number of initiatives underway to support the
implementation of the new policy.
eMplOyee eNgAgeMeNT suRvey
This year, the Company conducted its first group wide employee
survey. Almost 5,000 employees completed the survey. The
survey results showed that the Company’s employees were
concerned about many issues, including internal communication,
transparency on pay and strategy and career opportunities.
Division managers have met with their teams to discuss the
survey results and are presently implementing plans to deliver
an improvement. The Company will continue to conduct
employee engagement surveys each year and expects to see
an improvement on this year’s results. This expectation has
been clearly communicated to division managers, who will be
accountable for demonstrating improvements in future years.
2011 eNeRgy AudIT
MANAgINg wORkplAce cHANge
The Company believes it can do more to reduce its carbon footprint
and other adverse environmental impacts. Shortly, it will be
undertaking a Company-wide energy audit to identify further energy
abatement opportunities. Following the audit, the Company is
aiming to set a carbon reduction target for 2012 and future years.
eMplOyees
The Company’s 12,000+ employees are working in unprecedented
times. The media landscape has changed dramatically in the past
few years and is expected to continue evolving in order to meet
demands driven by technology and reader habits.
The Company is working hard to address these changes and to
ensure that its employees have the skills and training necessary
to work in the new media environment. The Company recently
announced it would spend almost $3.5 million over the next three
years investing in quality journalism and training on its major
metropolitan mastheads.
wORkplAce sAFeTy
Employee safety is a primary focus area for the Company. The
Company’s Board and management have a good safety record.
The Company has many systems and processes in place to meet
its safety obligations and recently restructured its Occupational
Health & Safety function to boost the level of expertise, resources
and consistency across the organisation. Between June 2010 and
July 2011, there was a 22 per cent reduction in Lost Time Injuries
(LTI) and the LTI frequency rate fell from 4.09 to 3.20.
The Company delivered specialist safety training to a significant
number of employees across all business units and divisions. The
Company conducts regular safety and environmental audits to
comply with legislative requirements. Our print sites continue to
win safety awards with both The Age Print Centre in Melbourne
and Fairfax Regional Printers in Dubbo winning PANPA awards
for safety in 2010 and 2011 respectively.
geNdeR dIveRsITy
During the year, the Company became a member of the Diversity
Council of Australia and developed a new diversity policy.
In 2011 various restructuring programs were implemented,
including the decision to outsource a large proportion of the
Company’s Australian metropolitan newspapers’ sub-editing work.
Any decision to outsource or restructure is difficult, particularly in
relation to how the decision impacts upon employees. However,
these decisions are considered necessary to secure the long term
financial sustainability of the Company’s business operations.
In the case of the sub-editing restructure, the decision was also
designed to allow the reallocation of resources, allowing the
Company to invest more in the creation side of quality journalism.
Whilst the Company understands and acknowledges that not
everyone will agree with the necessity to make these decisions,
it is still able to demonstrate its ability to implement these changes
in an ethical manner. The Company honoured all of its obligations
to consult with employees and their representatives and provided
full redundancy benefits.
The Company has recently announced further cost saving measures
to be implemented over the next two years. These changes are likely
to impact certain groups of employees, particularly in the Company’s
metropolitan printing divisions. Again, the Company will ensure that
these changes are managed responsibly and in compliance with the
Company’s legal and ethical obligations.
eMplOyee AssIsTANce: THe FAIRFAx FOuNdATION
The Company has a long and proud tradition of providing financial
and other assistance to employees in need. This assistance is
often given through the Fairfax Foundation. The Fairfax Foundation
was established in 1959 by the Fairfax family with a donation of
£100,000. The Foundation operates separately to the Company
and exists solely for the benefit of current and former staff members
and their dependants to help alleviate hardship or distress. The
Foundation is governed by a board of Trustees comprising of
four Company appointed Trustees and four employee elected
Trustees. The Foundation provides a range of grants, interest free
loans and discount holiday rental accommodation. The purpose
of the grants range from medical grants, funeral grants, education
grants and general hardship grants. Over the past three years, the
Fairfax Foundation has made approximately $1,000,000 in benefit
payments. The Foundation publishes an Annual Trustee Report.
8
ANNUAl
GENERAl
MEETING
The annual general
meeting will be held at:
10.30am on Thursday
10 November 2011
Four Seasons Hotel
199 George Street
Sydney NSW
FAiRFAx mEDiA LimiTED
AcN 008 663 161
TABle OF cONTeNTs
Board of Directors
Directors’ Report
Remuneration Report
Corporate Governance
Management Discussion and Analysis Report
Annual Financial Report
Independent Auditor’s Report
Shareholder Information
Five Year Performance Summary
Directory
Publications, websites and mobile device applications
10
12
17
28
35
37
116
118
119
120
121
FAIRFAX MeDIA lIMIteD ANNUAL REPORT 2011
FAIRFAX MeDIA lIMIteD ANNUAL REPORT 2011
9
9
Board of directors
MR ROGER CORBETT, AO
NON-EXECUTIVE CHAIRMAN, APPOINTED TO THE BOARD
4 FEBRUARY 2003
Mr Corbett was elected Chairman of the Board in October 2009. He 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. In 1999, Mr Corbett was appointed Chief Executive Officer
of Woolworths Limited. He retired from that position in 2006. Mr Corbett is a Director of the Reserve Bank of Australia, a Director of
Wal-Mart Stores and Chairman of PrimeAg Australia Limited. He is also the President of the University of Sydney Medical Foundation;
Chairman of the Council and Member of the Executive of Shore School; Chairman of the Salvation Army Advisory Board; a member
of the Dean’s Advisory Group of the Faculty of Medicine at the University of Sydney; and Chairman of the Advisory Committee of the
Westmead Children’s Hospital.
MR GREGORY HYWOOD
NON-EXECUTIVE DIRECTOR, APPOINTED TO THE BOARD EFFECTIVE 4 OCTOBER 2010
APPOINTED AS INTERIM CEO AND MANAGING DIRECTOR
7 DECEMBER 2010
APPOINTED AS CEO AND MANAGING DIRECTOR
7 FEBRUARY 2011
Mr Hywood has enjoyed a long career in the media and government. A Walkley Award winning journalist, he held a number of senior
management positions at Fairfax including Publisher and Editor-in-Chief of each of The Australian Financial Review, The Sydney
Morning Herald/Sun Herald and The Age. He also held the position of Group Publisher Fairfax magazines. He was Executive Director
Policy and Cabinet in the Victorian Premier’s Department between 2004 and 2006, and from 2006 to 2010 was Chief Executive
of Tourism Victoria. Mr Hywood is a Director of The Victorian Major Events Company.
MR MICHAEL ANDERSON
NON-EXECUTIVE DIRECTOR, APPOINTED TO THE BOARD
2 SEPTEMBER 2010
Mr Anderson has had a long career in the radio industry including as Chief Executive of Austereo Limited from 2003 until January 2010.
Prior to becoming Chief Executive he was Chief Operating Officer and from 1997 till early 2003 he was Executive Director of Sales and
Marketing. He began his career in sales at Austereo in 1990. During his time as Chief Executive he focussed the company on building
strong station brands and adapting the business to the changing media market including building and maintaining market leadership
and developing new strategic directions, focussing on target audiences and adapting to increased competition. He launched a
nationwide digital network and Australia’s first digital radio station. He has been a leader in adapting radio to the digital era.
MR NICHOLAS J FAIRFAX
NON-EXECUTIVE DIRECTOR, APPOINTED TO THE BOARD
9 MAY 2007
Mr Nicholas Fairfax was a Director of Rural Press Limited from August 2005 until May 2007. He has been a Director of Marinya Media
Pty Limited 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, Chairman of Elaine Education Pty Limited and a member of UTS Faculty of
Business Executive Council.
MS SANDRA MCPHEE
NON-EXECUTIVE DIRECTOR, APPOINTED TO THE BOARD
26 FEBRUARY 2010
Ms McPhee is a Director of AGL Energy Limited, Kathmandu Holdings Limited, Westfield Retail Trust and Tourism Australia. Her
previous directorships include Australia Post, Coles Group Limited and Perpetual Limited. Prior to becoming a Non-Executive Director,
Ms McPhee held senior executive positions in a range of consumer oriented industries including retail, tourism and aviation, most
recently with Qantas Airways Limited.
10
MR SAM MORGAN
NON-EXECUTIVE DIRECTOR, APPOINTED TO THE BOARD
26 FEBRUARY 2010
Mr Morgan is the founder and former CEO of New Zealand’s largest online transaction site Trade Me, which was purchased by Fairfax Media
in 2006. He is the Chairman of Jasmine Investments, Pacific Fibre and Visfleet and a Director of software companies Xero and Sonar6.
MS LINDA NICHOLLS, AO
NON-EXECUTIVE DIRECTOR, APPOINTED TO THE BOARD
26 FEBRUARY 2010
Ms Nicholls is a Corporate Advisor and Director of a number of leading Australian companies and organisations. She is Chair of KDR
(Yarra Trams) and a Director of Sigma Pharmaceutical Group, the Walter and Eliza Hall Institute of Biomedical Science and Low
Carbon Australia Pty Limited. She is also a member of the Harvard Business School Alumni Board. She is a former Chair of Australia
Post, former Chair of Healthscope Limited and a former Director of St. George Bank Limited. Prior to becoming a professional Director,
Ms Nicholls held senior executive positions in the banking and finance industry.
MR ROBERT SAVAGE, AM
NON-EXECUTIVE DIRECTOR, APPOINTED TO THE BOARD
25 JUNE 2007
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. Mr Savage was Chairman of Perpetual Limited until retiring at Perpetual’s AGM in 2010. He was Chairman of
Mincom Limited until May 2007 and a Director of Smorgon Steel Group Limited until August 2007 when it merged with OneSteel Limited.
MR PETER YOUNG, AM
NON-EXECUTIVE DIRECTOR, APPOINTED TO THE BOARD
16 SEPTEMBER 2005
Over the last 30 years, Mr Young has been an investment banking Executive in Australia, New Zealand and the U.S.A. He is a member
of the Royal Bank of Scotland’s Advisory Council in Australia. 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 Ratch Australia
Corporation Ltd, of Queensland Investment Corporation and of NSW Cultural Management Pty Ltd. He is involved in a number of
community, environmental and artistic activities.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
11
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 26 June 2011 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 ROGER CORBETT, AO
Non-Executive Chairman
MR GREGORY HYWOOD
Chief Executive Officer and Managing Director
Acting 7 December 2010 – 6 February 2011
and permanently appointed 7 February 2011.
MR NICHOLAS FAIRFAX
Non-Executive Director
MS SANDRA MCPHEE
Non-Executive Director
MR SAM MORGAN
Non-Executive Director
MS LINDA NICHOLLS, AO
Non-Executive Director
MR ROBERT SAVAGE, AM
Non-Executive Director
MR PETER YOUNG, AM
Non-Executive Director
MR MICHAEL ANDERSON
Non-Executive Director
Appointed to the Board on 2 September 2010
A profile of each Director holding office at the date of this report
is included on pages 10-11 of this report.
MR BRIAN MCCARTHY
Chief Executive Officer and Managing Director
Resigned 6 December 2010
MR JOHN B FAIRFAX, AO
Non-Executive Director
Retired 15 November 2010
ALTERNATE DIRECTOR
Mr Patrick Joyce, Investment Director at Marinya Media Pty
Limited, is an alternate Director for Nicholas Fairfax.
12
Directors’ report
COMPANY SECRETARY
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 expertise in commercial
and media and communication law. Ms Hambly is a member
of the Media and Communications Committee and the Privacy
Committee for the Law Council of Australia, a member of the
Advisory Board for the Centre of Media and Communications
Law at the Melbourne Law School and a member of Chartered
Secretaries Australia. Ms Hambly is also a Director of Company
B Belvoir Limited. She holds degrees in Law, Economics,
Science and Arts.
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 29 April 2011, all of the Stapled Preference Shares were
repurchased in accordance with their terms of issue for a
repurchase amount of $300 million.
Subsequent to year end, the Group announced it had
commenced preparation for an Initial Public Offering (IPO)
of Trade Me Limited (Trade Me), a New Zealand subsidiary.
The Group intends to sell between 30% to 35% of Trade Me
through the IPO, with Trade Me being listed on the New Zealand
Exchange. The timing of the IPO has not been finalised and will
depend on appropriate market conditions.
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 the publishing of news, information and
entertainment, advertising sales in newspaper, magazine and
online formats, and radio broadcasting.
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 loss attributable to the consolidated entity for the financial
year was $390,861,000 (2010 Profit: $282,115,000).
DIVIDENDS
An interim fully franked dividend of 1.5 cents per ordinary share
and debenture was paid on 21 March 2011 in respect of the year
ended 26 June 2011.
Since the end of the financial year, the Board has declared
a final fully franked dividend of 1.5 cents per ordinary share
and debenture in respect of the year ended 26 June 2011.
This dividend is payable on 27 September 2011.
Distributions to holders of Stapled Preference Securities (SPS)
were paid as follows: $3.2515 per share paid on 1 November
2010 and $3.2334 per share paid 29 April 2011.
REVIEW OF OPERATIONS
Revenue for the Group was in line with the prior year at
$2,477 million (2010: $2,490 million). After significant expenses
of $674.7 million the Group generated a net loss after tax
of $390.9 million (2010: profit $282.1 million). Earnings per
share decreased to a loss of 17.0 cents (2010: profit 11.5 cents).
Further information is provided in the Management Discussion
and Analysis Report on pages 35-36.
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 2-5 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
No material non-compliance with environmental regulation
has been identified relating to the 2011 financial year.
The Company reported to the Department of Climate Change
on the total carbon emissions of the Group generated in the
2010 financial year under the National Greenhouse and Energy
Reporting legislation for the first time in October 2010. The
Group’s main source of carbon emissions overall was from
electricity consumption at its larger sites and total scope 1 and 2
emissions reported was 97,194 tonnes CO2-e. More information
about the Group’s environmental performance can be found in
the Corporate Social Responsibility report.
EVENTS AFTER BALANCE DATE
There have not been any after balance date events.
REMUNERATION REPORT
A remuneration report is set out on pages 17-27 and forms part
of this Directors’ Report.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
13
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
RC Corbett
G Hywood
M Anderson
JB Fairfax
NJ Fairfax
BK McCarthy
S McPhee
S Morgan
L Nicholls
R Savage
P Young
TOTAL
Acquisition
Disposals
Opening
Balance
99,206
–
–
235,426,781
3,892,481
2,150,861
–
–
–
47,899
131,117
–
–
–
–
–
–
4,783
181,500
5,401
–
–
Closing
Balance
99,206
–
–
235,426,781
3,892,481
–
–
–
–
–
950,399
1,200,462
–
–
–
–
–
4,783
181,500
5,401
47,899
131,117
Post
Year End
Acquisitions
–
118,343
–
–
–
–
7,712
–
7,261
–
–
241,748,345
191,684
950,399
240,989,630
133,316
Post
Year End
Disposals
–
–
–
–
–
–
–
–
–
–
–
–
Post
Year End
Balance
99,206
118,343
–
235,426,781
3,892,481
1,200,462
12,495
181,500
12,662
47,899
131,117
241,122,946
In the case of retired Directors, the closing balance represents the number of shares at the date the Director retired from the Board.
As at the date of this report no Director holds any SPS.
No Director holds options over shares in the Company.
DIRECTORS’ MEETINGS
The following table shows the number of Board and Committee meetings held during the financial year ended 26 June 2011 and the
number attended by each Director or Committee member.
Board Meeting
Audit and Risk
Nominations
Personnel Policy
and Remuneration
Sustainability and
Corporate Responsibility
No.
Held
No.
Attended
No.
Held
No.
Attended
No.
Held
No.
Attended
No.
Held
No.
Attended
No.
Held
No.
Attended
Meetings*
R Corbett***
G Hywood**
M Anderson
JB Fairfax
NJ Fairfax
S McPhee
S Morgan
L Nicholls
R Savage
P Young
BK McCarthy
12
10
10
4
12
12
12
12
12
12
5
12
10
10
4
12
12
11
12
12
12
5
6
4
–
3
6
–
–
6
4
6
3
6
4
–
3
6
–
–
6
2
6
3
2
1
–
–
2
–
–
–
–
2
–
2
1
–
–
2
–
–
–
–
2
–
4
3
2
2
–
2
–
–
2
4
2
4
3
2
2
–
2
–
–
2
4
2
1
1
1
–
1
1
–
–
–
–
–
1
1
1
–
1
1
–
–
–
–
–
* The number of meetings held refers to the number of meetings held while the Director was a member of the Board or Committee.
** Mr Hywood attends the Audit and Risk, Personnel Policy and Remuneration Committee and Sustainability Committee meetings as an
invitee of the Committees.
*** Mr Corbett, Chairman, is an ex officio member of all Board committees.
14
Directors’ report
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 Access, Disclosure,
Insurance and Indemnity which provides for indemnity by the
Company 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 fees 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 33 to the financial statements.
The Board of Directors has received advice from the Audit
and 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 16 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 $276,510
• Overseas $170,030.
Other assurance and non-assurance services:
• Australia $111,182.
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.
Roger Corbett, AO
Chairman
Greg Hywood
Chief Executive Officer and Managing Director
16 September 2011
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
15
AUDitor’s iNDepeNDeNce DecLArAtioN
Auditor’s Independence Declaration to the Directors Fairfax Media
Limited
In relation to our audit of the financial report of Fairfax Media Limited for the financial year ended 26
June 2011 to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
Christopher George
Partner
16 September 2011
16
Liability limited by a scheme approved
under Professional Standards Legislation
reMUNerAtioN report
Dear Shareholder,
We are pleased to present the 2011 Fairfax Media Remuneration Report.
This year we have updated the format of the report with the aim of providing you with a clearer understanding of our remuneration
structure and outcomes. In addition to the information required under the Corporations Act, the report contains information which we
hope improves transparency and readability of the report. This extra information includes tables of remuneration actually paid during
the year to individuals. We believe this is more useful data than the statutory information which can be confusing due to the requirement
to include amounts accrued in the accounts for possible future year payments which may not ever be realised by our executives.
As you would be aware the media landscape is evolving rapidly, as is our business. With a new CEO and new strategy, the Board
Personnel Policy and Remuneration Committee engaged PwC during the year to conduct a review of our executive remuneration
arrangements. The aim of the review was to ensure that the executive incentive plans:
•
•
•
•
effectively underpin the achievement of the new strategy
support growth in shareholder value
comply with legislative changes, and
effectively motivate the senior executive team.
The report by PwC found that our existing short-term incentive plan (STI) was strongly aligned to financial performance and therefore
highly transparent and objective. However the review also found that the plan had the potential to encourage “silo” behaviour due to the
high focus on individual business unit financial metrics and offered limited focus on “lead” non-financial/strategic measures which need
to be achieved to promote longer term performance.
The review also found that the existing long-term incentive (LTI) plan is well aligned with shareholder interests. However, it provides
a low return on investment because the LTI hurdles had not been achieved but the Company still had an expense associated with
the grants. Due to the existing strong alignment with shareholders, the Board has decided to retain the same LTI plan for 2012.
Based on the findings of the PwC report, we have made some changes to our STI arrangements for the 2012 financial year, including
the requirement for part of the STI to be paid in the form of Fairfax shares which do not vest for a further two years. These changes
are outlined in the Remuneration Report. We believe that these new arrangements will better support the execution of the strategy
and improve the return to shareholders.
We hope you find the report informative.
We welcome your feedback on this report.
Robert Savage, AM
Chairman, Personnel Policy and Remuneration Committee
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
17
reMUNerAtioN report
1. INTRODUCTION
This report forms part of the Company’s 2011 Directors’ Report and describes the Fairfax Group’s remuneration arrangements
for Directors and prescribed senior executives in accordance with the requirements of the Corporations Act 2001 and Regulations.
The report also contains details of the equity interests of Fairfax Directors and prescribed senior executives.
2. PERSONNEL POLICY AND REMUNERATION COMMITTEE
The Board has a formal Charter for the Personnel Policy and Remuneration Committee (PPRC) which prescribes the responsibilities,
composition and meeting rules of the Committee. Under the Charter, the Committee must be comprised of a majority of Non-Executive
Directors who are independent. The members of the PPRC are:
• Robert Savage (Chairman and member from 2 December, 2010)
• Roger Corbett
• Sandra McPhee (from 2 December, 2010)
• Michael Anderson (from 2 December, 2010)
• Peter Young (Chairman up to 2 December, 2010 and ongoing member)
•
John B Fairfax (up to 11 November, 2010).
The PPRC met four times during the year. The Committee’s primary responsibilities are to:
(a) review and approve Fairfax employee remuneration strategies and frameworks
(b)
(c)
(d)
oversee the development and implementation of employee remuneration programs, performance management and succession
planning with the goal of attracting, motivating and retaining high quality people
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
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
(e)
make recommendations to the Board on Directors’ fees and review and recommend the aggregate remuneration of Non-Executive
Directors to be approved by shareholders
(f)
review the Group’s framework for compliance with occupational, health, safety and environmental regulation and its performance
against the framework, and
(g)
review and approve measurable objectives for achieving gender diversity and assess annually both the objectives and progress
in achieving them.
The CEO, Group General Counsel and Company Secretary and General Manager Corporate Human Resources attend PPRC meetings
as invitees but not when their own performance or 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. In August 2010, the PPRC received
advice from HART Consulting to assist in setting the base pay for the direct reports to the CEO for the 2011 financial year. As outlined
above, the PPRC engaged PwC to conduct a review of executive pay and incentive arrangements and subsequently received the
relevant advice. In addition, PwC provided advice on remuneration trends and executive pay to assist in setting base pay for the 2012
financial year.
In June 2011 the Committee commissioned advice from Egan Associates in relation to the remuneration of the Chief Executive
and Managing Director and the market competitiveness of remuneration for Non-Executive Directors.
3. DIVERSITY
The PPRC has expanded its Charter to include diversity initiatives. During the financial year the Company became a member
of the Diversity Council of Australia and developed a new Diversity Policy. There are a number of initiatives underway to support
the implementation of the policy.
The Company is compliant with the Equal Opportunity for Women in the Workplace Act 1999. The current workforce gender
demographics are:
• Proportion of women on the Board: 22%
• Proportion of women in senior management: 19%
• Proportion of women across the organisation: 52%
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4. 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 2010 Annual General Meeting and set at $2,100,000 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.
Expert advice was received in this regard from Egan Associates in June 2011 however in the present economic climate the Board
resolved that there would be no increase in Directors’ fees this year nor would the Board seek shareholder approval for an increase
in the cap on aggregate Directors’ fees this year. This will be reviewed in 2012.
At the date of this report, the Board has set Board and committee fees as follows:
Chairman of the Board*
Other Non-Executive Director
Chair of Audit and Risk Committee
Members of Audit and Risk Committee
Chair of Personnel Policy and Remuneration Committee
Members of Personnel Policy and Remuneration Committee
Chair of the Nominations Committee
Members of Nominations Committee
Chair of the Sustainability & Corporate Responsibility Committee
Members of Sustainability & Corporate Responsibility Committee
$
364,000
130,000
44,000
33,000
33,000
22,000
30,000
20,000
33,000
22,000
* The Chairman of the Board does not receive committee fees for membership of either of the Personnel Policy and Remuneration
Committee or the Nominations Committee.
The fees above do not include statutory superannuation payments.
4.1 Retirement benefits for Non-Executive Directors
The Company makes superannuation contributions on behalf of Non-Executive Directors in accordance with statutory requirements.
Other than superannuation, Non-Executive Directors are not entitled to any retirement benefits.
5. REMUNERATION OF THE CHIEF EXECUTIVE OFFICER
5.1 Mr Gregory Hywood (CEO and Managing Director from 7 December 2010)
The remuneration details for the CEO are set out in section 6.5 and 6.8 of this report.
2011 PERfORMaNCE YEaR
Mr Hywood, who at the time was a Non-Executive Director of Fairfax, was appointed to the role of CEO in an acting capacity on 7
December 2010 to enable the Board to conduct a global search for a new CEO following the resignation of former CEO and Managing
Director Mr Brian McCarthy. Prior to this date Mr Hywood was paid in accordance with the remuneration of Non-Executive Directors.
From 7 December 2010 until 1 April 2011 Mr Hywood was paid fixed fee remuneration amount of $2.4 million per annum (that is,
$775,385 for that period). He was not eligible to receive any performance bonuses or other benefits during this period.
On 7 February 2011 Mr Hywood was appointed to the role of CEO and Managing Director on an ongoing basis. From 1 April he was
paid a base salary (“Fixed Remuneration”) of $1.6 million per annum. This Fixed Remuneration represents total fixed cost to the
Company including superannuation and other benefits except as set out below.
For the period 1 April 2011 to 26 June 2011, Mr Hywood was eligible for a pro-rated performance bonus (“Performance Bonus”) of
up to 100% of Fixed Remuneration (prorated for the period) depending on achievement of defined performance criteria set by the
Chairman and Chairman of the PPRC. The criteria included specific deliverables to be achieved over the three month period to ensure
that the new strategy was embedded into the organisation. Twenty percent of the bonus was related to exceeding the 2011 financial
year financial outcome committed to the market on 24 February 2011. The remaining eighty percent of the bonus was related to the
development and implementation of the new strategy including building the new organisational structure and culture, and establishing
the implementation plan and delivering set progress targets under that plan. The Board believed that the focus of the CEO over this
three month period should be to drive the implementation of the new strategy, and therefore a higher emphasis was placed on the non-
financial strategic targets than will occur for future performance periods.
Following the end of the 2011 financial year, the Board determined that 72.5% of the target Performance Bonus was earned by
Mr Hywood representing 62.5% achievement of the financial component and 75% achievement of the strategic component.
Subject to shareholder approval, for the 2011 Performance year, Mr Hywood is entitled to an allocation of shares (purchased on market
by the Executive Share Plan Trust) of $800,000 worth of shares which equates to 569,395 shares. The number of shares allocated is
based on the market price of Fairfax shares on 7 February 2011 (Mr Hywood’s permanent appointment date) which was $1.40 per share.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
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2012 PERfORMaNCE YEaR
The PPRC received advice from PwC making various recommendations following its review of executive remuneration arrangements.
The advice included specific advice on market rates for the Chief Executive’s remuneration and incentive arrangements. The PPRC
also received advice from Egan Associates in relation to the remuneration of the Chief Executive. More details of the review are
set out in 6.1. Based on the above advice the PPRC recommended to the board a package of cash remuneration and incentive
arrangements for Mr Hywood.
The Board set new remuneration arrangements that will apply to Mr Hywood for the 2012 financial year. Mr Hywood’s Fixed
Remuneration of $1.6 million per year will remain unchanged. As well as Fixed Remuneration he will be eligible for a performance bonus
and participation in the Long-Term Equity-Based Incentive Scheme (LTI).
Mr Hywood is eligible for a performance bonus (“Performance Bonus”) of up to 150% of Fixed Remuneration depending on achievement
of defined performance criteria set at the beginning of each financial year. The performance targets are recommended by the PPRC
and approved by the Board each year. Fifty percent of the Performance Bonus is determined by achievement of financial targets for the
Group. The remaining incentive is based on other Key Performance Indicators set by the Board each year depending on the operational
and strategic goals of the Group. These KPIs may also include specific financial targets but also include strategic targets. A component
of this incentive(subject to shareholder approval) will be deferred in to shares (purchased on market by the Executive Share Plan Trust).
Further details of the plan are outlined in section 6.1.
Subject to shareholder approval, under the LTI Mr Hywood is entitled to an allocation of shares (purchased on market by the Executive
Share Plan Trust) to the equivalent of fifty percent of his Fixed Remuneration as an allocation of Company shares each year. These
shares vest on the terms set out in section 6.2.
5.2 Mr Brian McCarthy (CEO and Managing Director up to 6 December 2010)
The key terms of Mr McCarthy’s Executive Services Agreement with the Company included a Fixed Remuneration of $1.6 million
per year, a performance bonus and participation in the LTI.
Mr McCarthy was eligible for a performance bonus under the terms of the Company’s Key Executive Bonus Scheme (“STI”) of up
to ninety percent of Fixed Remuneration depending on achievement of defined performance criteria set at the beginning of each
financial year (“Performance Bonus”). The performance targets were recommended to the Board by the PPRC and approved by the
Board. Eighty percent of the Performance Bonus was determined by achievement of financial targets. The remaining twenty percent
was based on other Key Performance Indicators set by the Board depending on the operating and strategic goals of the Group.
In addition under the LTI, Mr McCarthy was entitled to an allocation of shares to the equivalent of 100% of his Fixed Remuneration
as an allocation of Company shares each year. The vesting criteria for these shares are set out in section 6.2.
Mr McCarthy ceased to be employed by Fairfax on 6 December 2010. Upon termination, Mr McCarthy received a payment in
accordance with his entitlements under his Executive Services Agreement. Mr McCarthy’s Executive Service Agreement was in place
prior to the changes to the Corporations Act in 2009 and include the equivalent of 12 months Fixed Remuneration (“Termination
Payment”) and statutory entitlements to annual and long service leave. He was also entitled to a pro-rated performance bonus. All
shares Mr McCarthy held under the LTI were forfeited.
Details of Mr McCarthy’s termination payments are set out in tables 6.5 and 6.8.
6. REMuNERatiON Of OtHER 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. The PPRC aims to ensure that the executive
remuneration framework 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, and
be transparent and fair.
The executive remuneration framework comprises a mix of fixed and performance-based components:
•
•
a fixed remuneration package, and
performance incentives.
The Fixed Remuneration component includes cash, superannuation and any benefits employees choose to salary sacrifice, for example,
motor vehicle, parking. It represents the total fixed cost to the Company including fringe benefits tax payable.
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 personal performance of the individual executive against objectives set at the beginning
of the year. The CEO conducts performance reviews with his direct reports each year, and presents the outcomes and proposed
incentive payments to the PPRC. The PPRC reviews and approves the remuneration packages and bonus payments to the CEO’s
direct reports. On the recommendations of the CEO, the PPRC also reviews and approves the key performance indicators for the CEO’s
direct reports for the following year. Performance evaluations in accordance with this framework have taken place for senior executives
for the year ended 26 June 2011.
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6.1 Performance-Based Short-term incentives (“Bonus payments”) for Senior Executives
2011 PERfORMaNCE YEaR
For the 2011 Performance Year, annual bonus payments for senior executives depended on achievement of annual financial
performance criteria for the Group as well as specific strategic and operational criteria. For the CEO, the bonus criteria were set by
the Board after considering recommendations from the PPRC. For other key senior executives the bonus criteria were set by the PPRC.
The bonus opportunity consisted of three components:
•
•
corporate level – drives corporate financial results (EPS, EBIT) and encourages senior management to work together for the overall
benefit of the group
business unit level – drives business unit financial results and other operational metrics to encourage team behaviour (e.g. EBIT,
circulation, readership, market position, revenue)
•
personal level – drives team and individual operating results (e.g. safety, cost reduction, business improvement, leadership).
Each senior executive had a target bonus opportunity depending on the accountabilities of the role and impact on Company or business
unit performance. There are two levels of performance:
•
•
“on-target” performance – where the target bonus will be earned (e.g. for EBIT the “on-target” performance is typically achievement
of budget) or
“maximum” performance – where performance is such that the maximum level of incentive will be earned. This applies for corporate
and business unit measures only.
For most senior executives reporting directly to the CEO, the on-target bonus opportunity for 2011 was 25% of the executive’s Fixed
Remuneration and the maximum bonus opportunity was 47.5% of the Fixed Remuneration. Generally, the bonus opportunity consisted
of three components: 20% based on Group EBIT and earnings per share, 70% based on business unit financial performance and 10%
based on other key performance indicators (KPIs). For corporate executives whose duties were not confined to one business unit,
generally 50% of the bonus opportunity was based on corporate financial performance.
The performance plans for a number of senior executives directly accountable for supporting the new CEO to drive key strategic
initiatives were adjusted for the period 1 April to 26 June 2011 by the Board PPRC to ensure alignment with the objectives of the
new CEO. These executives retained measures relating to the financial budget set at the start of the year. For the 1 April – 26 June
2011 period greater emphasis was placed on setting up the new organisation structure and the implementation of the strategic plan.
Bonus outcomes for the 2011 performance year for senior executives were generally below “target” levels in line with difficult
trading conditions.
2012 PERfORMaNCE YEaR
The Board PPRC engaged PwC to conduct a review of executive remuneration arrangements. The purpose of the review was to ensure
that remuneration arrangements drive financial results and shareholder returns, and effectively underpin the execution of the new
strategy. Following this review, new arrangements apply from 1 July 2011.
Annual bonus payments for senior executives place an emphasis on the achievement of annual financial performance criteria for the
Group as well as specific strategic and operational criteria. The bonus criteria for the CEO are approved by the Board after considering
recommendations from the Board PPRC. For other key senior executives the bonus criteria were set by the PPRC. The bonus
opportunity consists of three components:
•
•
corporate level – drives corporate financial results (EBIT) and encourages senior management to work together for the overall
benefit of the group
business Unit level – drives business unit financial and other operational metrics to encourage team behaviour (e.g. EBIT,
circulation, readership, market position, revenue, safety)
•
strategic level – drives team and individual operating results (e.g. delivery against strategic milestones, leadership).
Each senior executive has a target bonus opportunity depending on the accountabilities of the role and impact on Company or business
unit performance. There are two levels of performance:
•
“on-target” performance – where the target bonus will be earned (e.g. for EBIT the “on-target” performance is typically achievement
of budget) or
•
“maximum” performance – where performance is such that the maximum level of incentive will be earned.
The bonus arrangement allows for a cash payment and a component deferred into shares (Deferred Component). Any amounts
earned from the Strategic component and 50% of any amounts earned above “on-target” performance for Corporate and Business Unit
performance are deferred into shares.
For most executives reporting directly to the CEO, the on-target bonus opportunity is 45% of the executive’s fixed remuneration package
and the maximum incentive opportunity is 90% of the fixed remuneration package.
For all senior executives reporting directly to the CEO, 50% of the bonus is based on corporate measures, 25% is based on business
unit financial performance and 25% is based on other strategic key performance indicators (KPIs).
At the end of the financial year, actual performance is assessed against the agreed measures. The number of shares for the Deferred
Component for each senior executive depends on their role and responsibilities, and on actual performance.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
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Shares purchased for the Deferred Component are valued at face value based on the Volume Weighted Opening Price over the 10 days
immediately after the financial year’s results are announced to the market in August. Shares are purchased on market by the trustee
of the Executive Share Plan and allocated to the senior executive.
The shares for the Deferred Component are required to be held in the Trust for two years and the senior executive receives dividends
on the shares during this period.
At the end of the two year period, the ownership of the shares is transferred to the senior executive. If the senior executive resigns
or is terminated with cause prior to the end of the two year period, they forfeit the shares.
The balance of the bonus is paid to the senior executive as cash.
6.2 Long term Equity-Based incentive Scheme (Lti)
Senior executives whose roles and skills are critical to the strategy of the Group are eligible to participate in the Company’s
equity-based LTI.
The LTI commenced operation for the 2008 financial year. It aims to reward executives for creating growth in shareholder value.
Participants in the LTI receive the equivalent of a percentage of their total fixed remuneration as an allocation of Company shares
(Allocation). The number of Company shares to which a participant is entitled will depend on the participant’s role and responsibilities.
Shares for the Allocations are purchased on market by the trustee of the Executive Share Plan. The shares are allocated to the
employee and held by the trustee in trust until the Allocation vests or is forfeited. Executives receive any dividends paid on the shares
while they are in the trust.
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. 50% 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 as described in the table below:
TSR performance
Under 50th percentile
50th percentile
50th to 75th percentile
Above 75th percentile
% of Allocation that vests
Nil
50% of Allocation
Straight line pro rata
100%
The other 50% 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:
EPS performance
Less than 7% CAGR
7% CAGR
7% to 10% CAGR
10% CAGR or above
% of Allocation that vests
Nil
25%
Straight line pro rata
100%
The same LTI plan including the performance hurdles will be used for the next LTI allocation for the 2012 financial year.
OTHER TERMS OF THE LTI
On termination of an executive’s employment, vesting rights will depend on the circumstances of the termination. If an executive resigns,
unvested allocations will generally be forfeited. Although the Board has discretion to allow vesting, generally the Board will not exercise
this discretion unless there are very special circumstances. On termination for misconduct, allocations will be forfeited. If an executive is
terminated without cause, for example made redundant or dies or is permanently disabled, then vesting will be at the Board’s discretion.
In the circumstances of an offer to acquire the Company, vesting will be at the Board’s discretion.
The LTI was suspended in May 2009 pending finalisation of the tax treatment of employee share plans as a consequence of
announcements made in the 2009 Federal Budget. It recommenced operation in June 2010 on the same terms as it previously operated
after the relevant tax legislation was finalised.
STATUS AND kEY DATES – UNVESTED LTI SCHEME
Grant Date
Performance testing window
Expiry Date
(if hurdle not met)*
Performance Status
18 January 2008
1 July 2007 – 30 June 2010
30 June 2011
Performance hurdles have not yet been exceeded.
No shares are expected to vest after the fourth year of retest.
26 August 2008
1 July 2008 – 30 June 2011
30 June 2012
Performance hurdles have not yet been exceeded.
23 June 2010
1 July 2009 – 30 June 2012
30 June 2013
Performance testing window not yet commenced.
17 November 2010 1 July 2010 – 30 June 2013
30 June 2014
Performance testing window not yet commenced.
* Retest of conditions performed in the fourth year, if performance hurdle is not met in the initial performance testing window.
22
reMUNerAtioN report
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)
$m
$m
Cents
Cents
%
AIFRS
2011
2,466
285.0
11.6
3.0
(23.9)
AIFRS
2010
2,482
290.7
11.8
2.5
11.3
AIFRS
2009
2,600
241.3
12.4
2.0
AIFRS
2008
2,909
395.9
23.4
20.0
(52.1)
(34.7)
AIFRS
2007
2,117.6
267.8
23.2
20.0
34.2
* TSR comprises share price appreciation and dividends, gross of franking credits, reinvested in the shares.
Source: Bloomberg.
6.3 Retirement Benefits for Executives
Except for a very small number of long serving executives who are members of a defined-benefit superannuation plan, retirement
benefits are delivered through contribution accumulation superannuation plans. The defined-benefit funds (which are 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.
6.4 Executive Service agreements
The terms of employment of the CEO are set out in section 5 and below.
The remuneration and other terms of employment for the highest paid executives and key management personnel are set out in written
agreements. These service agreements are unlimited in term but may be terminated 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. Each agreement sets out the Fixed
Remuneration, performance-related cash bonus opportunities, termination rights and obligations and eligibility to participate in the LTI.
Executive salaries are reviewed annually. The executive service agreements do not require the Company to increase Fixed
Remuneration, pay incentive bonuses or continue the executive’s participation in the LTI. Key non-financial terms in the executive
service agreements are set out below. Remuneration details are set out in sections 6.7 and 6.8.
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)
(d)
is charged with any criminal offence which, in the reasonable opinion of the Company, may embarrass or bring the Fairfax Group
into disrepute, or
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, the payment is calculated on the basis of fixed
remuneration excluding bonuses and non-cash incentives.
Name of
Executive
Company
Termination
Notice Period
Employee
Termination
Notice Period
Post-Employment Restraint
Greg Hywood
12 months
6 months
12 month no solicitation of employees or clients
Allan Browne
12 months
4 months
12 month no solicitation of employees or clients
Brian Cassell
12 months
4 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
6 months no work for a competitor of the Fairfax Group
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
Bob Lockley
12 months
4 months
12 month no solicitation of employees or clients
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
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
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reMUNerAtioN report
6.5 actual Remuneration of Directors
The following table outlines the actual payments made to Directors during the performance year.
Base Salary,
Termination
& Other
Benefits
1,178,570
3,084,323
1,405,014
Non-executive
Directors Fees
Cash
Bonus
Superannuation
378,559
321,233
55,681
140,000
193,867
170,000
24,897
–
–
153,633
40,461
164,513
40,461
165,672
49,025
155,267
150,000
202,027
200,000
120,636
–
–
–
–
–
–
290,000
57,952
1,155,750
–
–
–
–
–
–
–
–
–
–
–
34,070
28,911
4,620
12,600
17,448
15,300
32,687
25,000
42,308
13,827
3,641
14,806
3,641
14,910
4,412
13,974
13,500
18,182
18,000
10,857
Total
Excluding
Shares
412,629
350,144
60,301
152,600
211,315
185,300
1,526,154
3,167,275
2,603,072
167,460
44,102
179,319
44,102
180,582
53,437
169,241
163,500
220,209
218,000
131,493
RC Corbett
JB Fairfax*
NJ Fairfax
G Hywood
B McCarthy**
S McPhee
S Morgan
L Nicholls
R Savage
P Young
M Anderson
2011
2010
2011
2010
2011
2010
2011
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
total remuneration:
Directors
2011
2010
4,262,893
1,405,014
1,614,752
1,111,180
347,952
1,155,750
200,381
142,313
6,425,978
3,814,257
Value of
Shares
Vested
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
Including
shares
412,629
350,144
60,301
152,600
211,315
185,300
1,526,154
3,167,275
2,603,072
167,460
44,102
179,319
44,102
180,582
53,437
169,241
163,500
220,209
218,000
131,493
6,425,978
3,814,257
* JB Fairfax retired on 11 November 2010.
** B McCarthy ceased to be employed by Fairfax on 6 December 2010. A split of salary and termination benefits is set out in 6.7 below.
6.6 Key management personnel
The following are the key management personnel for the financial year in addition to the Non-Executive Directors listed above.
KMP
Greg Hywood
Brian Cassell
Gail Hambly
Title
Chief Executive Officer
Chief Financial Officer
Group General Counsel and Company Secretary
There were no changes to the key management personnel between the end of the financial year and the date of this report.
24
reMUNerAtioN report
6.7 actual Remuneration of the Executives who received the highest remuneration or are Key Management Personnel
The following table outlines the actual payments made to executives during the performance year.
Base
Salary &
Other
Benefits
Termination
Cash
Bonus
Super-
annuation
Total
Excluding
Shares
Value of
Shares
Vested
Total
Including
Shares
Performance
Related
Total
G Hywood – Chief
Executive Officer
B McCarthy* – Chief
Executive Officer
A Browne – CEO &
Publisher Australian
Regional Publishing
B Cassell – Chief
Financial Officer
M Gill** – CEO
Financial Review Group
G Hambly – Group
General Counsel &
Company Secretary
R Lockley – CEO Print
& Logistics
J Matthews*** –
CEO Metro Media
2011
2010
2011
2010
2011
2011
2010
2011
2010
2011
2010
2011
1,203,467
–
290,000
32,687
1,526,154
2011
726,541
2,357,781
57,952
25,000
3,167,274
2010
1,405,014
514,762
485,727
717,045
689,325
–
–
–
–
–
1,155,750
42,308
2,603,073
100,000
214,500
118,919
363,340
50,000
50,000
664,762
750,227
50,000
885,964
50,000
1,102,665
296,773
713,831
19,387
34,615
1,064,606
502,872
492,109
511,247
504,972
634,374
576,717
–
–
–
–
–
–
162,855
273,350
126,420
242,825
350,000
250,938
61,805
59,145
50,000
51,923
727,532
824,604
687,667
799,720
53,468
1,037,842
48,297
875,952
TOTAL
2011
5,107,081
3,071,612
1,225,533
357,575
9,761,801
2010
4,153,864
–
2,500,703
301,673
6,956,241
19%
2%
52%
15%
35%
13%
39%
2%
22%
43%
18%
37%
34%
40%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,526,154
3,167,274
2,603,073
664,762
750,227
885,964
1,102,665
1,064,606
727,532
824,604
687,667
799,720
1,037,842
875,952
9,761,801
6,956,241
All executives are employees of the Company and the Group.
* B McCarthy ceased to be employed by Fairfax on 6 December 2010.
** M Gill ceased to be employed by Fairfax on 20 March 2011.
*** J Matthews was appointed as CEO Metropolitan Media on 24 February 2011 having previously held the role of CEO Fairfax Digital.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
25
reMUNerAtioN report
6.8 Remuneration of Directors and Key Management Personnel as defined under the Corporations Act 2001
and Regulations (accounting treatment)
DIRECTORS
This table sets out remuneration which includes post employment and share based long-term incentive benefits granted during the financial year.
Base Salary,
Termination
& Other
Benefits
378,559
321,233
55,681
140,000
193,867
170,000
1,203,467
3,084,323
1,405,014
153,633
40,461
164,513
40,461
165,672
49,025
155,267
150,000
202,027
200,000
120,636
Cash
Bonus
–
–
–
–
–
–
290,000
57,952
1,155,750
–
–
–
–
–
–
–
–
–
–
–
Superannuation
34,070
28,911
4,620
12,600
17,448
15,300
32,687
25,000
42,308
13,827
3,641
14,806
3,641
14,910
4,412
13,974
13,500
18,182
18,000
10,857
5,877,645
2,516,194
347,952
1,155,750
200,381
142,313
Long
Service
Leave
–
–
–
–
–
–
–
–
57,483
–
–
–
–
–
–
–
–
–
–
–
–
57,483
Total
Excluding
Shares
412,629
350,144
60,301
152,600
211,315
185,300
1,526,154
3,167,275
2,660,555
167,460
44,102
179,319
44,102
180,582
53,437
169,240
163,500
220,209
218,000
131,493
Value of
Shares***
–
–
–
–
–
–
–
(597,556)
502,909
–
–
–
–
–
–
–
–
–
–
–
Total
Including
shares
412,629
350,144
60,301
152,600
211,315
185,300
1,526,154
2,569,719
3,163,464
167,460
44,102
179,319
44,102
180,582
53,437
169,240
163,500
220,209
218,000
131,493
6,425,978
3,871,740
(597,556)
502,909
5,828,422
4,374,649
RC Corbett
NJ Fairfax
S McPhee
JB Fairfax*
G Hywood
B McCarthy**
2011
2010
2011
2010
2011
2010
2011
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
M Anderson
2011
total remuneration:
2011
Directors
2010
R Savage
S Morgan
L Nicholls
P Young
* JB Fairfax retired on 11 November 2010.
** B McCarthy ceased to be employed by Fairfax on 6 December 2010.
*** Amount includes the amortised cost of the fair value of rights to shares issued but not yet vested. Credits relate to the reversal of the prior
years amortised cost following forfeiture due to cessation of employment with Fairfax. Non-Executive Directors are not participants in any
performance related share arrangements.
EXECUTIVES
This table sets out remuneration which includes post employment and share based long-term incentive benefits granted during the
financial year.
Base Salary,
Termination &
Other Benefits
Cash
Bonus
Super-
annuation
Long Service
Leave
Expense
Total
Excluding
Shares
Value of
Shares***
Total
Including
Shares
G Hywood – Chief Executive Officer
B McCarthy* – Chief Executive Officer
2011
2011
2010
1,203,467
3,084,323
1,405,014
290,000
57,952
1,155,750
A Browne – CEO & Publisher
Australian Regional Publishing
B Cassell – Chief Financial Officer
2011
2010
2011
2010
M Gill** – CEO Financial Review Group 2011
G Hambly – Group General
Counsel & Company Secretary
32,687
25,000
42,308
50,000
50,000
50,000
50,000
34,615
61,805
59,145
50,000
51,923
53,468
48,297
357,575
301,673
–
–
57,483
1,526,154
3,167,275
2,660,555
–
1,526,154
(597,556) 2,569,719
3,163,464
502,909
25,850
59,519
26,799
78,350
–
13,122
10,208
71,250
52,835
17,435
8,151
154,456
266,546
690,612
809,746
912,763
1,181,015
1,064,606
740,654
834,812
758,917
852,555
1,055,277
884,103
9,916,258
7,222,786
127,130
103,616
176,441
150,899
(136,331)
817,742
913,362
1,089,204
1,331,914
928,275
881,848
141,194
991,629
156,817
874,922
116,005
960,334
107,779
1,215,646
160,369
177,032
1,061,135
(12,748) 9,903,510
8,421,838
1,199,052
514,762
485,727
717,045
689,325
1,010,604
502,872
492,109
511,247
504,972
634,374
576,717
8,178,694
4,153,864
100,000
214,500
118,919
363,340
19,387
162,855
273,350
126,420
242,825
350,000
250,938
1,225,533
2,500,703
2011
2010
2011
2010
2011
2010
2011
2010
R Lockley – CEO Print & Logistics
J Matthews – CEO Metro Media
TOTAL
26
reMUNerAtioN report
All executives are employees of the Company and the Group.
* B McCarthy ceased to be employed by Fairfax on 6 December 2010.
** M Gill ceased to be employed by Fairfax on 20 March 2011.
*** Amount includes the amortised cost of the fair value of rights to shares issued but not yet vested. Credits relate to the reversal of the prior
years amortised cost following forfeiture due to departure.
PERFORMANCE RIGHTS GRANTED TO EXECUTIVES WHO RECEIVED THE HIGHEST REMUNERATION
OR ARE kEY MANAGEMENT PERSONNEL DURING THE PERFORMANCE YEAR
Performance
Condition(1)
Number of
Shares Granted(2)
Fair Value
per Shares(3)
Maximum Value
of Grant(4)
G Hywood – Chief Executive Officer
B McCarthy – Chief Executive Officer*
A Browne – CEO & Publisher
Australian Regional Publishing
B Cassell – Chief Financial Officer
M Gill – CEO Financial Review Group
G Hambly – Group General
Counsel & Company Secretary
R Lockley – CEO Print & Logistics
J Matthews – CEO Metro Media
TSR
EPS
TSR
EPS
TSR
EPS
TSR
EPS
TSR
EPS
TSR
EPS
TSR
EPS
TSR
EPS
–
–
–
–
117,097
117,097
157,549
157,549
100,065
100,065
117,097
117,097
97,581
97,581
133,065
133,065
$1.04
$1.40
$1.04
$1.40
$1.04
$1.40
$1.04
$1.40
$1.04
$1.40
$1.04
$1.40
$1.04
$1.40
$1.04
$1.40
–
–
–
–
$121,781
$163,936
$285,717
$163,850
$220,568
$384,418
–
–
$121,781
$163,936
$285,717
$101,484
$136,613
$238,096
$138,387
$186,290
$324,677
The maximum value of unvested shares in the LTI plans for FY2008, FY2009, and FY2010 is $3,172,605. The minumum total value of
all unvested shares for all plan years is nil.
(1) LTI shares are subject to performance hurdles that are outlined in section 6.2. Rights to LTI shares lapse where the applicable
performance conditions are not satisfied on testing. As the LTI share rights only vest on satisfaction of performance conditions which are
to be tested in future fiscal periods, fiscal 2011 LTI shares have not yet been forfeited or vested.
(2) The grants made to Executives constituted their full LTI entitlement for fiscal 2011 and were made on 17 November 2010 subject to the
terms summarised in section 6.2.
(3) Fair value per LTI share was calculated by independent consultants PriceWaterhouseCoopers as at the grant date
of 17 November 2010.
(4) The maximum value of the grant has been estimated based on the fair value per instrument. The minimum total value of the grant is nil
(this assumes none of the applicable performance conditions are met). The maximum value has been calculated to be nil for Executives
who have departed during the period.
6.9 Options
During the year ended 26 June 2011:
•
•
•
•
no options were granted to Directors or key management personnel (2010: nil)
no options held by Directors or key management personnel vested (2010: nil)
no options held by Directors or key management personnel lapsed (2010: nil), and
no options held by Directors or key management personnel were exercised (2010: nil).
6.10 Loans to Directors and key management personnel
During the year ended 26 June 2011, there were no loans to Directors or to key management personnel (2010: nil).
6.11 Hedging Risk on Securities forming Part of Remuneration
The rules of the Fairfax Employee Share Plans prohibit employees from creating any encumbrance on unvested share rights. Under
the Board approved Fairfax Securities Trading Policy, the Directors and certain senior employees are not permitted to enter a financial
transaction (whether through a derivative, hedge or other arrangement) which would operate to limit the economic risk of an employee’s
holding of unvested Company securities which have been allocated to the employee as part of his or her remuneration. Employees who
are found not to have complied with the Securities Trading Policy risk disciplinary sanctions which may include termination of employment.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
27
corporAte GoVerNANce
corporAte GoVerNANce
The Company’s compliance with the ASX
Corporate Governance Council’s Corporate
Governance Principles and Recommendations,
2nd edition (“ASX Recommendations”) is set
out in the following table.
Principle 1: Lay solid foundations for management and oversight
1.1
1.2
1.3
Establish the functions reserved to the Board and those delegated to senior executives
and disclose those functions
Disclose the process for evaluating the performance of senior executives
Provide the information indicated in the Guide to reporting on Principle 1
Principle 2: Structure the Board to add value
2.1
2.2
2.3
2.4
2.5
2.6
A majority of the Board should be independent Directors
The chair should be an independent Director
The roles of chair and Chief Executive Officer should not be exercised by the same individual
The Board should establish a nomination committee
Disclose the process for evaluating the performance of the Board, its committees and
individual Directors
Provide the information indicated in Guide to reporting on Principle 2
Principle 3: Promote ethical and responsible decision making
3.1
Establish a code of conduct and disclose the code or a summary of the code as to:
•
•
•
the practices necessary to maintain confidence in the Company’s integrity
the practices necessary to take into account their legal obligations and the
reasonable expectations of shareholders, and
the responsibility and accountability of individuals for reporting and investigating
reports of unethical practices.
3.2
3.3
Establish a policy concerning trading in Company securities by Directors, senior executives
and employees and disclose the policy or a summary of that policy
Provide the information indicated in Guide to reporting on Principle 3
Principle 4: Safeguard integrity in financial reporting
4.1
4.2
4.3
4.4
The Board should establish an audit committee
Structure the audit committee so that it:
• consists of only Non-Executive Directors
• consists of a majority of independent Directors
•
is chaired by an independent chair, who is not chair of the Board, and
• has at least three members.
The audit committee should have a formal charter
Provide the information indicated in Guide to reporting on Principle 4
Principle 5: Make timely and balanced disclosure
5.1
5.2
Establish written policies and procedures designed to ensure compliance with ASX
Listing Rule disclosure requirements and to ensure accountability at a senior executive
level for that compliance and disclose those policies or a summary of those policies
Provide the information indicated in Guide to reporting on Principle 5
Compliance
Pages
29
20-22
20-22
30
30
30
30
30
10–14,30-31
31
34
31
32
30
32
10-14,32
32
32
28
corporAte GoVerNANce
Principle 6: Respect the rights of shareholders
6.1
6.2
Design a communications policy for promoting effective communication with
shareholders and encouraging their participation at general meetings and disclose
the policy or a summary of the policy
Provide the information indicated in Guide to reporting on Principle 6
Principle 7: Recognise and manage risk
7.1
7.2
7.3
Companies should establish policies for the oversight and management of material
business risks and disclose a summary of those policies
Board should require management to design and implement the risk management and
internal control system to manage the company’s material business risks and report to
it on whether those risks are being managed effectively. The Board should disclose that
management has reported to it as to the effectiveness of the Company’s management
of its material business risks
Board should disclose whether it has received assurance from the Chief Executive
(or equivalent) that the declaration provided in accordance with section 295A of the
Corporations Act is founded on a sound system of risk management and internal control
and that the system is operating effectively in all material respects in relation to financial
reporting risks
7.4
Provide the information indicated in Guide to reporting on Principle 7
Principle 8: Remunerate fairly and responsibly
8.1
8.2
8.3
The Board should establish a remuneration committee
Clearly distinguish the structure of Non-Executive Directors’ remuneration from that
of executive Directors and senior executives
Provide the information indicated in Guide to reporting on Principle 8
Compliance
Pages
32
32
33
33
33
33
18
18-22
14,18,27
The key corporate governance principles of the Fairfax Group are set out below. This section of the Annual Report, which is publicly
available on the Company’s website at www.fxj.com.au, contains summaries of the Fairfax Board Charter, Nomination Committee
Charter, Code of Conduct, the Sustainability & Corporate Responsibility Charter, Audit and Risk Committee Charter, Charter of Audit
Independence, policy on market disclosure and shareholder communications, risk management policy and securities trading policy
(including policy on hedging unvested securities issued as part of remuneration). The Personnel Policy and Remuneration Committee
Charter is summarised in the Remuneration Report.
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 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 (CEO)
(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 the issue of securities and entry into material finance arrangements, including loans and debt issues.
Subject to the specific authorities reserved to the Board under the Board Charter, and to the authorities delegated to the Board
committees, the Board has delegated to the CEO responsibility for the management and operation of the Fairfax Group. The CEO is
responsible for the day-to-day operations, financial performance and administration of the Fairfax Group within the powers authorised
to him from time-to-time by the Board. The CEO may make further delegation within the delegations specified by the Board and is
accountable to the Board for the exercise of these delegated powers.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
29
corporAte GoVerNANce
Membership of the Board and its committees at the date of this report is set out below.
Director
Membership Type
Audit and Risk
Nominations
Personnel Policy and
Remuneration
Sustainability
and Corporate
Responsibility
Committee Membership
R Corbett
G Hywood**
M Anderson*
N Fairfax
S McPhee
S Morgan
L Nicholls
R Savage
P Young
Independent Chair
CEO
Independent
Non-Independent
Independent
Independent
Independent
Independent
Independent
Member
Chair
Member
Member
–
–
–
–
Member
Member
–
–
Chair
–
–
–
–
–
Member
Member
–
Member
–
Member
–
–
Chair
Member
–
Member
Chair
Member
–
–
–
–
* Mr Anderson was appointed to the Board on 2 September 2010.
** Mr Hywood’s appointment to the Board is effective 4 October 2010. Mr Hywood was appointed as interim CEO on 7 December 2010 and
as ongoing CEO on 7 February 2011.
The qualifications and other details of each member of the Board are set out on pages 10-11 of this report.
Except for the Chief Executive Officer and Mr Nicholas Fairfax, all Directors (including the Chair) are considered by the Board to be
independent, Non-Executive Directors.
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.
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.
The Board has a Nominations Committee which reviews potential Board candidates when necessary. The Committee is comprised
of Non-Executive Directors, the majority of whom are independent. The Committee may seek expert external advice on suitable
candidates.
The Board has adopted a formal Nominations Committee Charter. Under the Charter, the purpose of the Committee is to identify
individuals qualified to become Board members and recommend them for nomination to the Board and its Committees; to ensure Board
members’ performance is reviewed regularly and to recommend changes from time to time to ensure the Board has an appropriate mix
of skills and experience.
The Committee uses the following principles to recommend candidates and provide advice and other recommendations to the Board:
•
•
a majority of the Directors and the Chair should be independent, and
the Board should represent a broad range of expertise consistent with the Company’s strategic focus.
Duties of the Nominations Committee include:
• making recommendations to the Board on the size and composition of the Board
•
•
•
•
identifying and recommending individuals qualified to be Board members, taking into account such factors as it deems appropriate
identifying Board members qualified to fill vacancies on the Committees
recommending the appropriate process for the evaluation of the performance of each director and the Board, and
other duties delegated to it from time to time relating to nomination of Board or Committee members or corporate governance.
The Board conducts a review of its structure, composition and performance annually. The Board may seek external advice to assist
in the review process. During this financial year a formal review of Board performance was conducted by the Chairman.
30
corporAte GoVerNANce
INDEPENDENT DIRECTORS
Under the Board Charter, the majority of the Board and the Chair must be independent. A Director must notify the Company about any
conflict of interest, potential material relationship with the Company or circumstance relevant to his/her independence.
Directors have determined that all Directors except the Chief Executive Officer 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, criteria set out in the Board Charter and the ASX Recommendations. The Board has not set specific materiality
thresholds, considering it more effective to assess any relationship on its merits on a case-by-case basis, and where appropriate, with
the assistance of external advice.
The ASX Recommendations, in summary, state that the Board should consider whether the Director:
•
is a substantial shareholder or officer or associated with a substantial shareholder of the Company
• was employed in an executive capacity by the Group within the last three years
• within the last three years, was a principal of a material professional adviser or a material consultant or an employee materially
associated with a service
•
•
is, or is associated with a material supplier or customer of the Group, and
has a material contractual relationship with the Group other than as a Director.
Mr Nicholas Fairfax is associated with Marinya Media, a substantial shareholder. On this basis, the Board has concluded that, given
the shareholding criteria in the ASX Recommendations, he is not an independent Director.
Although Mr Sam Morgan was employed as the CEO of Trade Me until January 2008, and as an advisory board member to Trade Me
until March 2009, after consideration of all circumstances relevant to Mr Morgan’s position, the Directors have determined that he is
independent.
CODE OF CONDUCT
All Directors, managers and employees are required to act honestly and with integrity.
The Company has developed and communicated to all employees and Directors the Fairfax Code of Conduct. The Code assists
in upholding ethical standards and conducting business in accordance with applicable laws. The Code also sets out the responsibility
of individuals for reporting Code breaches.
The Fairfax Code of Conduct aims 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 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 Code of Conduct is the Company’s range of 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.
The Code of Conduct is a set of general principles relating to employment with Fairfax, covering the following areas:
•
•
business integrity – conducting business with honesty, integrity and fairness; reporting concerns without fear of punishment;
making public comments about the Company and disclosing real or potential conflicts of interest
professional practice – dealings in Fairfax shares; disclosing financial interests; protecting Company assets and property;
maintaining privacy and confidentiality; undertaking employment outside Fairfax; personal advantage, gifts and inducements,
recruitment and selection; and Company reporting
•
health, safety and environment
• Equal Employment Opportunity and anti-harassment
•
•
compliance with Company policies, and
implementation of and compliance with the Code of Conduct.
The Code of Conduct is to be read in conjunction with the codes of ethics for each masthead and the other Fairfax policies as amended
from time to time.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
31
corporAte GoVerNANce
AUDIT AND RISk COMMITTEE
The Audit and Risk Committee operates in accordance with a 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 Fairfax Group and to monitor the quality and reliability of financial information for the
Group. To carry out this role, the Committee:
•
•
•
recommends to the Board the appointment of 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 for Board approval and oversees key finance and treasury functions
formulates and oversees an effective business risk plan
ensures appropriate policies and procedures are in place for compliance with all legal, regulatory and ASX requirements
• monitors compliance with regulatory and ethical requirements
•
•
•
reviews the external audit process with the external auditor, including in the absence of management
reviews the performance of internal audit
reviews and approves the internal audit plan and receives summaries of significant reports by internal audit
• meets with the Internal Audit Manager including in the absence of management if considered necessary, and
•
does anything else it considers necessary to carry out the above functions.
Under its Charter, all members of the Committee must be Non-Executive Directors. Executives may attend by invitation. The Chair
of the Committee is required to be independent and have relevant financial expertise and may not be the Chair of the Board. The
members of the Audit and Risk Committee and details of their attendance at Committee meetings are set out on page 14. The Chair of
the Committee may, at the Company’s expense, obtain external advice, or obtain assistance and information from officers of the Group,
or engage other support as reasonably required from time to time.
CHARTER OF AUDIT INDEPENDENCE
The Board has also adopted a Charter of Audit Independence. The purpose of this Charter is to provide a framework for the Board
and management to ensure that the external 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. The auditor is required to have regular communications
with the Committee, at times without management present. Audit personnel must be appropriately trained, meet the required technical
standards and maintain confidentiality.
Restrictions are placed on non-audit work performed by the auditor. Non-audit fees above a fixed level may not be incurred without the
approval of the Chair of the Audit and Risk Committee.
The Company requires the rotation of the lead audit partner and the independent review partner for the Company at least every five
years. The 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. The auditor must also confirm that neither it nor its
partners has any financial or material business interests in the Company outside of the supply of professional services.
MARkET DISCLOSURE AND SHAREHOLDER COMMUNICATIONS
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
the 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 or if the information would, or would be likely to, influence
investors in deciding whether to buy, hold or sell Fairfax securities.
The Chief Executive Officer, Chief Financial Officer, General Manager Investor Relations and Group General Counsel/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 communications 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.
ASX and press releases of a material nature must be approved by a Disclosure Officer.
The Disclosure Officers, in conjunction with the Chair of the Board are authorised to determine whether a trading halt will be requested
from the ASX to prevent trading in an uninformed market.
32
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 Listing Rules and statutory reporting obligations, the Company actively encourages timely and ongoing shareholder
communications.
To ensure ready access for shareholders to information about the Company, Company announcements, annual reports, analyst and
investor briefings, financial results and other information useful to investors such as press releases are placed on the Company’s
website at www.fxj.com.au as soon as practical after their release to the ASX. Several years’ worth of historical financial information
is available on the website. The results briefings given to analysts by senior management are webcast on the website.
The full text of notices of meetings and the accompanying explanatory materials are posted on the website for each Annual General
Meeting. The Chair’s and the Chief Executive Officer’s addresses, proxy counts and results of shareholder resolutions at the meeting
are also posted on the website.
At the Annual General Meeting, shareholders are encouraged to ask questions and are given a reasonable opportunity to comment
on matters relevant to the Company. The external auditor attends the Annual General Meeting and is available to answer shareholder
questions about the audit and the audit report.
RISk MANAGEMENT AND INTEGRITY OF FINANCIAL REPORTING
The Board oversees the development of a risk management and internal compliance and control system.
The system seeks to provide a consistent approach to identifying, assessing, and reporting risks, whether they are related to Company
performance, reputation, safety, environment, internal control, compliance or other risk areas.
Key aspects of the Company’s risk management and internal compliance and control system are summarised as follows:
•
•
•
•
risks are assessed at least annually and revised periodically for each division through the business planning, budgeting, forecasting,
reporting, internal audit 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 and the effectiveness of the risk management system
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 process control reviews over
key areas, based on their importance to the Company, and provides assurance over the internal control assessments undertaken
by management.
The Company’s risk framework is overseen and monitored by both the Board and the Audit and Risk Committee.
As part of the risk framework, specific policies and approval processes have been developed to cover key risk areas such as material
investments and contracts, treasury, capital expenditure approval, occupational health and safety and environmental processes.
The Company’s Internal Audit function comprises the Internal Audit Managers and a team of professionals who work through a schedule
of prioritised risk areas across all the major business units to provide an independent risk assessment and evaluation of operating and
financial controls. The Internal Audit function is independent from the external auditor and the Internal Audit Managers may meet with
the Audit and Risk Committee in the absence of management. Internal Audit reports its results to each meeting of the Audit and Risk
Committee and the Internal Audit Managers attend the meetings.
The Board has received written assurances from the Chief Executive and the Chief Financial Officer that in their opinion:
(a)
(b)
the financial statements and associated notes comply in all material respects with the accounting standards as required by the
Corporations Act 2001
the financial statements and associated notes give a true and fair view, in all material respects, of the financial position as at 26 June,
2011, and performance of the Company and Consolidated Entity for the period then ended as required by the Corporations Act 2001
(c)
there are reasonable grounds to believe the Company will be able to pay its debts as and when they become due and payable
(d)
the financial records of the Company have been properly maintained in accordance with the Corporations Act 2001
(e)
the statements made above regarding the integrity of the financial statements are founded on a sound system of financial risk
management and internal compliance and control which, in all material respects, implements the policies adopted by the Board
(f)
the risk management and internal compliance and control systems of the Company and Consolidated Entity relating to financial
reporting compliance and operations objectives are operating efficiently and effectively, in all material respects. Management
has reported to the Board as to the effectiveness of the Company’s management of its material business risks
(g)
subsequent to 26 June 2011, no changes or other matters have arisen that would have a material effect on the operation
of the risk management and internal compliance and control systems of the Company and Consolidated Entity.
These statements to the Board are 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.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
33
corporAte GoVerNANce
REMUNERATION
Information about the Board’s Personnel Policy and Remuneration Committee (PPRC), the PPRC Charter, the Company’s remuneration
policies for Non-Executive Directors and the remuneration of the CEO and senior executives is set out in the Remuneration Report
beginning on page 17.
TRADING IN COMPANY SECURITIES
Directors must not trade directly or indirectly in Fairfax securities while in possession of price sensitive information. Price sensitive
information is information which has not been made public, 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 or which would be likely to influence an investment decision
in relation to the securities.
The Fairfax Securities Trading Policy regulates dealings by Directors and certain senior employees (“Designated People”) in Fairfax
securities (including shares, convertible notes derivatives and options). The purpose of the Policy is to ensure that Designated People
comply with the legal and company-imposed restrictions on trading in securities whilst in possession of unpublished price sensitive
information. The Policy sets out blackout periods when no trading is to be undertaken and a process for authorisation of trading at other
times. Designated People means the Directors, CEO, Company Secretary, those employees who report directly to the CEO and those
employees who are notified that they are subject to the Policy.
A Designated Person must not trade in breach of the Policy either directly or indirectly through another entity, such as a partner, child,
nominee or controlled company acting on his/her behalf. Under the Policy, Designated People are prohibited from trading in Fairfax securities
without approval under the Policy or when in possession of price-sensitive information about Fairfax. In addition, Designated People must not
tip anyone else on Fairfax securities, engage in short term speculative trading in Fairfax securities or trade in Fairfax derivatives.
Black-out periods occur before the announcement of the half-yearly and annual results, other trading updates and the Annual General
Meeting. During black-out periods Designated People will not be authorised to trade. Before trading outside black-out periods, Directors
must obtain approval from the Chair (or the chairman of the Audit and Risk Committee for approvals for the Chair to trade). Other
Designated People must obtain approval from the Company Secretary who will consult with the Chair.
Each Director must notify the Company Secretary of any change in the Director’s interest in Fairfax securities so as to ensure
compliance with the disclosure requirements of the ASX Listing Rules.
The Policy prohibits Designated People from entering into any financial transactions that operate to limit the economic risk of unvested
Fairfax securities which have been allocated to an employee as part of his/her remuneration, prior to the securities vesting. Any breach
of this prohibition risks disciplinary sanctions.
SUSTAINABILITY AND CORPORATE RESPONSIBILITY COMMITTEE
In 2011, the Board established a Sustainability and Corporate Responsibility Committee and adopted a supporting Charter.
The primary purpose of the Committee is to advise and assist the Board in setting an overall direction for the Company’s commitment
to building a long term future, which includes operating its business responsibly, ethically and sustainably (including financial,
environmental and otherwise). To fulfil this purpose, the Committee’s role includes:
1.
2.
3.
4.
5.
6.
7.
8.
9.
providing strategic leadership to the Board and management in overseeing the development and implementation of a sustainability
and corporate social responsibility (CSR) strategy and related policies
fostering a workplace culture which values sustainable and socially responsible business practices
identifying and monitoring current and emerging CSR trends, risks and opportunities and ensuring that the Board is kept up to date
with market and investor expectations on CSR activities
considering and endorsing proposals by management to enhance the Group’s CSR profile, reputation and activities
ensuring the Board, employees, the investment community and other stakeholders are kept properly informed of the Group’s CSR
initiatives and performance
overseeing the Group’s compliance with corporate governance and legal requirements in relation to CSR issues and related reporting
ensuring that executives are remunerated having regard to performance metrics that recognise both tangible and intangible
value creation
dealing with such matters as the Committee deems necessary to carry out the functions set out above including interaction with
other Board Committees where appropriate, and
reviewing the adequacy of this Charter in light of emerging CSR trends and obligations and making recommendations to the Board
for approval.
The Committee’s membership and Chair are determined by the Board from time to time and must consist of at least three Directors,
not more than one of whom will be an executive Director. Other Directors are entitled to attend the Committee meetings. The members
of the Sustainability and Corporate Social Responsibility Committee, and details of their attendance at Committee meetings, are set
out on page 14. In order to carry out the Committee’s duties, the Chair of the Committee is authorised (at the Company’s expense) to
engage external advice, obtain assistance and information from officers of the Group and engage such other support as is reasonably
required from time to time.
34
MANAGeMeNt DiscUssioN AND ANALYsis report
TRADING OVERVIEW
Trading conditions during the 2012 financial year followed two very distinct patterns. Until November 2010 we saw a reasonably strong
economy with advertising revenues growing and in turn, our profitability improving. In early November 2010, the Reserve Bank of
Australia increased interest rates for the seventh time in a thirteen month period. This action, combined with the increased margins that
lenders were overlaying on the increase, coincided with an almost immediate negative impact on consumer confidence and spending,
events that have been widely reported over the past twelve months.
With a stronger economy in the first half, we reported both revenue and earnings before interest and tax up 3% and 8% respectively
and a profit after tax and Stapled Preference Share dividend up 15% to $165.4 million. Revenue grew across all our business segments
and costs were kept well under control.
As economic conditions in our major Australian markets remained soft in the second half, we experienced continuing weakness in
advertising demand and subsequently saw a decrease in revenues during the period. Compared to the corresponding second half last
year, our underlying results saw revenue decline 5% and due to the high fixed cost nature of our publishing business, EBIT decline 21%.
Further disrupting trading activity during the second half was the Christchurch earthquake in February 2011. The Christchurch Press is
our second largest daily newspaper in New Zealand. Our New Zealand staff has performed magnificently during what has been a very
stressful period and even with all the damage to that city and its infrastructure, we did not miss an issue. Obviously the Christchurch
economic situation is considerably weakened and this has had a flow through effect into the whole New Zealand economy.
On an underlying trading basis for the year, revenue was in line with last year, EBIT fell 6% and a profit after tax and Stapled Preference
Share of $274 million was reported, 1.8% below last year.
Non recurring restructure and redundancy costs were incurred with some benefit realised during the year and the full impact of the
savings to be achieved in subsequent years. The downturn in trading also resulted in a non cash write down of the carrying value of
the Group’s Intangible Assets.
These non recurring costs amounted to an after tax charge of $675 million in the year.
Including these non recurring costs, the net loss attributable to members of the Company was $400.9 million.
FINANCIAL POSITION
A key feature of our business is the strong free cash flow generation. This was again a highlight this year with net cash inflow
from trading activities increasing 8% to $624 million. After capital expenditure of $58 million, dividends paid of $87 million and
the redemption of the Stapled Preference Shares for $300 million in April 2011, we effectively decreased our net debt by over
$247 million during the year.
Net debt for covenant purposes was $1488 million at year end, well within all covenant limits. We have substantial headroom,
irrespective of any proceeds from the potential sale of our Radio assets or the possible Initial Public Offering of a portion of the
Trade Me digital business announced in August 2011.
Since 2008 we have successfully reduced the net debt by $1.3 billion. Even taking into consideration the $600 million rights issue
in March 2009, our strong free cash flow allowed us to reduced debt by over $700 million in the same period.
Shareholders should also be aware that we do not face any short to medium term refinancing risk. Our scheduled debt repayments
in fiscal 2012 are covered by $987 million of cash on deposit and undrawn committed facilities plus free cash flow that will be generated
during the year. Indeed, we have already repaid $167 million Medium Term Note facility from existing cash reserves.
The strength of our cash flows and financial position can best be demonstrated by the graphs below.
FREE CASH FLOW GENERATED
(EBITDA less cash interest, tax and capital expenditure payments)
$395.3
$432.8
$357.0
$249.4
460
410
360
310
260
210
160
110
60
10
2008
2009
2010
2011
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
35
MANAGeMeNt DiscUssioN AND ANALYsis report
MINIMAL REFINANCING RISk
Drawn Committed Debt Facilties by financial year
Chullora Financing
US Private Placement II
NZ$ Facility
A$ Domestic MTN
A$ Bank Syndication
US Private Placement III
Eurobond Issue
AUD$m
1000
750
500
250
0
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
FY2018
FY2019
FY2012 maturities covered by A$987 million of cash on deposit and undrawn committed facilities plus free cash flow generated from
business operations (excludes asset sales proceeds).
FINANCIAL POSITION
Following balance date, directors have declared a final dividend of 1.5 cents per ordinary share, fully franked. Combined with the interim
dividend of 1.5 cents, this brings the total dividend paid to 3.0 cents for the year. The Dividend Reinvestment Plan was not in operation
for the payment of these dividends.
The dividend payments are slightly above the Board Policy announced in December 2008 whereby the dividend payout ratio is
approximately 20% until trading performance and credit metrics were improved. The Board continually assesses the level of the
dividend payout ratio in light of strengthening financial position, trading conditions and capital requirements.
RECONCILIATION OF STATUTORY TO UNDERLYING PERFORMANCE
Total revenue
Associate profits
Expenses
Operating EBitDa
Net (loss)/profit attributable
to members of the Company
SPS dividend (net of tax)
Net (loss)/profit after tax
and SPS dividend
(Loss)/earnings per share
As reported
Significant items
Underlying trading performance
26 June 2011
$’000
27 June 2010
$’000
26 June 2011
$’000
27 June 2010
$’000
26 June 2011
$’000
27 June 2010
$’000
2,465,541
2,482,373
3,362
2,226
2,549,588
1,845,543
(80,685)
639,056
–
–
688,129
(688,129)
–
–
–
–
2,465,541
2,482,373
3,362
2,226
1,861,459
1,845,543
607,444
639,056
(390,861)
10,034
282,115
11,780
(674,674)
(8,359)
–
–
283,813
10,034
290,474
11,780
(400,895)
270,335
(674,674)
(8,359)
273,779
278,694
(17.0)
11.5
11.6
11.8
Refer to Note 4 of the Financial Statements for further breakdown of the significant items reported during the year.
RECONCILIATION OF TRADING TO OPERATING CASH FLOW
Cash flow from trading activities
Interest received
Finance costs and income tax paid
Net cash flow from operating activities
36
26 June 2011
$’000
27 June 2010
$’000
624,280
575,485
9,856
(202,711)
431,425
7,968
(133,834)
449,619
FAiRFAx mEdiA LimiTEd
AcN 008 663 161
annual financial
report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Inventories
Income tax expense
Notes to the Financial Statements
1. Summary of significant accounting policies
2. Revenues
3. Expenses
4. Significant items
5.
6. Dividends paid and proposed
7. Receivables
8.
9. Assets held for sale
10. Held to maturity investments
11. Investments accounted for using the equity method
12. Available for sale investments
13. Intangible assets
14. Property, plant and equipment
15. Derivative financial instruments
16. Deferred tax assets and liabilities
17. Payables
18. Interest bearing liabilities
19. Provisions
20. Pension assets and liabilities
21. Other financial assets
22. Contributed equity
23. Reserves
24. Retained profits
25. Non-controlling interest
26. Earnings per share
27. Commitments
28. Contingencies
29. Controlled entities
30. Acquisition and disposal of controlled entities
31. Business combinations
32. Employee benefits
33. Remuneration of auditors
34. Director and executive disclosures
35. Related party transactions
36. Notes to the cash flow statement
37. Financial and capital risk management
38. Segment reporting
39. Parent entity information
40. Events subsequent to balance sheet date
Directors’ Declaration
38
39
40
41
42
44
58
59
60
60
61
62
63
63
63
64
66
66
70
72
75
76
77
79
80
82
83
85
87
87
88
88
89
90
95
96
97
98
99
101
102
103
111
114
114
115
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
37
coNsoLiDAteD iNcoMe stAteMeNt
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
Revenue from operations
Other revenue and income
Total revenue and income
Note
2(A)
2(B)
26 June 2011
$’000
27 June 2010
$’000
2,463,413
2,476,775
13,095
13,541
2,476,508
2,490,316
Share of net profits of associates and joint ventures
11(C)
3,362
2,226
Expenses from operations excluding impairment, depreciation,
amortisation and finance costs
Depreciation and amortisation
Impairment of intangibles, investments and property, plant and equipment
Finance costs
Net (loss)/profit from operations before income tax expense
Income tax expense
Net (loss)/profit from operations after income tax expense
Net (loss)/profit is attributable to:
Non-controlling interest
Owners of the parent
Earnings per share (cents per share)
Basic (loss)/earnings per share (cents per share)
Diluted (loss) /earnings per share (cents per share)
3(A)
3(B)
3(C)
5
(1,894,537)
(1,839,107)
(114,351)
(655,051)
(119,009)
(303,078)
(86,589)
(113,623)
(6,436)
(135,911)
397,465
(115,088)
(389,667)
282,377
25
1,194
262
(390,861)
282,115
(389,667)
282,377
26
26
(17.0)
(17.0)
11.5
11.0
The above Consolidated Income Statement should be read in conjunction with the accompanying Notes.
38
coNsoLiDAteD stAteMeNt
oF coMpreHeNsiVe iNcoMe
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
Net (loss)/profit from operations after income tax expense
Other comprehensive income
Changes in fair value of available for sale financial assets
Actuarial gain/(loss) on defined benefit plans
Changes in fair value of cash flow hedges
Changes in value of net investment hedges
Exchange differences on translation of foreign operations
Income tax on items of other comprehensive income
Other comprehensive income for the period, net of tax
26 June 2011
$’000
27 June 2010
$’000
(389,667)
282,377
(1,606)
1,385
(13,894)
13,148
(92,043)
(787)
(93,797)
2,082
(986)
4,522
(4,272)
34,356
(1,302)
34,400
total comprehensive income for the period
(483,464)
316,777
total comprehensive income is attributable to:
Non-controlling interest
Owners of the parent
1,194
262
(484,658)
316,515
(483,464)
316,777
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
39
coNsoLiDAteD BALANce sHeet
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES AS AT 26 JUNE, 2011
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Assets held for sale
Held to maturity investments
Other financial assets
total current assets
NON-CURRENT ASSETS
Receivables
Investments accounted for using the equity method
Available for sale investments
Intangible assets
Property, plant and equipment
Derivative assets
Deferred tax assets
Pension assets
Other financial 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
Pension liabilities
Other non-current liabilities
total non-current liabilities
total liabilities
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained profits
total parent entity interest
Non-controlling interest
TOTAL EQUITY
Note
36(B)
7
8
9
10
21
7
11
12
13
14
15
16(A)
20(A)
21
17
18
15
19
18
15
16(A)
19
20(A)
22
23
24
25
26 June 2011
$’000
27 June 2010
$’000
207,137
371,742
38,967
4,975
–
3,686
117,872
390,375
38,043
5,257
11,591
–
626,507
563,138
2,268
33,322
2,633
3,020
43,585
4,239
5,260,108
5,942,781
722,346
778,621
27,839
10,512
260
14,833
44,352
11,774
–
2,575
6,074,121
6,830,947
6,700,628
7,394,085
279,669
666,785
80,200
140,810
46,477
276,580
269,672
12,567
109,948
54,849
1,213,941
723,616
865,247
106,534
21,815
50,396
3,595
392
1,208,789
85,093
16,374
48,006
4,800
669
1,047,979
1,363,731
2,261,920
2,087,347
4,438,708
5,306,738
4,646,248
4,942,677
(226,294)
11,764
(127,128)
481,978
4,431,718
5,297,527
6,990
9,211
4,438,708
5,306,738
The above Consolidated Balance Sheet should be read in conjunction with the accompanying Notes.
40
coNsoLiDAteD cAsH FLoW stAteMeNt
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Dividends and distributions received
Finance costs paid
Net income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payment for earn outs and purchase of controlled entities, associates
and joint ventures (net of cash acquired)
Payment for purchase of businesses, including mastheads
Payment for property, plant, equipment and software
Proceeds from sale of property, plant and equipment
Proceeds from sale of investments and other assets
Loans advanced to other parties
Loans repaid by other parties
Payment for convertible notes
Repayment of convertible notes
Note
26 June 2011
$’000
27 June 2010
$’000
2,721,399
2,661,927
(2,099,784)
(2,089,172)
9,856
2,665
7,968
2,730
(120,761)
(126,064)
(81,950)
(7,770)
36(A)
431,425
449,619
(11,998)
(15,807)
(57,461)
3,897
1,820
(20,820)
2,311
–
100
(7,447)
(1,574)
(80,375)
8,845
6,554
–
15,308
(1,400)
–
Net cash outflow from investing activities
(97,958)
(60,089)
Cash flows from financing activities
Payment for repurchase of Stapled Preference Shares
Payment for purchase of non-controlling interests in subsidiaries
Payment for shares acquired by employee share trust
Share issue costs
Proceeds from borrowings and other financial liabilities
Repayment of borrowings and other financial liabilities
Payment of facility fees
Dividends and distributions paid to shareholders including SPS*
Dividends paid to non-controlling interests in subsidiaries
Net cash outflow from financing activities
Net increase in cash and cash equivalents held
Cash and cash equivalents at beginning of the financial year
Effect of exchange rate changes on cash and cash equivalents
(300,000)
(7,865)
(4,666)
–
281,591
(120,335)
(2,870)
(85,511)
(1,070)
–
–
–
(46)
1,631
(300,076)
–
(41,770)
(372)
(240,726)
(340,633)
92,741
117,872
(3,476)
48,897
69,124
(149)
Cash and cash equivalents at end of the financial year
36(B)
207,137
117,872
* Total cash dividends for the current year totalled $85.5 million (2010: $41.8 million); this includes $17.3 million (2010: $15.9 million) made
to stapled preference shareholders (SPS). Total SPS distributions during the period were $19.8 million, $2.5 million of which has been
classified in finance costs paid. This is consistent with the reclassification of the SPS from equity to debt during the period, prior to
being repurchased on 29 April 2011.
The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying Notes.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
41
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FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
43
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
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 the consolidated entity consisting
of Fairfax Media Limited and its controlled entities.
The financial report is for the period 28 June 2010 to 26 June 2011 (2010: the period 29 June 2009 to 27 June 2010). Reference in this
report to ‘a year’ is to the period ended 26 June 2011 or 27 June 2010 respectively, unless otherwise stated.
(a) BaSiS Of PREPaRatiON
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 authoritative pronouncements of the Australian Accounting
Standards Board. The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
The Group has prepared the financial statements in compliance with recent amendments to the Corporations Acts 2001 in June
2010 which remove the requirement for the Group to lodge parent entity financial statements. Parent entity financial statements
have been replaced by the specific parent entity disclosures in Note 39.
As at 26 June 2011, the consolidated entity has net current liabilities of $587 million. Both the Medium Term Notes ($167.7 million)
and the Eurobonds ($472.5 million) have been classified as current due to their maturity dates of 27 June 2011 and 15 June 2012
respectively. The consolidated entity has sufficient committed but unused non-current facilities of $760 million at the balance sheet
date to finance its liabilities as and when they fall due, including maturing liabilities as disclosed in Note 18. In the opinion of the
directors, Fairfax Media Limited will be able to continue to pay its debts as and when they fall due. As a result, the financial report
of the Company and its controlled entities has been prepared on a going concern basis.
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 assets which are measured at fair value. The carrying values of recognised
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.
(B) PRiNCiPLES Of CONSOLiDatiON
(i) Controlled entities
The consolidated 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 consolidated entity.
Controlled entities are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from
the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of controlled entities by the Group (refer to Note 1(C)).
All inter-entity transactions, balances and unrealised gains on transactions between Group entities have been eliminated in full.
Non-controlling interests in the earnings and equity of controlled entities are shown separately in the consolidated income
statement, statement of comprehensive income, statement of changes in equity 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 consolidated financial statements as a reduction in the carrying amount of the investment.
When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint venture,
the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate or
joint venture.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the
Group’s interest in associates and joint ventures.
44
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(C) aCCOuNtiNG fOR aCQuiSitiONS
Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination
is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer,
the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, the amount of any
non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in
the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs
are expensed as incurred and included in other expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and
other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts
of the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest
in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration which is deemed to be an asset or liability is recognised in accordance
with AASB 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified
as equity, it will not be remeasured until it is finally settled within equity.
(D) iMPaiRMENt Of 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 circumstances indicate 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 which 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 discounted to their present value using a post-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. 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 assesses 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 carrying amount of an asset exceeds
its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
(E) iNtaNGiBLES
(i) Goodwill
Goodwill represents the excess of cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of
the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill on acquisitions of associates is included in investments in associates. Goodwill is allocated to a reportable segment for
the purposes of impairment testing (refer Note 1(D)). Goodwill is not amortised. 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 losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
(ii) Other intangible assets
Mastheads and tradenames
The majority of mastheads and tradenames have been assessed to have indefinite useful lives. Accordingly, 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 losses.
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 directors have determined that the majority of
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.
There is a small number of tradenames that have been assessed to have a definite useful life and are amortised using a straight-line
method over twenty years.
Radio licences
Radio licences, being commercial radio licences held by the consolidated entity under the provisions of the Broadcasting Services
Act 1992, have been assessed to have indefinite useful lives. Accordingly, 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 losses.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
45
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
Websites
Internal and external costs directly incurred in the development of websites are capitalised and amortised using a straight-line
method over two to four years. Capitalised website costs are reviewed annually for potential impairment.
Computer software
Acquired computer software licences are capitalised as an intangible as are internal and external costs 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. These costs are amortised using the straight-line
method over three to five years.
Other
Other intangibles, where applicable, are stated at cost less accumulated amortisation and impairment losses. The useful lives of
the intangible assets are assessed 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 capitalised and are expensed in the income statement in the period
the expenditure is incurred.
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 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 functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
reporting date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement, with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a
foreign operation and qualifying cash flow hedges, which are deferred in equity until disposal. Tax charges and credits attributable
to exchange differences on borrowings are also recognised in equity.
Translation differences on non-monetary items that are measured in terms of historical cost 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 using 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 each balance sheet presented are translated at the closing rate at the date of that balance sheet;
income and expenses for each income statement are translated at average exchange rates; and
all resulting exchange differences 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 separate component of equity, the net investment hedge reserve.
On disposal of a foreign entity, or when 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 acquisition of a foreign entity are
treated as assets and liabilities of the foreign entity and translated at the closing rate.
(G) REvENuE RECOGNitiON
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. Revenue from advertising, circulation, subscription, radio broadcasting and printing is recognised
when control of the right to be compensated has been obtained and the stage of completion of the contract can be reliably
measured. For newspapers, magazines and other publications the right to be compensated is on the publication date. Revenue
from the provision of online advertising on websites is recognised in the period the advertisements are placed or the impression
occurs. Amounts disclosed as revenue are net of commissions, rebates, discounts, returns, trade allowances, duties and taxes paid.
Dividends are recognised as revenue when the right to receive payment is established. This applies even if they are paid out
of pre-acquisition profits. However, the investment may need to be tested for impairment as a consequence. Refer to Note 1(D).
Interest is recognised as it accrues, taking into account the effective yield on the financial asset.
46
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(H) iNCOME tax aND OtHER taxES
The income 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 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 financial reporting purposes.
Deferred income tax liabilities are recognised 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 business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect 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 reverse 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 losses 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 respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in
the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying 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.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable group and the same taxation authority.
Goods and Services tax (GSt)
Revenues, expenses and assets are recognised net of the amount of GST except:
(i)
where the GST incurred on a purchase 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 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 recoverable 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 basis 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 Australian entities have implemented the tax consolidation legislation
as of 1 July 2003. The current and deferred tax amounts for each member in the tax consolidated group (except for the head entity)
have been allocated based on stand-alone calculations that are modified to reflect membership of the tax consolidated group.
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.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate 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 losses or unused tax credits transferred to Fairfax Media Limited under the tax consolidation
legislation. Assets or liabilities arising under tax funding arrangements with the tax consolidated 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.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
47
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(i) LEaSES
(i) finance leases
Assets acquired under finance leases which result in the consolidated entity receiving substantially all the risks and rewards of
ownership of the asset 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 finance lease obligation, net of finance charges, is included
within interest bearing liabilities. The interest element is allocated to accounting periods during the lease 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.
(iii) Onerous property costs
Property leases are considered to be an onerous contract if the unavoidable costs of meeting the obligations under the contract
exceed the economic benefits expected to be received under it. Where a decision has been made to vacate the premises or there
is excess capacity and the lease is considered to be onerous, a provision is recorded.
(J) CaSH aND CaSH EQuivaLENtS
Cash and cash equivalents includes cash on hand, deposits held at call 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 OtHER RECEivaBLES
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost which is the original invoice
amount less an allowance for any uncollectible amount. Collectability 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 collect the debts.
Interest receivable on related party loans is recognised on an accruals basis.
(L) iNvENtORiES
Inventories including work in progress 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 assessed as the cost of direct material and labour and a proportion of manufacturing
overheads based on normal operating capacity; and
•
in the case of other inventories, cost is assigned by the weighted average cost method.
(M) avaiLaBLE fOR 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 prices and unrealised gains and losses arising from changes in
the fair value are recognised in the asset revaluation reserve. The assets are included in non-current assets 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 loss, 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 consolidated entity classifies 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 those 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 the
possibility it will be sold in the short term and the asset is subject 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 statement in
the period in which they arise.
48
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(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 and other financial assets in the balance sheet and measured at amortised cost using
the effective interest method.
(iii) Other financial assets
These assets are non-derivatives that are either designated or not classified 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 losses
are included in profit and loss.
(iv) Held to maturity investments
Held to maturity investments are non-derivative financial 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 assets are measured at amortised cost
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 unless 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 financial liabilities other than derivatives are carried at amortised cost.
The Group uses derivative financial instruments such as forward foreign currency contracts, 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 recognised 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 loss 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 similar maturity profiles. The fair value of interest rate swap contracts is determined by reference to market values
for similar instruments.
Hedge accounting
For the purposes of hedge accounting, hedges are classified as:
• Fair value hedges: hedges of the fair value of recognised assets or liabilities or a firm commitment
• Cash flow hedges: hedges of highly probable forecast transactions
• Net investment hedges: hedges of the net investment in a foreign operation
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 within finance costs. 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 asset 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 asset 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 within finance costs. Gains or losses that are recognised 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.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies
for hedge accounting. 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.
Net investment hedge
Hedges of a net investment in a foreign operation are accounted for in a similar way to cash flow hedges. Gains or losses on the
hedging instrument relating to the effective portion of the hedge are recognised directly in equity while any gains or losses relating
to the ineffective portion are recognised in profit or loss. On disposal of the foreign operation, the cumulative value of such gains
or losses recognised directly in equity is transferred to the income statement based on the amount calculated during the direct
method of consolidation.
Derivatives that do not qualify for hedge accounting
For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are taken directly
to the income statement.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
49
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(O) PROPERtY, PLaNt aND EQuiPMENt
Property, plant and equipment is recorded at cost less accumulated depreciation and any accumulated impairment losses.
Directly attributable costs arising from the acquisition or construction of fixed assets, including internal labour and interest,
are also capitalised 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 based upon the present value of expected future cashflows.
Depreciation and amortisation
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost, net of their
residual values, over their estimated useful lives, as follows:
Buildings
Printing presses
up to 60 years
up to 20 years
Other production equipment
up to 15 years
Other equipment
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 estimated
recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with carrying amount. These are
included in the income statement.
(P) 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.
(Q) PROviSiONS
Provisions are recognised when the Group has a legal, equitable or constructive 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 can 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 balance date.
(R) 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 transaction costs) and the redemption amount is recognised in the income
statement over the period of the borrowings using the effective interest method.
Finance lease liabilities are determined in accordance 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 losses net of hedged amounts on borrowings,
including trade creditors and lease finance charges.
Borrowing costs are expensed as incurred unless they relate to qualifying assets. Qualifying assets are assets which take more
than 12 months to get ready for their intended use or sale. In these circumstances, borrowing costs are capitalised to the cost
of the asset. Where funds are borrowed generally, borrowing costs are capitalised using a weighted average capitalisation rate.
50
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(S) 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 provision 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 possible, 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.
The cost of share based payments is recognised over the period in which the performance and/or service conditions are fulfilled
(the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date).
At each reporting date until vesting, the cumulative charge to the income statement is the product of (i) the grant date fair value of
the award; (ii) the current best estimate of the number of awards that will vest, taking into account 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 issued to employees for no cash consideration under the Long Term Incentive Share Plan is recognised
as an employee benefits expense over the vesting period (refer to Note 32).
Shares purchased, but which have not yet vested to the employee as at reporting date are offset against contributed equity of the
Group (refer to Note 1(T)).
(iii) Defined benefit superannuation plans
Fairfax Media Limited and certain controlled entities participate in a number of superannuation plans.
An asset or liability 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 cost. 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 accepts
voluntary redundancy in exchange 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 encourage voluntary redundancy.
(v) Bonus plans
The Group recognises a provision and an expense for bonuses where contractually obliged or where there is a past practice that
has created a constructive obligation.
(t) CONtRiButED EQuitY
Ordinary shares are classified as equity. Stapled preference shares were classified as equity (refer Note 22(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 acquisition of a business are not included
in the cost of the acquisition as part of the purchase consideration.
If the Group reacquires its own equity instruments, e.g. under the Long Term Incentive Plan, those instruments are deducted
from equity.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
51
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
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 shares and rank equally with such shares 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 conversion will not
result in a breach of any of the following:
(i)
(ii)
any provision of the Foreign Acquisitions and Takeovers Act 1975;
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.
(u) 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 financial 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 shares and dilutive potential
ordinary shares adjusted for any bonus issue.
(v) SEGMENt REPORtiNG
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur
expenses (including revenue and expense relating to transactions with other components of the same entity), whose operating
results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to
the segment and assess its performance and for which discrete financial information is available. Management will also consider
other factors in determining operating segments such as the existence of a line manager and the level of segment information
presented to the Board of Directors.
Operating segments have been identified based on the information provided to the chief operating decision makers, being the Board
of Directors, Chief Executive Officer and Chief Financial Officer.
The Group aggregates two or more operating segments when they have similar economic characteristics, and the segments are
similar in each of the following respects:
• Nature of the products and services
• Nature of the production processes
• Type or class of customer for the products and services
• Methods used to distribute the products or provide the services, and if applicable
• Nature of the regulatory environment
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However, an operating
segment that does not meet the quantitative criteria is still reported separately where information about the segment would be
useful to users of the financial statements.
Information about other business activities and operating segments that are below the quantitative criteria are combined and
disclosed in a separate category for “Other segments”.
(W) SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
The carrying amounts of certain assets and liabilities are 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
estimation of the recoverable amount of the cash generating units (CGU) to which the goodwill and intangibles with indefinite useful
lives are allocated.
Key assumptions in determining recoverable amount subject to significant accounting judgement include growth rates beyond the
budgeted period, discount rates relevant to individual CGU Groups and the growth rates beyond year three cash flows which form
the basis of the terminal value. Management have estimated cash flows based on the annual budget for 2012 which has been built
52
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
up from individual profit centres. Anticipated growth rates applied to year two and three cash flows represent print and online growth
projections determined by management from historical long term averages and validated against market consensus on earnings
projections to 2013. The terminal growth rate has been determined by taking a mid-point of the RBA inflation target range (2.0% –
3.0%) plus an allowance of 1.0% for real GDP/population growth (0.5% for radio, agriculture and printing).
The weighted average discount rates have been calculated using market observable data from Bloomberg and judgement has
been exercised when considering premiums associated with unique CGU Groups. Inputs include a risk free rate of 5.2% and
2 year weekly beta.
The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill and intangibles with indefinite
useful lives are detailed in Note 13 along with a sensitivity analysis.
(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 course 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 using a Monte Carlo model, using the
assumptions detailed in Note 32.
(iv) Defined benefit plans
Various actuarial assumptions are required when determining the Group’s superannuation plan obligations. These assumptions
and the related carrying amounts are discussed in Note 20.
(x) ROuNDiNG Of aMOuNtS
The consolidated 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 accordance with that Class Order, unless otherwise indicated.
(Y) NEW aCCOuNtiNG StaNDaRDS aND uiG iNtERPREtatiONS
Certain new accounting standards and interpretations have been published that are not mandatory for 26 June 2011 reporting
periods. The Group’s assessment of the impact of these new standards and interpretations is set out below:
Reference
title
Summary
application date
of standard*
impact on Group
financial report
application date
for Group*
AASB 124
(Revised)
Related Party Disclosures
(December 2009)
1 January 2011
27 June 2011
This is a revision
to a disclosure
standard so will
have no direct
impact on the
amounts included
in the Group’s
financial statements.
The revised AASB 124 simplifies the
definition of a related party, clarifying
its intended meaning and eliminating
inconsistencies from the definition, including:
(a) The definition now identifies a subsidiary
and an associate with the same investor
as related parties of each other;
(b) Entities significantly influenced by
one person and entities significantly
influenced by a close member of the
family of that person are no longer
related parties of each other;
(c) The definition now identifies that,
whenever a person or entity has both
joint control over a second entity and
joint control or significant influence
over a third party, the second and
third entities are related to each other.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
53
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
Reference
title
Summary
application date
of standard*
impact on Group
financial report
application date
for Group*
AASB 2009-12
Amendments to Australian
Accounting Standards
[AASBs 5, 8, 108, 110,
112, 119, 133, 137,
139, 1023 & 1031 and
Interpretations 2, 4,
16, 1039 & 1052]
AASB 2009-14
Amendments to
Australian Interpretation
– Prepayments of a
Minimum Funding
Requirement
AASB 2010-4
Further Amendments
to Australian Accounting
Standards arising from
the Annual Improvements
Project
[AASB 1, AASB 7, AASB
101, AASB 134 and
Interpretation 13]
AASB 2010-5
Amendments to Australian
Accounting Standards
[AASB 1, 3, 4, 5, 101,
107, 112, 118, 119, 121,
132, 133, 134, 137, 139,
140, 1023 & 1038 and
Interpretations 112, 115,
127, 132 & 1042]
This amendment makes numerous editorial
changes to a range of Australian Accounting
Standards and Interpretations.
1 January 2011 No major impact
expected on the
Group.
27 June 2011
In particular, it amends AASB 8 Operating
Segments to require an entity to exercise
judgement in assessing whether a
government and entities known to be
under the control of that government
are considered a single customer for the
purposes of certain operating segment
disclosures. It also makes numerous
editorial amendments to a range of
Australian Accounting Standards and
Interpretations, including amendments
to reflect changes made to the text of
IFRS by the IASB.
These amendments arise from the issuance
of Prepayments of a Minimum Funding
Requirement (Amendments to IFRIC 14).
The requirements of IFRIC 14 meant that
some entities that were subject to minimum
funding requirements could not treat any
surplus in a defined benefit pension plan
as an economic benefit.
The amendment requires entities to treat
the benefit of such an early payment as a
pension asset. Subsequently, the remaining
surplus in the plan, if any, is subject to the
same analysis as if no prepayment had
been made.
Emphasises the interaction between
quantitative and qualitative AASB 7
disclosures and the nature and extent of
risks associated with financial instruments.
Clarifies that an entity will present an
analysis of other comprehensive income
for each component of equity, either in
the statement of changes in equity or in
the notes to the financial statements.
Provides guidance to illustrate how to
apply disclosure principles in AASB 134
for significant events and transactions.
Clarifies that when the fair value of award
credits is measured based on the value
of the awards for which they could be
redeemed, the amount of discounts or
incentives otherwise granted to customers
not participating in the award credit scheme,
is to be taken into account.
This Standard makes numerous editorial
amendments to a range of Australian
Accounting Standards and Interpretations,
including amendments to reflect changes
made to the text of IFRS by the IASB.
These amendments have no major impact
on the requirements of the amended
pronouncements.
1 January 2011 No major impact
expected on the
Group.
27 June 2011
1 January 2011 No major impact
expected on the
Group.
27 June 2011
1 January 2011 No major impact
expected on the
Group.
27 June 2011
54
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
application date
of standard*
impact on Group
financial report
application date
for Group*
1 January 2011 No major impact
expected on the
Group.
27 June 2011
1 January 2012 The Group has not
yet determined the
extent of the impact
of the amendments.
25 June 2012
1 January 2013 The Group has not
yet determined the
extent of the impact
of the amendments.
1 July 2013
Reference
title
Summary
AASB 2010-6
Amendments to Australian
Accounting Standards –
Disclosures on Transfers
of Financial Assets
[AASB 1 & AASB 7]
AASB 2010-8
Amendments to Australian
Accounting Standards –
Deferred Tax: Recovery
of Underlying Assets
[AASB 112]
AASB 9
Financial Instruments
The amendments increase the disclosure
requirements for transactions involving
transfers of financial assets. Disclosures
require enhancements to the existing
disclosures in IFRS 7 where an asset is
transferred but is not derecognised and
introduce new disclosures for assets that
are derecognised but the entity continues
to have a continuing exposure to the asset
after the sale.
These amendments address the
determination of deferred tax on investment
property measured at fair value and
introduce a rebuttable presumption that
deferred tax on investment property
measured at fair value should be determined
on the basis that the carrying amount will be
recoverable through sale. The amendments
also incorporate SIC-21 Income Taxes –
Recovery of Revalued Non-Depreciable
Assets into AASB 112.
AASB 9 includes requirements for the
classification and measurement of
financial assets resulting from the first
part of Phase 1 of the IASB’s project to
replace IAS 39 Financial Instruments:
Recognition and Measurement (AASB 139
Financial Instruments: Recognition and
Measurement).
These requirements improve and simplify
the approach for classification and
measurement of financial assets compared
with the requirements of AASB 139.
The main changes from AASB 139 are
described below.
(a) Financial assets are classified based on
(1) the objective of the entity’s business
model for managing the financial
assets; (2) the characteristics of the
contractual cash flows. This replaces the
numerous categories of financial assets
in AASB 139, each of which had its own
classification criteria.
(b) AASB 9 allows an irrevocable election
on initial recognition to present
gains and losses on investments in
equity instruments that are not held
for trading in other comprehensive
income. Dividends in respect of these
investments that are a return on
investment can be recognised in profit
or loss and there is no impairment or
recycling on disposal of the instrument.
(c) Financial assets can be designated
and measured at fair value through
profit or loss at initial recognition if
doing so eliminates or significantly
reduces a measurement or recognition
inconsistency that would arise from
measuring assets or liabilities, or
recognising the gains and losses
on them, on different bases.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
55
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
application date
of standard*
impact on Group
financial report
application date
for Group*
1 January 2013 The Group has not
yet determined the
extent of the impact
of the amendments.
1 July 2013
1 January 2013 The Group has not
yet determined the
extent of the impact
of the amendments.
1 July 2013
1 January 2013 The Group has not
yet determined the
extent of the impact
of the amendments.
1 July 2013
Reference
title
Summary
AASB 2009-11
AASB 2010-7
Amendments to Australian
Accounting Standards
arising from AASB 9
[AASB 1, 3, 4, 5, 7, 101,
102, 108, 112, 118, 121,
127, 128, 131, 132, 136,
139, 1023 & 1038 and
Interpretations 10 & 12]
Amendments to Australian
Accounting Standards
arising from AASB 9
(December 2010)
[AASB 1, 3, 4, 5, 7, 101,
102, 108, 112, 118, 120,
121, 127, 128, 131, 132,
136, 137, 139, 1023, &
1038 and interpretations
2, 5, 10, 12, 19 & 127]
**
Consolidated Financial
Statements
These amendments arise from the issuance
of AASB 9 Financial Instruments that sets
out requirements for the classification and
measurement of financial assets. The
requirements in AASB 9 form part of the
first phase of the International Accounting
Standards Board’s project to replace IAS
39 Financial Instruments: Recognition
and Measurement.
This Standard shall be applied when
AASB 9 is applied.
The requirements for classifying and
measuring financial liabilities were added
to AASB 9. The existing requirements for
the classification of financial liabilities and
the ability to use the fair value option have
been retained. However, where the fair
value option is used for financial liabilities
the change in fair value is accounted for as
follows:
– The change attributable to changes
in credit risk are presented in other
comprehensive income (OCI)
– The remaining change is presented in
profit or loss
If this approach creates or enlarges an
accounting mismatch in the profit or loss,
the effect of the changes in credit risk are
also presented in profit or loss.
IFRS 10 establishes a new control model
that applies to all entities. It replaces parts
of IAS 27 Consolidated and Separate
Financial Statements dealing with the
accounting for consolidated financial
statements and SIC-12 Consolidation
– Special Purpose Entities.
The new control model broadens the
situations when an entity is considered to
be controlled by another entity and includes
new guidance for applying the model to
specific situations, including when acting
as a manager may give control, the impact
of potential voting rights and when holding
less than a majority voting rights may give
control. This is likely to lead to more entities
being consolidated into the group.
56
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
application date
of standard*
impact on Group
financial report
application date
for Group*
1 January 2013 The Group has not
yet determined the
extent of the impact
of the amendments.
1 July 2013
1 January 2013 The Group has not
yet determined the
extent of the impact
of the amendments.
1 July 2013
1 January 2013 The Group has not
yet determined the
extent of the impact
of the amendments.
1 July 2013
Reference
title
Summary
**
Joint Arrangements
**
Disclosure of Interests
in Other Entities
**
Fair Value Measurement
IFRS 11 replaces IAS 31 Interests in Joint
Ventures and SIC-13 Jointly- controlled
Entities – Non-monetary Contributions by
Ventures. IFRS 11 uses the principle of
control in IFRS 10 to define joint control,
and therefore the determination of whether
joint control exists may change. In addition
IFRS 11 removes the option to account
for jointly controlled entities (JCEs) using
proportionate consolidation. Instead,
accounting for a joint arrangement is
dependent on the nature of the rights and
obligations arising from the arrangement.
Joint operations that give the venturers a
right to the underlying assets and obligations
themselves is accounted for by recognising
the share of those assets and obligations.
Joint ventures that give the venturers a right
to the net assets is accounted for using the
equity method. This may result in a change
in the accounting for the joint arrangements
held by the group.
IFRS 12 includes all disclosures relating
to an entity’s interests in subsidiaries, joint
arrangements, associates and structures
entities. New disclosures have been
introduced about the judgements made
by management to determine whether
control exists, and to require summarised
information about joint arrangements,
associates and structured entities and
subsidiaries with non-controlling interests.
IFRS 13 establishes a single source of
guidance under IFRS for determining the
fair value of assets and liabilities. IFRS 13
does not change when an entity is required
to use fair value, but rather, provides
guidance on how to determine fair value
under IFRS when fair value is required
or permitted by IFRS. Application of this
definition may result in different fair values
being determined for the relevant assets.
IFRS 13 also expands the disclosure
requirements for all assets or liabilities
carried at fair value. This includes
information about the assumptions
made and the qualitative impact of those
assumptions on the fair value determined.
* Designates the beginning of the applicable annual reporting period unless otherwise stated.
** The AASB has not issued this standard, which was finalised by the IASB in May 2011.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
57
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
2. Revenues
(a) REvENuE fROM OPERatiONS
Total revenue from sale of goods
Total revenue from services
total revenue from operations
(B) OtHER REvENuE aND iNCOME
Interest income
Dividend revenue
Gains on sale of property, plant and equipment
Other
total other revenue and income
total revenue and income
26 June 2011
$’000
27 June 2010
$’000
487,787
510,304
1,975,626
1,966,471
2,463,413
2,476,775
10,967
92
1,251
785
7,943
12
1,217
4,369
13,095
13,541
2,476,508
2,490,316
58
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
3. Expenses
(a) ExPENSES BEfORE iMPaiRMENt, DEPRECiatiON,
AMORTISATION AND FINANCE COSTS
Staff costs excluding staff redundancy costs
Redundancy and restructuring costs
Newsprint and paper
Distribution costs
Production costs
Promotion and advertising costs
Rent and outgoings
Repairs and maintenance
Communication costs
Maintenance and other computer costs
Fringe benefits tax, travel and entertainment
Other
26 June 2011
$’000
27 June 2010
$’000
862,561
36,752
243,942
137,933
188,058
119,327
58,255
29,459
22,167
26,777
25,138
842,320
5,076
249,059
136,956
193,824
106,626
57,193
29,631
23,354
26,054
24,964
144,168
144,050
total expenses before impairment, depreciation, amortisation and finance costs
1,894,537
1,839,107
(B) DEPRECiatiON aND aMORtiSatiON
Depreciation of freehold property
Depreciation of plant and equipment
Amortisation of leasehold property/buildings
Amortisation of tradenames
Amortisation of software
Amortisation of customer relationships
total depreciation and amortisation
(C) fiNaNCE COStS
External corporations/persons
Finance lease
Hedge ineffectiveness
total finance costs
(D) DEtaiLED ExPENSE DiSCLOSuRES
Operating lease rental expense
Defined contribution fund expense
Share-based payment expense
Net foreign exchange loss
5,094
74,828
3,677
13
27,842
2,897
4,990
76,337
2,959
–
26,077
3,260
114,351
113,623
121,057
129,541
4,647
(6,695)
4,778
1,592
119,009
135,911
39,019
57,885
2,675
631
37,579
55,598
3,297
1,597
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
59
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
4. Significant items
The profit after tax from operations includes the following items where disclosure
is relevant in explaining the financial performance of the consolidated entity.
Property – Comprising:
New Zealand income tax expense
Property loss, net of tax
impairment of intangibles and property, plant and equipment – Comprising:
Impairment of mastheads, goodwill and customer relationships
Impairment of property, plant and equipment
Income tax benefit
impairment of intangibles and property, plant and equipment, net of tax
Restructuring and redundancy – Comprising:
Restructuring and redundancy charges
Income tax benefit
Restructuring and redundancy, net of tax
26 June 2011
$’000
27 June 2010
$’000
–
–
(8,359)
(8,359)
(649,869)
(4,038)
3,188
(650,719)
(34,222)
10,267
(23,955)
–
–
–
–
–
–
–
Net significant items after income tax expense
(674,674)
(8,359)
Non-recurring tax expense resulting from changes in the prior year to the New Zealand tax legislation disallowing depreciation
of buildings with an estimated useful life of 50 years or more. The change is applicable from the 2011–12 income year.
At balance date it has been determined that there is impairment of intangible assets arising from a subdued economic environment
and lower than expected earnings in the current year. Therefore in accordance with AASB 136, management have impaired goodwill,
mastheads and customer relationships in certain CGU Groups. Refer to Note 1(W)(i) and Note 13 for the method and assumptions
used in estimating recoverable amount.
5. Income tax expense
Income tax expense is reconciled to prima facie income tax payable as follows:
Net (loss)/profit before income tax expense
Prima facie income tax at 30% (2010: 30%)
Tax effect of differences:
Overseas tax rate and accounting differentials
Share of net profits of associates and joint ventures
Non-assessable dividends
(Over)/under provision in prior financial years
Temporary differences not recognised on intangible and other asset write-offs
Non-deductible items
Non-deductible depreciation and amortisation
New Zealand legislative changes to tax depreciation on buildings
Other
income tax expense
Current income tax expense
Deferred income tax benefit
(Over)/under provision in prior financial years
income tax expense in the income statement
60
26 June 2011
$’000
27 June 2010
$’000
(303,078)
397,465
(90,923)
119,240
(14,502)
(21,072)
(363)
(11)
(2,708)
192,983
2,434
–
–
(321)
86,589
100,188
(10,891)
(2,708)
(668)
(2)
5,931
318
2,781
17
8,359
184
115,088
112,759
(3,602)
5,931
86,589
115,088
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
6. Dividends paid and proposed
(a) ORDiNaRY SHaRES
Interim 2011 franked dividend: 100% franked 1.5 cents
– paid 21 March 2011 (2010: unfranked dividend
1.1 cents – paid 19 March 2010)
Final 2010 dividend: 100% franked 1.4 cents
– paid 23 September 2010 (2009: nil)
total dividends paid – ordinary shares
(B) StaPLED PREfERENCE SHaRES (SPS)
SPS dividend:
2011: $3.2334 per share – paid 29 April 2011*
2011: $3.2515 per share – paid 1 November 2010
2010: $2.9010 per share – paid 30 April 2010
2010: $2.2946 per share – paid 30 October 2009
total dividends paid – SPS
total dividends paid
Consolidated
26 June 2011
$’000
Consolidated
27 June 2010
$’000
Company
26 June 2011
$’000
Company
27 June 2010
$’000
35,279
25,872
35,279
25,872
32,927
68,206
–
25,872
32,927
68,206
–
25,872
7,355
9,950
–
–
17,305
85,511
–
–
8,877
7,021
15,898
41,770
–
–
–
–
–
–
–
–
–
–
68,206
25,872
* The final SPS distribution totalled $9.9 million, $2.5 million of which has been classified as finance costs. This is consistent
with the reclassification of the SPS from equity to debt during the period, prior to being repurchased on 29 April 2011.
(C) DiviDENDS PROPOSED aND NOt RECOGNiSED aS a LiaBiLitY
Since balance date the directors have declared a final dividend of 1.5 cents per fully paid ordinary share fully franked at the corporate
tax rate of 30%. The aggregate amount of the final dividend to be paid on 27 September 2011 out of the retained profits at 26 June
2011, but not recognised as a liability at the end of the year is expected to be $35.3 million.
(D) fRaNKED DiviDENDS
Franking account balance as at balance date at 30% (2010: 30%)
Franking credits that will arise from the payment of income tax payable balances
as at the end of the financial year
total franking credits available for subsequent financial years based on a tax rate of 30%
Company
2011
$’000
Company
2010
$’000
30,936
4,095
39,532
70,468
47,277
51,372
On a tax-paid basis, the Company’s franking account balance is approximately $30.9 million (2010: $4.1 million). The impact on the
franking account of the dividend declared by the directors since balance date will be a reduction in the franking account of approximately
$15.1 million.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
61
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
7. Receivables
Current
Trade debtors*
Provision for doubtful debts
Loans and deposits
Prepayments
Other
total current receivables
Non-current
Loans and deposits
Prepayments
Other
total non-current receivables
26 June 2011
$’000
27 June 2010
$’000
351,406
(10,061)
373,448
(9,627)
341,345
363,821
111
14,742
15,544
102
11,276
15,176
371,742
390,375
1,876
–
392
2,268
1,880
83
1,057
3,020
* Trade debtors are non-interest bearing and are generally on 7 to 45 day terms.
IMPAIRED TRADE DEBTORS
As at 26 June 2011, trade debtors of the Group with a nominal value of $10.1 million (2010: $9.6m) were impaired and provided for.
No individual amount within the provision for doubtful debts is material. Refer to Note 37(C) for the factors considered in determining
whether trade debtors are impaired.
As at 26 June 2011, an analysis of trade debtors that are not considered as impaired is as follows:
Not past due
Past due 0 – 30 days
Past due 31 – 60 days
Past 60 days
2011
$’000
2010
$’000
243,145
230,445
63,865
17,533
16,802
97,690
19,689
15,997
341,345
363,821
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.
Movements in the provision for doubtful debts are as follows:
Balance at the beginning of the financial year
Additional provisions
Utilised
Exchange differences
Balance at the end of the financial year
2011
$’000
9,627
3,318
(2,791)
(93)
10,061
2010
$’000
9,839
9,400
(9,640)
28
9,627
62
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
8. Inventories
Raw materials and stores – at net realisable value
Finished goods – at cost
Work in progress – at cost
total inventories
9. Assets held for sale
Freehold land and buildings
Plant and equipment
total assets held for sale
26 June 2011
$’000
27 June 2010
$’000
34,412
34,391
3,844
711
3,374
278
38,967
38,043
26 June 2011
$’000
27 June 2010
$’000
4,468
507
4,975
5,257
–
5,257
Assets held for sale comprise properties, plant and equipment in Australia and New Zealand that are being actively marketed and for
which the sale is highly probable.
Prior to being transferred to held for sale, the properties, plant and equipment were remeasured at the lower of carrying amount
and fair value less costs to sell. As a result, an impairment charge of $1.4 million (2010: $1.4 million) was recognised in the income
statement against the assets.
For those properties classified within held for sale, a subsequent impairment charge of $0.1m (2010: nil) was recorded due
to reassessment of the property value at the lower of carrying amount and fair value less costs to sell at reporting date.
10. Held to maturity investments
Current
Bonds
total current held to maturity investments
The annuity bonds were redeemed on 30 September 2010 for a fair value of $10.6m.
26 June 2011
$’000
27 June 2010
$’000
–
–
11,591
11,591
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
63
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
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
Name of Company
Principal Activity
Australian Associated Press Pty Ltd
Autobase Limited
News agency business
and information service
E-commerce: online vehicle
dealer automotive website
Digital Radio Broadcasting Melbourne Pty Ltd
Digital audio broadcasting
Digital Radio Broadcasting Perth Pty Ltd
Digital audio broadcasting
Digital Radio Broadcasting Brisbane Pty Ltd
Digital audio broadcasting
Digital Radio Broadcasting Sydney Pty Ltd
Digital audio broadcasting
Earth Hour Limited
Environmental promotion
Homebush Transmitters Pty Ltd
Rental of a transmission facility
Newspaper House Limited
Property ownership
New Zealand Press Association Ltd
NGA.net Pty Ltd
Perth FM Facilities Pty Ltd
Times Newspapers Limited
Xchange IT Newsagents Pty Ltd
News agency business and
financial information service
Provider of e-recruitment
software to corporations
Note
26 June 2011
$’000
27 June 2010
$’000
(A)(i)
(B)(i)
14,449
18,873
33,322
14,102
29,483
43,585
Place of
Incorporation
Australia
Ownership interest
26 June 2011
27 June 2010
47.0%
47.0%
New Zealand
25.4%
25.4%
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
18.0%
33.4%
25.0%
11.3%
33.3%
50.0%
45.5%
49.2%
18.0%
33.4%
25.0%
11.3%
33.3%
50.0%
45.5%
49.2%
Australia
28.0%
28.0%
Rental of a transmission facility
Australia
Newspaper publishing
Provider of EDI software
New Zealand
Australia
33.3%
49.9%
30.0%
33.3%
49.9%
–
(i) Carrying amount of investment in associates
Balance at the beginning of the financial year
Share of associates’ net profit after income tax expense
Dividends received/receivable from associates
Impairment of investment in associate
Exchange differences
Balance at end of the financial year
(ii) Share of associates’ profits
Revenue
Profit before income tax expense
Income tax expense
Net profit after income tax expense
(iii) Share of associates’ assets and liabilities
Current assets
Non-current assets
total assets
Current liabilities
Non-current liabilities
total liabilities
64
26 June 2011
$’000
27 June 2010
$’000
14,102
14,819
770
(373)
–
(50)
685
(350)
(1,060)
8
14,449
14,102
39,541
39,528
930
(160)
770
15,641
23,464
39,105
10,622
3,216
13,838
750
(65)
685
15,357
22,405
37,762
10,118
3,123
13,241
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(B) iNtEREStS iN JOiNt vENtuRES
Name of Company
Principal Activity
Place of
Incorporation
Ownership interest
26 June 2011
27 June 2010
Fermax Distribution Company Pty Ltd
Letterbox distribution of newspapers
Australia
Gilgandra Newspapers Pty Ltd
Newspaper publishing and printing
Gippsland Regional Publications Partnership
Newspaper publishing and printing
Torch Publishing Company Pty Ltd
Newspaper publishing and printing
Online Marketing Group Pty Limited*
E-commerce: Online marketing
Australia
Australia
Australia
Australia
50.0%
50.0%
50.0%
50.0%
–
50.0%
50.0%
50.0%
50.0%
48.0%
* Investment in joint venture was increased to a controlling interest of 68.2% on 23 November 2010. As a result, this investment is now part
of the consolidated group. Refer to Note 30 for further details.
(i) Carrying amount of investment in joint ventures
Balance at the beginning of the financial year
Share of joint ventures’ net profit after income tax expense
Interests in joint venture acquired during the year
Dividends received/receivable from joint venture
Impairment of investment in joint venture
Investment in joint venture transferred to a controlled entity
Investment in joint venture disposed during the year
Balance at end of the financial year
(ii) Share of joint ventures’ profits
Revenues
Expenses
Profit before income tax expense
Income tax expense
Net profit after income tax expense
(iii) Share of joint ventures’ assets and liabilities
Current assets
Non-current assets
total assets
Current liabilities
Non-current liabilities
total liabilities
(C) SHaRE Of NEt PROfitS Of aSSOCiatES aND JOiNt vENtuRES
Profit before income tax expense
Income tax expense
Net profit after income tax expense
26 June 2011
$’000
27 June 2010
$’000
29,483
2,592
–
(2,200)
–
(11,002)
31,849
1,541
421
(2,368)
(460)
–
–
(1,500)
18,873
29,483
12,377
(9,600)
2,777
(185)
2,592
4,935
17,584
22,519
1,553
424
1,977
13,869
(12,156)
1,713
(172)
1,541
5,141
19,804
24,945
2,259
1,720
3,979
3,707
(345)
3,362
2,463
(237)
2,226
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
65
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
12. Available for sale investments
Listed equity securities – at fair value
total available for sale investments
26 June 2011
$’000
27 June 2010
$’000
2,633
2,633
4,239
4,239
Available for sale investments consist of investments in ordinary shares at fair value and have no fixed maturity date.
13. Intangible assets
Mastheads and tradenames
Software
Customer relationships
Radio licences
Goodwill
total intangible assets
26 June 2011
$’000
27 June 2010
$’000
3,254,396
3,366,633
71,024
3,453
132,217
85,981
11,631
132,217
1,799,018
2,346,319
5,260,108
5,942,781
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
licences
$’000
Customer
relationships
$’000
Mastheads &
tradenames
$’000
Note
Software
$’000
Goodwill
$’000
Total
$’000
at 28 June 2009
Cost
156,678
17,103
3,732,273
211,432
2,435,308
6,552,794
Accumulated amortisation and impairment
(24,461)
(4,723)
(378,640)
(149,706)
(106,717)
(664,247)
Net carrying amount
132,217
12,380
3,353,633
61,726
2,328,591
5,888,547
Period ended 27 June 2010
Balance at beginning of the financial year
132,217
12,380
3,353,633
61,726
2,328,591
5,888,547
Additions
Capitalisations from works in progress
14
Disposals
Acquisition through business combinations
3(B)
Amortisation charge
Impairment
Transfer to other asset category
Exchange differences
at 27 June 2010, net of accumulated
amortisation and impairment
–
–
–
–
–
–
–
–
–
–
–
–
(3,260)
–
2,492
19
–
–
–
–
–
(89)
(3,400)
16,489
13,720
37,924
(2,302)
717
(26,077)
–
–
–
–
(31)
4,289
–
–
908
13,720
37,924
(2,333)
5,006
(29,337)
(89)
–
273
12,562
29,343
132,217
11,631
3,366,633
85,981
2,346,319
5,942,781
66
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
Radio
licences
$’000
Customer
relationships
$’000
Mastheads &
tradenames
$’000
Note
Software
$’000
Goodwill
$’000
Total
$’000
at 27 June 2010
Cost
156,678
19,614
3,745,362
242,066
2,453,036
6,616,756
Accumulated amortisation and impairment
(24,461)
(7,983)
(378,729)
(156,085)
(106,717)
(673,975)
Net carrying amount
132,217
11,631
3,366,633
85,981
2,346,319
5,942,781
Period ended 26 June 2011
Balance at beginning of the financial year
132,217
11,631
3,366,633
85,981
2,346,319
5,942,781
Additions
Capitalisations from works in progress
14
Disposals
Acquisition through business combinations
Amortisation charge
Impairment
Exchange differences
at 26 June 2011, net of accumulated
amortisation and impairment
3(B)
at 26 June 2011
Cost
–
–
–
–
–
–
–
–
–
–
1,353
(2,897)
(6,588)
13
–
–
20,846
1,732
11,275
(179)
1,381
–
–
(2,128)
48,387
1,745
11,275
(2,307)
71,967
(13)
(27,842)
–
(30,752)
(80,915)
–
(562,366)
(649,869)
(46)
(52,168)
(1,324)
(31,194)
(84,732)
132,217
3,453
3,254,396
71,024
1,799,018
5,260,108
156,678
8,008
3,714,053
253,229
2,468,101
6,600,069
Accumulated amortisation and impairment
(24,461)
(4,555)
(459,657)
(182,205)
(669,083)
(1,339,961)
Net carrying amount
132,217
3,453
3,254,396
71,024
1,799,018
5,260,108
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
67
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(ii) impairment of cash generating units (CGu) including goodwill and indefinite life assets
Goodwill is allocated to CGU Groups identified according to business segment and geographic regions. The recoverable amount
of each CGU which includes goodwill or indefinite life intangibles has been tested.
The recoverable amount of each CGU is determined based on value-in-use calculations using a three year cash flow projection and
a terminal value. These calculations use cash flow projections based on the risk adjusted financial budgets approved by the Directors
for the 2012 financial year, after an adjustment for central overheads. Cash flows beyond the 2012 period are extrapolated using the
estimated growth rates stated at (iv) below.
(iii) allocation of goodwill, licences, mastheads and tradenames to CGus
For the financial year ended 26 June 2011, goodwill, licences, mastheads and tradenames were allocated to the following CGU Groups:
allocation of goodwill to CGu Groups
New South Wales Metropolitan and Community Media*
Victorian Metropolitan and Community Media*
Australian Regional Media
Business Media**
Agricultural Media**
Australian Online
New Zealand Online
Printing Operations
Broadcasting
New Zealand Media
Other
total goodwill by CGu Groups
Metropolitan Media*
Specialist Media**
total goodwill by reportable segment
total goodwill
allocation of licences, masthead and tradenames to CGu Groups
New South Wales Metropolitan and Community Media
Victorian Metropolitan and Community Media
Australian Regional Media
Business Media
Agricultural Media
Australian Online
New Zealand Online
Broadcasting
New Zealand Media
total licences, mastheads and tradenames
total goodwill, licences, mastheads and tradenames
26 June 2011
$’000
27 June 2010
$’000
–
–
404,420
8,321
19,658
233,590
559,306
351,713
108,185
5,932
–
76,333
118,946
434,924
16,594
21,354
185,808
590,174
351,613
173,185
9,932
5,739
1,691,125
1,984,602
–
107,893
253,823
107,894
107,893
361,717
1,799,018
2,346,319
431,936
441,565
434,082
443,711
1,090,221
1,082,339
162,523
345,744
23,525
25,340
132,217
733,542
162,523
356,735
8,450
26,739
132,217
852,054
3,386,613
3,498,850
5,185,631
5,845,169
* The Metropolitan Media reportable segment is comprised of New South Wales Metropolitan and Community Media and Victorian
Metropolitan and Community Media CGU Groups.
** The Specialist Media reportable segment is comprised of Business Media and Agricultural Media CGU Groups.
68
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(iv) Key assumptions used for value-in-use calculations
The key assumptions on which management based its cash flow projections when determining the value-in-use calculations of the CGUs
are as follows:
•
•
•
•
•
growth rates of 12% to 20% for Online (2010: 12% to 15%), between 5% to 10% for Media (2010: 7.5% to 15%), 5% for Printing
(2010: 5%) and 3% for Broadcasting (2010: 7% to 7.5%) for years 1 to 3.
the weighted average growth rates used were derived from internal forecasts.
an exchange rate of 1.29 (2010: 1.22) was applied to New Zealand mastheads.
the post-tax discount rates applied to the CGU Groups’ cash flow projections was in the range 9.4% to 14.9% producing a mid point
of 10.1% for both Australian and New Zealand Media (2010: Aust: 10.3%; NZ: 10.9%), 12.3% for Australian Online (2010: 12.5%)
and 12.8% for New Zealand Online (2010: 13.1%).
terminal value growth rate of 3.5% (2010: 3.5%) was used for cash flows from year 4 onwards for all CGUs with the exception of
Agricultural Media, Printing Operations, Broadcasting and a small number of Australian Regional Media and New Zealand Media
CGUs which were calculated at 3.0% (2010: 3.0%).
As a result of revisions in certain key assumptions to reflect current trading conditions, the carrying value of goodwill, mastheads
and customer relationships allocated to certain CGU Groups displayed in (iii) above have been reduced to their recoverable amount
through the recognition of a $649.9 million impairment loss. This impairment is as a result of a number of factors, including the slower
than expected recovery of the advertising market in the second half of fiscal 2011 and the ongoing impact of soft economic conditions.
Restructuring programs anticipated but not approved yet by the Board have not been included in the value in use calculations.
The Directors note that the extent and duration of the current weakness is difficult to predict and have carefully considered the
economic outlook and the market in which each media asset operates.
Directors consider that, despite the impairment provision recognised, the fair value of the Group’s intangible assets in aggregate
is in excess of carrying value.
(v) impact of possible change in key assumptions
Holding all assumptions constant, if year 1 cash flow forecasts declined by 5%, an aggregated impairment of $145.8 million would result
in all CGUs with the exception of Online and Printing Operations.
Holding all assumptions constant, if the discount rate applied to the media cash flow projections was increased by 0.25%, an
aggregated impairment of $91.1 million would result in all CGUs with the exception of Online and Printing Operations. If the rate was
further increased by 0.5%, an aggregated impairment of $182.1 million would result across all CGUS with the exception of Online
and Printing Operations.
If terminal value growth rates of 2.75% was consistently applied across all CGUs an impairment of $196.4 million would result in
all CGUs with the exception of Online and Printing Operations. Management does not consider that there are any other reasonably
possible changes in any of the key assumptions which would cause the carrying amount of any of the CGU Groups to exceed
its recoverable amount.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
69
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
14. Property, plant and equipment
Freehold land and buildings
At cost
Provision for depreciation
total freehold land and buildings
Leasehold buildings
At cost
Provision for depreciation
total leasehold buildings
Plant and equipment
At cost
Provision for depreciation
total plant and equipment
Capital works in progress – at cost
total property, plant and equipment
26 June 2011
$’000
27 June 2010
$’000
267,103
(34,530)
271,799
(31,442)
232,573
240,357
100,101
(25,285)
100,306
(22,205)
74,816
78,101
1,112,149
1,115,740
(713,739)
(664,580)
398,410
451,160
16,547
9,003
722,346
778,621
RECONCILIATIONS
Reconciliations of the carrying amount of each class of property, plant and equipment during the financial year are set out below:
Capital works
in progress
$’000
Freehold land
& buildings
$’000
Leasehold
buildings
$’000
Plant and
equipment
$’000
Note
Total
$’000
at 28 June 2009
Cost
Accumulated depreciation
and impairment
Net carrying amount
Period ended 27 June 2010
Balance at beginning of financial year
Additions/capitalisations
Capitalisation to software
Disposals
Acquisition through business
combinations
Depreciation charge
Assets classified as held for sale
Impairment
Exchange differences
at 27 June 2010, net of accumulated
depreciation and impairment
13
3(B)
9
70
89,880
–
272,176
(25,895)
84,811
1,173,383
1,620,250
(20,560)
(710,076)
(756,531)
89,880
246,281
64,251
463,307
863,719
89,880
(42,950)
(37,924)
246,281
5,189
–
64,251
19,755
–
(1,202)
(2,657)
–
–
463,307
863,719
67,200
–
(319)
7
49,194
(37,924)
(4,178)
7
(4,990)
(5,257)
(588)
924
(2,959)
(76,337)
(84,286)
–
(218)
(71)
–
(4,020)
1,322
(5,257)
(4,826)
2,172
–
–
–
–
–
(3)
9,003
240,357
78,101
451,160
778,621
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
Capital works
in progress
$’000
Freehold land
& buildings
$’000
Leasehold
buildings
$’000
Plant and
equipment
$’000
Note
Total
$’000
9,003
–
271,799
(31,442)
100,306
1,115,740
1,496,848
(22,205)
(664,580)
(718,227)
9,003
240,357
78,101
451,160
778,621
at 27 June 2010
Cost
Accumulated depreciation and
impairment
Net carrying amount
Period ended 26 June 2011
Balance at beginning of financial year
9,003
240,357
78,101
451,160
778,621
13
3(B)
9
Additions/capitalisations
Capitalisation to software
Disposals
Acquisition through business
combinations
Depreciation charge
Assets classified as held for sale
Impairment
Exchange differences
at 26 June 2011, net of accumulated
depreciation and impairment
at 26 June 2011
Cost
Accumulated depreciation and impairment
20,746
(11,275)
(13)
–
–
(507)
(1,252)
(155)
493
–
(38)
398
(5,094)
(1,005)
–
(2,538)
781
–
(325)
–
34,901
–
(6,598)
662
56,921
(11,275)
(6,974)
1,060
(3,677)
(74,828)
(83,599)
–
–
(64)
150
(3,808)
(3,229)
(1,362)
(5,060)
(5,986)
16,547
232,573
74,816
398,410
722,346
16,547
–
267,103
(34,530)
100,101
1,112,149
1,495,900
(25,285)
(713,739)
(773,554)
Net carrying amount
16,547
232,573
74,816
398,410
722,346
During the current year, an impairment charge of $1.4 million was recorded on property, plant and equipment prior to transferring
these assets to held for sale. The assets were remeasured at the lower of carrying amount and fair value less costs to sell (refer
to Note 9). In addition, an impairment charge of $3.7 million was recorded on printing press equipment in New Zealand following
a review of recoverable amount.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
71
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
15. Derivative financial instruments
Non-current assets
Cross currency swap – cash flow hedge
Cross currency swap – fair value hedge
Cross currency swap – net investment hedge
Call option derivative
total non-current derivative assets
Current liabilities
Interest rate swap – cash flow hedge
Cross currency swap – cash flow hedge
Cross currency swap – fair value hedge
total current derivative liabilities
Non-current liabilities
Interest rate swap – cash flow hedge
Cross currency swap – fair value hedge
Cross currency swap – cash flow hedge
Obligation under put option*
total non-current derivative liabilities
26 June 2011
$’000
27 June 2010
$’000
–
–
27,339
500
27,839
6,540
72,800
860
80,200
13,453
74,379
7,481
11,221
101
29,909
14,342
–
44,352
–
55
12,512
12,567
23,612
24,453
37,028
–
106,534
85,093
* Present value of exercise price of the put option over subsidiary shares. The put and the call option are 50% exercisable in the period
July – October 2012 and the remaining interest is exercisable in the period July 2013 – September 2013.
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.
72
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(a) HEDGiNG aCtivitiES
(i) Cash flow hedges – interest rate and cross currency swaps
At 26 June 2011, the Group held interest rate swaps 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 26 June 2011, the notional principal amounts and period of expiry of the swaps are as follows:
Pay fixed, receive floating – AUD$550m
Interest rate
Maturity date
15 June 2012
2011
7.60%
2010
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 contracts 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 26 June 2011, the Group 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 26 June 2011, the notional principal amounts and period of expiry of the swaps for each counterparty are as follows:
Pay fixed, receive floating – AUD$59.5m
Pay fixed, receive floating – AUD$59.5m
Interest rate
Maturity date
10 July 2017
10 July 2017
2011
7.52%
7.46%
2010
7.52%
7.46%
The contracts require settlement on interest receivable semi annually and interest payable each 90 days. These dates coincide with
the interest payable dates on the underlying Senior Notes.
At 26 June 2011, the Group held an interest rate swap designated as hedging the future contracted interest payments on AUD
denominated bank borrowings. The interest rate swap is being used to hedge future movements in interest rates.
At 26 June 2011, the notional principal amount and period of expiry of the swap are as follows:
Pay fixed, receive floating – AUD$125m
Interest rate
Maturity date
12 October 2015
2011
6.52%
2010
6.52%
The contract requires settlement on interest receivable and interest payable each 90 days. These dates coincide with the interest
payable dates on the underlying AUD denominated bank borrowings.
At 26 June 2011, the above hedges were assessed to be highly effective with a combined unrealised loss in fair value of $9.7 million
(2010: $4.0 million gain) recognised in equity for the period. During the period an unrealised loss of $0.1 million (2010: $3.3 million
unrealised loss) was recognised in the income statement attributable to the ineffective portion of the cash flow hedges.
During the year there was no material gain or loss transferred from equity to the income statement (2010: $1.8 million unrealised loss).
(ii) Cash flow hedges – foreign exchange contracts
During the year, forward exchange contracts were used by the Group to hedge future foreign capital purchase commitments across
the Australian and New Zealand business. The contracts are timed to mature as payments are scheduled to be made to suppliers.
At 26 June 2011, the Group did not hold any forward exchange contracts (2010: nil).
The foreign currency contracts are considered to be fully effective hedges as they are matched against the highly probable foreign
capital purchases with any gain or loss on the contracts taken directly to equity. When the contract is delivered, the Group will adjust
the initial measurement of any component recognised on the balance sheet by the related amount deferred in equity.
During the current and prior financial period there was no material ineffectiveness recognised in the income statement attributable
to cash flow hedges of foreign exchange contracts.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
73
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(iii) fair value hedges
At 26 June 2011, the Group held cross currency swap agreements designated to changes in the underlying value of USD denominated
senior notes (refer to Note 18). The terms of certain 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
Group’s New Zealand controlled entities (excluding Trade Me Limited), as discussed in Note (iv) below.
At 26 June 2011, the Group also held cross currency swap agreements partly designated to changes in the underlying value of the
EUR denominated Eurobond (refer to Note 18). The terms of the cross currency swap exchange EUR obligations into AUD obligations.
This swap has been 99% designated to a cash flow hedge, as discussed in (i) above.
At 26 June 2011, the cross currency swap agreements had a combined value of $75.2 million (2010: $7.1 million).
The cross currency swaps are designated based on matched terms to the debt and also have the same maturity profile as the USD
denominated senior notes and the EUR denominated Eurobonds.
The terms of these cross currency swaps are as follows:
Pay floating AUD receive fixed USD – USD $125m
Pay floating AUD receive floating USD – USD $25m
Pay floating NZD receive fixed USD – USD $40m
Pay floating NZD receive fixed USD – USD $90m
Pay floating NZD receive fixed USD – USD $50m
Pay floating AUD receive fixed EUR – EUR €4m
Maturity date
10 July 2014
10 July 2014
15 January 2019
15 January 2016
15 January 2014
15 June 2012
For the Group, the remeasurement of the hedged items resulted in a gain before tax of $79.3 million (2010: $32.3 million gain) and the
changes in the fair value of the hedging instruments resulted in a loss before tax of $73.8 million (2010: $33.4 million loss) resulting in
a net gain before tax of $5.5 million (2010: $1.1 million loss) recorded in finance costs.
(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 acquisition of the business assets of Independent News Limited in June 2003.
At 26 June 2011, the hedges were assessed to be highly effective with an unrealised gain of $9.2 million (2010: $3.0 million loss)
recognised in equity. During the current financial period there was an unrealised loss of $0.1 million (2010: $0.1 million loss) recognised
in the income statement attributable to the ineffective portion of the net investment hedges.
74
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
16. Deferred tax assets and liabilities
(a) RECOGNiSED DEfERRED tax aSSEtS aND LiaBiLitiES
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
26 June 2011
$’000
27 June 2010
$’000
26 June 2011
$’000
27 June 2010
$’000
26 June 2011
$’000
27 June 2010
$’000
Property, plant and equipment
4,268
4,551
Inventories
Investments
Intangible assets
Other assets
Provisions
Payables
Other liabilities
Other
–
–
6,306
16,039
50,001
12,152
4,771
2,913
–
–
6,567
25,216
48,993
9,504
2,676
4,147
36,893
3,155
10,915
38,656
17,728
–
–
241
165
27,374
3,020
10,347
41,935
22,258
–
–
229
1,091
(32,625)
(3,155)
(10,915)
(32,350)
(1,689)
50,001
12,152
4,530
2,748
(22,823)
(3,020)
(10,347)
(35,368)
2,958
48,993
9,504
2,447
3,056
Gross deferred tax assets/liabilities
96,450
101,654
107,753
106,254
(11,303)
(4,600)
Set-off of deferred tax assets/liabilities
(85,938)
(89,880)
(85,938)
(89,880)
–
–
Net deferred tax assets/liabilities
10,512
11,774
21,815
16,374
(11,303)
(4,600)
(B) MOvEMENt iN tEMPORaRY DiffERENCES DuRiNG tHE fiNaNCiaL YEaR
Property, plant and equipment
Inventories
Investments
Intangible assets
Other assets
Provisions
Payables
Other liabilities
Other
Property, plant and equipment
Inventories
Investments
Intangible assets
Other assets
Provisions
Payables
Other liabilities
Tax losses
Other
Balance
27 June 2010
Recognised
on acquisition
Recognised
in income
Recognised
in equity
Balances
disposed
Balance
26 June 2011
(22,823)
(3,020)
(10,347)
(35,369)
2,958
48,993
9,504
2,448
3,056
–
–
–
(576)
–
47
–
–
–
(9,802)
(135)
(847)
3,595
(8,906)
961
2,648
2,082
(487)
–
–
279
–
4,259
–
–
–
179
(4,600)
(529)
(10,891)
4,717
–
–
–
–
–
–
–
–
–
–
(32,625)
(3,155)
(10,915)
(32,350)
(1,689)
50,001
12,152
4,530
2,748
(11,303)
Balance
28 June 2009
Recognised
on acquisition
Recognised
in income
Recognised
in equity
Balances
disposed
Balance
27 June 2010
(13,791)
(2,788)
(10,498)
(37,616)
(356)
52,826
10,288
3,202
1,510
(4,465)
(1,688)
–
–
–
–
–
–
–
–
–
–
–
(9,032)
(232)
432
2,247
2,588
(3,833)
(784)
(754)
(1,510)
7,276
(3,602)
–
–
(281)
–
726
–
–
–
–
245
690
–
–
–
–
–
–
–
–
–
–
–
(22,823)
(3,020)
(10,347)
(35,369)
2,958
48,993
9,504
2,448
–
3,056
(4,600)
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
75
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(C) tax LOSSES aND futuRE DEDuCtiBLE tEMPORaRY DiffERENCES
The Group has realised Australian capital losses for which no deferred tax asset is recognised on the balance sheet of $213,358,421
(2010: $208,979,744) which are available indefinitely for offset against future capital gains subject to continuing to meet relevant
statutory tests.
The Group has deductible temporary differences for which no deferred tax asset is recognised on the balance sheet of $299,425,782
(2010: $298,194,934).
(D) uNRECOGNiSED tEMPORaRY DiffERENCES
At 26 June 2011, there are no material unrecognised temporary differences associated with the Group’s investments in associates
or joint ventures, as the Group has no material liability for additional taxation should unremitted earnings be remitted (2010: Nil).
17. Payables
Trade and other payables*
Interest payable
Income in advance
total current payables
* Trade payables are non-interest bearing and are generally on 30 day terms.
26 June 2011
$’000
27 June 2010
$’000
184,229
188,489
22,192
73,248
18,944
69,147
279,669
276,580
76
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
18. Interest bearing liabilities
Current interest bearing liabilities – unsecured
Bank borrowings
Other loans
Senior notes
Medium term notes
Eurobonds
Other
Finance lease liability
total current interest bearing liabilities
Non-current interest bearing liabilities – unsecured
Bank borrowings
Other loans
Senior notes
Eurobonds
Other
Finance lease liability
total non-current interest bearing liabilities
Net debt for financial covenant purposes
Cash and cash equivalents
Current interest bearing liabilities
Non-current interest bearing liabilities
Derivative financial instruments liabilities*
Net debt for financial covenant purposes
Note
26 June 2011
$’000
27 June 2010
$’000
(B)
(C)
(E)
(F)
(D)
(D)
(B)
(C)
(F)
(D)
(D)
19,378
–
–
167,700
472,543
3,322
3,842
58,531
167,587
–
39,975
3,579
666,785
269,672
392,060
145,231
450,293
–
8,311
14,583
539,431
494,068
11,634
18,425
865,247
1,208,789
(207,137)
666,785
865,247
162,706
(117,872)
269,672
1,208,789
74,413
1,487,601
1,435,002
* Debt hedging instruments as measured against the undiscounted contractual AUD cross currency swap obligations and therefore may not
equate to the values disclosed in the balance sheet (inclusive of transaction costs).
(a) fiNaNCiNG aRRaNGEMENtS
The Group net debt for financial covenant purposes, taking into account all debt related derivative financial instruments, was $1,488
million as at 26 June 2011 (2010: $1,435 million).
The Group has sufficient unused committed facilities at the balance sheet date to finance maturing current interest bearing liabilities.
The Group has a number of financing facilities which are guaranteed by Fairfax Media Limited and are covered by deeds of
negative pledge.
(B) BaNK BORROWiNGS
Current
A NZ$50 million revolving committed cash advance facility is available to the Group until December 2011. At 26 June 2011, NZ$25
million was drawn down (2010: NZ$25 million).
A $1,155.6 million syndicated bank facility is available to the Group until periods ranging from April 2013 to April 2015. At 26 June 2011,
$395 million was drawn (2010: $125 million). The interest rate for the drawings under this facility is the applicable bank bill rate plus
a credit margin.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
77
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(C) SENiOR NOtES
The Group issued Senior Notes in the US private placement market with a principal value of US$230 million (A$289.8 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
cross-currency swaps. This issue of Senior Notes comprises maturities ranging from January 2014 to January 2019. In January 2011
Senior Notes of US$50 million were repaid. The weighted average maturity of the issue is approximately 4.7 years. The applicable
cross-currency swap credit margin includes the cost 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 principal value of US$250 million (A$308.2 million)
in July 2007 comprising maturities ranging from July 2014 to July 2017. The weighted average maturity of this issue is approximately
4.2 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 principal on the Senior Notes are payable in US dollars and were swapped into fixed
and floating rate Australian dollars via cross-currency swaps. An additional 1.00% p.a. step up margin is payable on the coupons,
effective from 10 July 2009.
(D) OtHER LOaNS aND fiNaNCE LEaSE LiaBiLitY
The Chullora printing facility in Sydney is partially financed by a finance lease facility and loans with a maturity date of September 2015.
There is a finance lease of $18.4 million (2010: $22.0 million), which was entered into in February 1996. There is also principal and
interest outstanding of $11.6 million (2010: $15.1 million) in the form of a fixed rate loan with an established repayment schedule.
The CPI indexed annuity loan of $36.6 million outstanding at June 2010 was repaid in full on 30 September 2010 in accordance
with the early redemptive provisions. The finance lease facility and fixed rate loan will continue to maturity in September 2015.
(E) MEDiuM tERM NOtES (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. In May 2009, the Group repurchased and cancelled $32.3 million of the outstanding MTNs.
After the Group’s accounting year end on 26 June 2011, the remaining $167.7 million of MTNs were repaid on 27 June 2011.
(f) EuROBONDS
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 6.25% p.a. payable annually in arrears (2010: 6.25%). The interest and principal on the notes are payable in Euro and were swapped
into fixed rate Australian dollars via cross-currency swaps.
78
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
19. Provisions
Current
Employee benefits
Defamation
Property
Redundancy
Other
total current provisions
Non-current
Employee benefits
Property
Other
total non-current provisions
26 June 2011
$’000
27 June 2010
$’000
103,232
101,558
6,283
346
30,703
246
3,341
599
4,183
267
140,810
109,948
13,527
36,821
48
50,396
12,812
34,936
258
48,006
RECONCILIATION
Reconciliations of the carrying amount of each class of provision, other than employee benefits, during the financial year are set out below:
at 27 June 2010
Current
Non-current
total provisions, excluding employee benefits
Period ended 26 June 2011
Balance at beginning of the financial year
Additional provision
Acquisition of controlled entities
Utilised
Exchange differences
Defamation
$’000
Property
$’000
Redundancy
$’000
3,341
–
599
34,936
3,341
35,535
4,183
–
4,183
3,341
3,824
–
(873)
(9)
35,535
3,149
23
4,183
33,608
–
(1,531)
(7,126)
(9)
38
Balance at end of the financial year
6,283
37,167
30,703
at 26 June 2011
Current
Non-current
6,283
346
30,703
–
36,821
–
total provisions, excluding employee benefits
6,283
37,167
30,703
Other
$’000
267
258
525
525
545
–
(776)
–
294
246
48
294
NATURE AND TIMING OF PROVISIONS
(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(S)(i).
(ii) Defamation
From time to time, entities in the Group are sued for defamation and similar matters in the ordinary course of business. The defamation
provision maintained is with respect to various 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 impact on the Group.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
79
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(iii) Property
The provision for property costs is in respect of make good provisions, deferred lease incentives and onerous lease provisions.
The make good provisions and deferred lease incentives are amortised over the shorter of the term of the lease or the useful life
of the assets, being up to 20 years.
(iv) Redundancy
The provision is in respect of amounts payable in connection with redundancy and includes termination benefits, on-costs and
outplacement services.
(v) Other
Other provisions includes various other costs relating to the business.
20. Pension assets and liabilities
SUPERANNUATION PLAN
The Group contributes to defined contribution and defined benefit plans which provide benefits to employees and their dependants
on retirement, disability or death. All defined benefit plans are closed to new members.
The superannuation arrangements in Australia are managed in a sub-plan of the Mercer Super Trust, called Fairfax Media Super.
The Trustee of the Trust is Mercer Investment Nominees Limited. The superannuation arrangements in New Zealand are managed
by AoN Consulting 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 have defined contribution plans and the Fairfax
NZ Retirement Fund has a defined benefit section.
The defined contribution plans receive fixed contributions from employees and from Group companies and the Group’s legally
enforceable obligation is limited to these contributions. The defined benefit plans receive employee contributions plus Group company
contributions at rates recommended by the plans’ actuaries.
The following sets out details in respect of the defined benefit plans only and in the case of the Fairfax NZ Retirement Fund,
excludes $52.1 million (2010: $50.9 million) of defined contribution assets and entitlements.
(a) BaLaNCE SHEEt
The amounts recognised in the balance sheet are determined as follows:
Pension asset
Pension liabilities
Net pension liabilities
Present value of the defined benefit obligation
Fair value of defined benefit plan assets
Net pension liabilities
Note
26 June 2011
$’000
27 June 2010
$’000
260
(3,595)
(3,335)
(22,644)
19,309
–
(4,800)
(4,800)
(21,512)
16,712
(3,335)
(4,800)
(B)
(C)
(B) RECONCiLiatiON Of tHE PRESENt vaLuE Of DEfiNED BENEfit OBLiGatiON
Balance at the beginning of the financial year
21,512
20,560
Current service cost
Interest cost
Contributions by employees
Actuarial (gains) /losses
Benefits paid
Taxes, premiums and expenses paid
Exchange differences on foreign plans
Balance at the end of the financial year
80
952
979
248
(725)
(56)
(243)
(23)
954
944
23
1,643
(2,513)
(106)
7
22,644
21,512
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(C) RECONCiLiatiON Of tHE faiR vaLuE Of PLaN aSSEtS
Balance at the beginning of the financial year
Expected return on plan assets
Actuarial gains
Contributions by Group companies and employees
Benefits paid
Taxes, premiums and expenses paid
Exchange differences on foreign plans
Balance at the end of the financial year
(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
26 June 2011
$’000
27 June 2010
$’000
16,712
1,168
660
1,081
(56)
(243)
(13)
17,875
1,194
657
(408)
(2,512)
(106)
12
19,309
16,712
952
979
954
944
(1,168)
(1,194)
763
704
1,636
2,019
(E) CatEGORiES Of PLaN aSSEtS
The major categories of plan assets as a percentage of the fair value of the total defined benefit plan assets are as follows:
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
26 June 2011
%
27 June 2010
%
9
20
33
28
5
5
2011
%
5.2
5.9
4.0
7
21
31
28
8
5
2010
%
5.1
5.9
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 5.9% p.a. rate of return, net of tax and expenses (2010: 5.9% p.a).
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
81
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(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 2008
by Mercer Human Resource Consulting Pty Ltd. The last actuarial assessment of Fairfax NZ Retirement Fund was carried out as at
1 April 2008 by AoN Consulting New Zealand Limited. Fairfax New Zealand Superannuation Fund and Fairfax NZ Senior Executive
Superannuation Scheme are defined contribution funds and do 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.
Total employer contributions expected to be paid by Group companies for the 2012 financial year are $758,000.
(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
$3.3 million at the most recent financial position of the plans, being 1 July 2008 for Australia and 1 April 2008 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 2008 for Australia and 1 April 2008 for New Zealand), which would have a material
impact on the overall financial position of the defined benefit plan.
(i) HiStORiC SuMMaRY
Defined benefit plan obligation
Plan assets
Surplus/(deficit)
2007
$’000
2008
$’000
2009
$’000
2010
$’000
(20,048)
33,429
(24,254)
29,796
(20,560)
17,875
(21,512)
16,712
13,381
5,542
(2,685)
(4,800)
Experience adjustments arising on plan liabilities
Experience adjustments arising on plan assets
(2,032)
(1,038)
7,678
(3,132)
(1,513)
6,283
1,551
(756)
2011
$’000
(22,644)
19,309
(3,335)
(490)
(585)
26 June 2011
$’000
27 June 2010
$’000
3,686
3,686
73
14,760
14,833
–
–
2,575
–
2,575
21. Other financial assets
Current
Loan receivable
total current other financial assets
Non-current
Shares in unlisted entities – at fair value
Loan receivable
total non-current other financial assets
82
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
22. Contributed equity
Ordinary Shares
2,351,955,725 ordinary shares fully paid
(2010: 2,351,955,725)
unvested Employee incentive Shares
11,723,026 unvested employee incentive shares
(2010: 8,411,794)
Stapled Preference Shares (SPS)
Nil stapled preference shares (2010: 3,000,000)
Debentures
281 debentures fully paid (2010: 281)
total contributed equity
* Amount is less than $1000.
Note
26 June 2011
$’000
27 June 2010
$’000
(A)
4,667,944
4,667,944
(B)
(21,696)
(18,430)
(C)
(D)
–
293,163
*
*
4,646,248
4,942,677
RECONCILIATIONS
Reconciliations of each class of contributed equity at the beginning and end of the current financial year are set out below:
(a) ORDiNaRY SHaRES
Balance at beginning of the financial year
Share issue costs
Note
26 June 2011
No. of shares
27 June 2010
No. of shares
26 June 2011
$’000
27 June 2010
$’000
2,351,955,725 2,351,955,725
4,667,944
4,667,990
–
–
–
(46)
Balance at end of the financial year
2,351,955,725 2,351,955,725
4,667,944
4,667,944
(B) uNvEStED EMPLOYEE iNCENtivE SHaRES
Balance at beginning of the financial year
Share acquisition – 10 December 2010
Tax benefit recognised directly in equity
8,411,794
3,311,232
–
8,411,794
(18,430)
(33,031)
–
–
(4,666)
1,400
–
14,601
Balance at end of the financial year
11,723,026
8,411,794
(21,696)
(18,430)
(C) StaPLED PREfERENCE SHaRES (SPS)
Balance at beginning of the financial year
3,000,000
3,000,000
Share repurchase – 29 April 2011
(3,000,000)
Share issue costs transferred to reserves
23
Balance at end of the financial year
(D) DEBENtuRES
Balance at beginning of the financial year
Balance at end of the financial year
total contributed equity
* Amount is less than $1000.
–
–
281
281
293,163
(300,000)
6,837
293,163
–
–
–
–
3,000,000
–
293,163
281
281
*
*
*
*
4,646,248
4,942,677
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
83
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
TERMS AND CONDITIONS OF CONTRIBUTED EQUITY
(a) Ordinary Shares
Ordinary shares entitle the holder to receive dividends as declared and, in the event of winding up the Company, to participate in the
proceeds from the sale of all surplus assets 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.
Dividend Reinvestment Plan
Fairfax Media Limited introduced a Dividend Reinvestment Plan (DRP) to eligible shareholders during the financial year ended
30 June 2004.
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 costs. Shares are issued and/or transferred to DRP participants at a predetermined price, less any
discount that the directors may elect to apply from time to time. During the financial year ended 26 June 2011, no ordinary shares
(2010: nil) were issued under the terms of the DRP.
(B) unvested Employee incentive 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 share 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 discretion 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 preference
shareholders. The distribution rate is calculated as the sum of the six month bank bill swap rate and a margin. Distributions are
non-cumulative. Total distribution payments in the year to SPS holders was $19.8 million (2010: $15.8 million). Of the total distribution,
$17.3 million has been classified as dividends paid (refer Note 6), with the remaining $2.5 million classified as finance costs. The
classification is consistent with the reclassification of the SPS from equity to debt during the period.
On 29 April 2011, all of the SPS were repurchased in accordance with their terms of issue for a repurchase amount of $100 per share.
(D) Debentures
Debenture holders terms and conditions are disclosed in Note 1(T).
84
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
23. Reserves
Asset 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
Acquisition reserve
General reserve
total reserves
(a) asset revaluation reserve
Balance at beginning of the financial year
Revaluation of available for sale investments
Tax effect on available for sale investments
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 reserve
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
Tax effect on share-based payment expense
Tax expense recognised directly in reserve
Balance at end of the financial year
(f) acquisition reserve
Balance at beginning of the financial year
Acquisition of non-controlling interest
Recognition of put option on non-controlling interest
Balance at end of the financial year
Note
26 June 2011
$’000
27 June 2010
$’000
(A)
(B)
(C)
(D)
(E)
(F)
(G)
506
1,833
(233,884)
(140,969)
1,220
5,167
6,971
563
(6,837)
10,946
(4,037)
5,099
–
–
(226,294)
(127,128)
1,833
(1,606)
279
506
32
2,082
(281)
1,833
(140,969)
(173,662)
(92,915)
32,693
(233,884)
(140,969)
10,946
(13,894)
4,168
1,220
(4,037)
13,148
(3,944)
5,167
5,099
2,675
(803)
–
6,971
–
(4,637)
5,200
563
7,286
4,522
(862)
10,946
(1,024)
(4,272)
1,259
(4,037)
3,987
3,297
(989)
(1,196)
5,099
–
–
–
–
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
85
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(G) General reserve
Balance at beginning of the financial year
Share issue costs transferred from contributed equity
Balance at end of the financial year
NATURE AND PURPOSE OF RESERVES
Note
22
26 June 2011
$’000
27 June 2010
$’000
–
(6,837)
(6,837)
–
–
–
(a) asset revaluation reserve
The asset revaluation reserve is used to record 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).
(B) foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising on translation of foreign controlled entities
and associated funding of foreign controlled entities, as described in Note 1(F).
(C) Cashflow hedge reserve
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 described in Note 1(N). Refer to further disclosures at Note 15.
(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 further disclosures at Note 15.
(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(S)(ii).
(f) acquisition reserve
The acquisition reserve is used to record differences between the carrying value of non-controlling interests and the consideration
paid/received, where there has been a transaction involving non-controlling interests that does not result in a loss of control.
The reserve is attributable to the equity of the parent.
(G) General reserve
The general reserve is used to record Stapled Preference Share (SPS) issue costs that have been transferred from contributed equity.
The SPS were repurchased on 29 April 2011.
86
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
24. Retained profits
Balance at beginning of the financial year
Net (loss)/profit for the financial year
Actuarial gain/(loss) on defined benefit plans, net of tax
Tax benefits recognised directly in equity
total available for appropriation
Dividends paid
Balance at end of the financial year
25. Non-controlling interest
Interest in:
Contributed equity
Reserves
Retained profits
Balance at end of the financial year
RECONCILIATION
Balance at beginning of the financial year
Acquisition of controlled entities
Acquisition of non-controlling interest in previously controlled entities
Share of profit for the period
Dividends paid to non-controlling interest
Balance at end of the financial year
Note
26 June 2011
$’000
27 June 2010
$’000
481,978
(390,861)
967
5,191
237,604
282,115
(741)
4,770
97,275
523,748
6
(85,511)
(41,770)
11,764
481,978
26 June 2011
$’000
27 June 2010
$’000
3,407
4,484
(901)
6,990
9,211
883
(3,228)
1,194
(1,070)
6,990
1,783
7,679
(251)
9,211
9,445
–
–
262
(496)
9,211
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
87
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
26. Earnings per share
Basic (loss)/earnings per share
After significant items less SPS dividend (net of tax)
Diluted (loss)/earnings per share
After significant items (net of tax)
Earnings reconciliation – basic
Net (loss)/profit attributable to members of the Company
Less Dividends on SPS (net of tax)
Basic (loss)/earnings after significant items less SPS dividend
Earnings reconciliation – diluted
Net (loss)/profit attributable to members of the Company
Weighted average number of ordinary shares used in calculating basic EPS
SPS
Weighted average number of ordinary shares used in calculating diluted EPS
27. Commitments
OPERATING LEASE COMMITMENTS – GROUP AS LESSEE
26 June 2011
¢ per share
27 June 2010
¢ per share
(17.0)
11.5
(17.0)
11.0
26 June 2011
$’000
27 June 2010
$’000
(390,861)
(10,034)
282,115
(11,780)
(400,895)
270,335
(390,861)
282,115
26 June 2011
Number
’000
27 June 2010
Number
’000
2,351,956
2,351,956
166,530
212,128
2,518,486
2,564,084
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:
Within one year
Later than one year and not later than five years
Later than five years
total operating lease commitments
26 June 2011
$’000
27 June 2010
$’000
41,850
135,606
271,331
43,238
129,939
313,970
448,787
487,147
The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
These non-cancellable leases have remaining terms of between five and twenty years. All property leases include a clause to enable
upward revision of rental charge on an annual basis according to prevailing market conditions.
88
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
FINANCE LEASE COMMITMENTS – GROUP AS LESSEE
The Group has a finance lease for property, plant and machinery with a carrying amount of $30.1 million (2010: $31.3 million). The lease
has a remaining term of four years (2010: five years) and a weighted average interest rate of 13.4% (2010: 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
Note
26 June 2011
$’000
27 June 2010
$’000
5,076
16,496
–
21,572
(3,147)
18,425
3,842
14,583
18,425
5,076
20,303
1,269
26,648
(4,644)
22,004
3,579
18,425
22,004
18(D)
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 rent
payable over the remaining lease term of four years which is subject to such movements amounts to $18.3 million (2010: $21.6 million).
CAPITAL COMMITMENTS
At 26 June 2011, 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:
Within one year
Later than one year and not later than five years
Later than five years
total capital commitments
28. Contingencies
26 June 2011
$’000
27 June 2010
$’000
2,506
7,772
–
–
–
–
2,506
7,772
GUARANTEES
Under the terms of ASIC Class Order 98/1418 (as amended), the Company and certain controlled entities (refer Note 29),
have guaranteed any deficiency of funds if any entity to the class order is wound-up. No such deficiency exists at balance date.
DEFAMATION
From time to time, entities in the Group are sued for defamation and similar matters in the ordinary course of business. At the date
of this report, there were no legal actions against the consolidated entity, other than those recognised at Note 19, that are expected
to result in a material impact.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
89
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
29. Controlled entities
The following entities were controlled as at the end of the financial year:
Fairfax Media Limited
CONTROLLED ENTITIES
5AU Broadcasters Proprietary Limited
ACN 074 162 888 Pty Ltd (in Liq)
ACN 083 365 799 Pty Ltd (in Liq)
ACN 101 806 302 Pty Ltd
Agricultural Publishers Pty Limited
Associated Newspapers Ltd
Aussie Destinations (1) Pty Ltd
Australian Property Monitors Pty Limited
AZXC Pty Ltd
Border Mail Printing Pty Ltd
Bridge Printing Office Pty Limited
Bundaberg Broadcasters Pty Ltd
Bundaberg Narrowcasters Pty Ltd
Carpentaria Newspapers Pty Ltd
Central Districts Field Days Limited
Commerce Australia Pty Ltd
Communication Associates Limited
Country Publishers Pty Ltd
CountryCars.com.au Pty Ltd
Creative House Publications Pty Ltd
Cudgegong Newspapers Pty Ltd
David Syme & Co Pty Limited
Debt Retrieval Agency Limited
Esperance Holdings Pty Ltd (in Liq)
Examiner Properties Pty Ltd
F@rming Online Pty Ltd (in Liq)
Fairfax Business Media (South Asia) Pte Limited
Fairfax Business Media Pte Limited
Fairfax Business Media Sdn. Bhd.
Fairfax Community Network Limited
Fairfax Community Newspapers Pty Limited
Fairfax Corporation Pty Limited
Fairfax Digital Australia & New Zealand Pty Ltd
Fairfax Digital Limited
Fairfax Group Finance New Zealand Pty Ltd
Fairfax Media (UK) Limited
Fairfax Media Group Finance Pty Limited
Fairfax Media Management Pty Limited
Fairfax Media Operations Limited
Fairfax Media Operations Pty Ltd
Fairfax Media Publications Pty Limited
Fairfax New Zealand Finance Pty Ltd
Fairfax New Zealand Holdings Limited
90
Notes
(a)
Country of
Incorporation
Australia
Ownership interest
2011
%
2010
%
(a)
(c)
(c)
(a)
(a)
(a)
(b)
(a)
(b)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(c)
(a)
(c)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(f)
(e)
(a)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Singapore
Singapore
Malaysia
Australia
Australia
Australia
Australia
Australia
New Zealand
United Kingdom
Australia
Australia
New Zealand
Australia
Australia
Australia
New Zealand
100
–
–
100
100
100
68
100
68
100
100
100
100
100
100
100
100
100
100
60
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
48
100
48
100
100
100
100
100
100
75
100
100
100
60
100
100
100
100
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 26 JUNE, 2011
Fairfax New Zealand Limited
Fairfax News Network Pty Limited
Fairfax Print Holdings Pty Limited
Fairfax Printers Pty Limited
Fairfax Radio Network Pty Limited
Fairfax Radio Syndication Pty Limited
Fairfax Regional Printers Pty Limited
Fantasports Australia Pty Ltd (in Liq)
Farm Progress Companies, Inc
Farm Progress Holding Co, Inc
Farm Progress Insurance Services, Inc
Financial Essentials Pty Ltd
Find a Babysitter Pty Limited
Golden Mail Pty Limited
Harris and Company Pty Limited
Harris Enterprises Pty Ltd
Harris Print Pty Ltd
Harris Publications Pty Ltd (in Liq)
Hunter Distribution Network Pty Ltd
Illawarra Newspaper Holdings Pty Ltd
Notes
(a)
(a)
(a)
(a)
(a)
(a)
(c)
(a)
(a)
(a)
(a)
(a)
(c)
(a)
(a)
Country of
Incorporation
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
United States
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Indiana Prairie Farmer Insurance Services, Inc
United States
Integrated Publication Solutions Pty Ltd
(a) (d)
Internet Marketing Australia Pty Ltd
Internet Products Sales & Services Pty Ltd
InvestSMART Financial Services Pty Ltd
John Fairfax & Sons Ltd
John Fairfax (US) Limited
John Fairfax Limited
Lanson Investments Pty Ltd
Leeton Newspapers Pty Ltd
Lime Digital Pty Limited
Mayas Pty Ltd
Mayas Unit Trust
Media Investments Pty Ltd
Melbourne Community Newspapers Pty Ltd (in Liq)
Merredin Advertiser Pty Ltd (in Liq)
Micosh Pty Ltd
Miller Publishing Co, Inc
Milton Ulladulla Publishing Co. Pty Ltd
Mistcue Pty Limited
Mountain Press Pty Ltd
Newcastle Newspapers Pty Ltd
Newsagents Direct Distribution Pty Ltd
North Australian News Pty Ltd
Northern Newspapers Pty Ltd
NZ Rural Press Limited
Occupancy Pty Ltd
Old Friends Limited
Ollority Pty Ltd
Online Marketing Group Pty Ltd
(b)
(b)
(a)
(a)
(a)
(a)
(c)
(c)
(a)
(a)
(a) (g)
(a)
(a)
(h)
(b)
(b)
Australia
Australia
Australia
Australia
Australia
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
New Zealand
Australia
Australia
Ownership interest
2011
%
100
100
100
100
100
100
100
–
100
100
100
100
100
66
100
100
100
–
100
100
100
100
68
68
100
100
100
100
100
100
100
100
100
100
–
–
100
100
100
65
88
100
100
100
100
100
90
100
68
68
2010
%
100
100
100
100
100
100
100
100
100
100
100
100
100
66
100
100
100
100
100
100
100
100
48
48
100
100
100
100
100
100
100
100
100
100
100
100
100
100
60
65
88
100
–
100
100
100
–
100
48
48
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
91
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
Online Services International Limited
OSF Australia Pty Limited
Fairfax Media Productions UK Limited
Personal Investment Direct Access Pty Limited
Port Lincoln Times Pty Ltd
Port Stephens Publishers Pty Ltd
Port Stephens Publishers Trust
Queensland Community Newspapers Pty Limited
Radio 1278 Melbourne Pty Limited
Radio 2UE Sydney Pty Ltd
Radio 3AW Melbourne Pty Limited
Radio 4BC Brisbane Pty Limited
Radio 4BH Brisbane Pty Limited
Radio 6PR Perth Pty Limited
Radio 96FM Perth Pty Limited
Regional Press Australia Pty Limited
Regional Printers Pty Limited
Regional Publishers (Tasmania) Pty Ltd
Regional Publishers (Victoria) Pty Limited
Regional Publishers (Western Victoria) Pty Limited
Regional Publishers Pty Ltd
Riverina Newspapers (Griffith) Pty Ltd
RP Interactive Pty Ltd (in Liq)
RSVP.com.au Pty Limited
Rural Press (North Queensland) Pty Limited (in Liq)
Rural Press (USA) Inc
Rural Press (USA) Limited
Rural Press Pty Ltd
Rural Press Printing (Victoria) Pty Limited
Rural Press Printing Pty Limited
Rural Press Queensland Pty Ltd
Rural Press Regional Media (WA) Pty Limited
Rural Press Share Plan Pty Limited (in Liq)
Rural Publishers Pty Limited
Southern Weekly Partnership
S.A. Regional Media Pty Limited
Satellite Interactive Marketing Pty Limited (in Liq)
Satellite Music Australia Pty Limited
Stayz Limited
Stayz Pty Limited
Stock Journal Publishers Pty Ltd
Suzannenic Pty Limited
The Advocate Newspaper Proprietary Limited
The Age Company Pty Ltd
The Age Print Company Pty Ltd
The Barossa News Pty Limited
The Border Morning Mail Pty Ltd
The Border News Partnership
The Examiner Newspaper Pty Ltd
The Federal Capital Press of Australia Pty Limited
Notes
(i)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(c)
(a)
(c)
(a)
(a)
(a)
(a)
(a)
(c)
(a)
(a)
(c)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
Country of
Incorporation
New Zealand
Australia
United Kingdom
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
92
Ownership interest
2011
%
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
51
100
–
100
90
90
100
100
100
100
100
100
100
63
100
100
2010
%
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
51
100
100
100
100
100
100
100
100
100
100
100
100
63
100
100
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
The Independent News Pty Ltd
The Murrumbidgee Irrigator Pty Ltd
The Printing Press Pty Limited (in Liq)
TheVine.com.au Pty Ltd
The Wagga Daily Advertiser Pty Ltd
The Warrnambool Standard Pty Ltd
The Weather Company Pty Limited
Trade Me Limited
Tricom Group Pty Ltd
Trade Me Travel Trustees Limited
West Australian Rural Media Pty Ltd
West Australian Primary Industry Press Pty Ltd
Western Magazine Pty Ltd
Western Magazine Settlement Trust
Whyalla News Properties Pty Ltd
Winbourne Pty Limited
Notes
(a)
(c)
(a)
(a)
(a)
(a)
(a)
(a)
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
2011
%
100
100
–
70
100
100
75
100
100
100
100
100
75
75
100
100
2010
%
100
100
100
70
100
100
75
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 2007 (as
varied from time to time) 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) The ownership interest in these entities was increased from 48% to 68% on 23 November 2010. As a result, these entities are now
controlled by the Group.
(c) These entities were liquidated or amalgamated and subsequently deregistered during the financial year.
(d) This company was formerly called Digital Radio Australia Pty Limited.
(e) This company was formerly called Go East Furniture Company Pty Ltd.
(f)
(g) Acquired on 9 December 2010.
(h) Acquired on 11 March 2011.
(i) This company was formerly called Oxford Scientific Films Limited.
Incorporated on 22 November 2010.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
93
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
DEED OF CROSS GUARANTEE
Fairfax Media Limited and certain wholly-owned entities (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 26 June 2011 and consolidated balance sheet as at 26 June 2011, comprising
the members of the Closed Group after eliminating all transactions between members are set out below:
(a) BaLaNCE SHEEt
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Held to maturity investments
Assets held for sale
Other financial assets
total current assets
Non-current assets
Receivables
Investments accounted for using the equity method
Available for sale investments
Intangible assets
Property, plant and equipment
Derivative assets
Deferred tax assets
Other financial 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
Provisions
Pension liabilities
total non-current liabilities
total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
total equity
94
26 June 2011
$’000
27 June 2010
$’000
136,644
296,131
33,642
–
2,342
3,686
59,430
310,909
32,502
11,591
3,176
–
472,445
417,608
647,574
720,233
32,377
2,633
42,734
4,239
3,768,533
3,962,668
626,056
663,629
27,839
8,362
28,065
23,604
1,052,167
1,397,236
6,165,541
6,842,408
6,637,986
7,260,016
202,998
647,407
80,200
120,964
39,828
205,777
269,672
12,567
96,874
43,425
1,091,397
628,315
865,295
100,513
47,486
3,595
1,194,713
85,093
45,864
4,779
1,016,889
1,330,449
2,108,286
1,958,764
4,529,700
5,301,252
4,646,248
4,942,677
(30,958)
(85,590)
(46,640)
405,215
4,529,700
5,301,252
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(B) iNCOME StatEMENt
Total revenue
Share of net profits of associates and joint ventures
Expenses before finance costs
Finance costs
Net (loss)/profit from operations before income tax expense
Income tax expense
Net (loss)/profit from operations after income tax expense
26 June 2011
$’000
27 June 2010
$’000
1,989,258
1,901,430
2,845
1,709
(2,256,837)
(1,494,106)
(39,552)
(52,760)
(304,286)
(64,045)
356,273
(84,562)
(368,331)
271,711
30. Acquisition and disposal of controlled entities
(a) aCQuiSitiONS
The Group gained control over the following entities or businesses during the year:
Entity or business acquired
Principal activity
Date of
Acquisition
Ownership
Interest
Country Connect Pty Limited
Naracoorte Herald Pty Limited
South East Coastal Leader Pty Limited
Border Chronicle Pty Limited
Commerce Australia Pty Ltd
Web design and livestock marketing
20 September 2010
Newspaper publishing
Newspaper publishing
Newspaper publishing
Online real estate website
1 October 2010
1 October 2010
1 October 2010
20 October 2010
(i)
(ii)
(iii)
(iv)
(v)
Online Marketing Group Pty Limited
E-commerce: Online marketing
23 November 2010
68.2% (vi)
AZXC Pty Ltd
E-commerce: Online marketing
Internet Products Sales & Services Pty Ltd
E-commerce: Online marketing
Ollority Pty Ltd
E-commerce: Online marketing
Internet Marketing Australia Pty Ltd
E-commerce: Online marketing
Aussie Destinations (1) Pty Ltd
E-commerce: Online marketing
Newsagents Direct Distribution Pty Ltd
Distribution
TenderLink.com Limited
Kiama Independent
Lake Times
Occupancy Pty Limited
Online tender notification service
Newspaper publishing
Newspaper publishing
Milton Ulladulla Publishing Co Pty Limited
Newspaper publishing
23 June 2011
Online accommodation advertising
11 March 2011
23 November 2010
23 November 2010
23 November 2010
23 November 2010
23 November 2010
9 December 2010
31 January 2011
28 February 2011
28 February 2011
(vii)
(vii)
(vii)
(vii)
(vii)
100%
(viii)
(ix)
(x)
100%
(xi)
(i) The business of Country Connect Pty Limited was acquired including the Country Connect trademark and the www.countryconnect.com.au
domain name.
(ii) The business of Naracoorte Herald Pty Limited was acquired including the Naracoorte Herald and Naracoorte Herald Extra mastheads.
(iii) The business of South East Coastal Leader Pty Limited was acquired including the South East Coastal Leader and Summer Holiday
Guide mastheads.
(iv) The business of Border Chronicle Pty Limited was acquired including the Border Chronicle masthead.
(v) On 14 March 2007, the Group gained control over Commerce Australia Pty Ltd via the acquisition of a 75% interest in this company.
On 20 October 2010, the Group acquired the remaining 25% interest in this company resulting in an ownership interest of 100%.
(vi) The Group acquired an additional 20.2% interest in this company during the period, by way of a convertible note settlement. An interest
of 48% had previously been acquired in October 2008. As a result the company is now controlled by the Group and is no longer
accounted for as a joint venture (refer Note 11).
(vii) This is a 100% owned subsidiary of Online Marketing Group Pty Limited. Refer (vi) above.
(viii) The business of TenderLink.com Limited was acquired including the www.tenderlink.com domain name.
(ix) The business of Kiama Independent was acquired including the Kiama Independent masthead and the www.kiamaindependent.com.au
domain name.
(x) The business of Lake Times was acquired including the Lake Times masthead and www.laketimes.com.au domain name.
(xi) The Group acquired the remaining 40% interest in this company resulting in an ownership interest of 100%.
For additional information refer to Note 31.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
95
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(B) DiSPOSaLS
The Group disposed of its interests in the following businesses during the year:
Entity or business disposed
Principal activity
Connect 4
OSF Limited
Financial information services
Television production
Date of Disposal
1 September 2010
8 June 2011
Ownership
Interest
(i)
(ii)
(i) The business assets of Connect 4 were disposed, including the Connect 4 trademark and the www.connect4.com.au domain name.
(ii) The business assets of OSF Limited were disposed.
31. Business combinations
ACQUISITIONS DURING THE PERIOD
Acquisitions, none of which were individually significant to the consolidated entity, are listed in Note 30(A).
The fair values of the identifiable assets and liabilities acquired were:
value of net assets acquired
Cash and cash equivalents
Receivables
Inventories
Property, plant and equipment
Intangible assets*
Deferred tax assets
total assets
Payables
Provisions
Current tax liabilities
Deferred tax liabilities
total liabilities
value of identifiable net assets
Non-controlling interest in net assets**
Goodwill arising on acquisition
total identifiable net assets and goodwill attributable to the group
Purchase consideration
Cash paid
Contingent consideration liability
Shares issued at fair value
Fair value of equity interest in joint venture prior to acquisition of controlling interest
Fair value of derivatives (call and put options) issued
Conversion of convertible notes to shares
total purchase consideration
Net cash outflow on acquisition
Net cash acquired with subsidiary
Cash paid
Net cash outflow
Recognised
on acquisition
$’000
2,256
1,542
50
1,060
23,580
47
28,535
6,454
534
177
576
7,741
20,795
(883)
48,387
68,299
30,061
8,727
11,221
11,002
4,700
2,588
68,299
2,256
(30,061)
(27,805)
* The fair values of intangible assets acquired for Occupancy Pty Limited have been determined provisionally and based upon the best
information available as initial accounting was not complete at the reporting date.
** The value of the non-controlling interest was determined based on the 20.2% interest in the fair value of the identifiable net assets of Online
Marketing Group Pty Ltd as at the acquisition date.
96
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
Direct costs of $559,050 were incurred in relation to the above acquisitions. These costs are included in other expenses in the
consolidated income statement.
The consolidated income statement includes sales revenue and net profit for the year ended 26 June 2011 of $9,487,490 and $536,478
respectively, as a result of acquisitions of business combinations made during the reporting period. Had the acquisitions occurred at
the beginning of the reporting period, the consolidated income statement would have included revenue and profit of $19,779,803 and
$964,656 respectively.
Goodwill of $48,387,057 includes synergies expected to be achieved as a result of combining the acquired businesses with the rest
of the Group. The acquired workforces and future growth opportunities are also key factors contributing to the goodwill acquired during
the reporting period.
Customer relationships with various suppliers have been acquired as part of the business acquisitions made during the reporting period.
These have been subject to an external third party valuation and the fair value has been recognised in the net assets acquired and will
be subject to annual impairment testing in future periods.
Included in the business acquisitions made during the reporting period were mastheads, brand, trade and domain names.
Under the terms of a number of the purchase agreements, the Group must pay former owners of the acquired businesses additional
cash payments based upon various performance metrics including specific revenue targets for the 2011 fiscal year. The potential
undiscounted amounts of all future payments that may be required is $8,727,164, which is recorded in trade and other payables in
Note 17. Future changes in estimates of the contingent consideration will be recorded directly in the consolidated income statement
in the periods in which they occur.
Under the terms of one of the purchase agreements, call and put options have been issued to the vendors by the Group. The fair value
of the call and put options as at 26 June 2011 was $4,700,000 which is recorded in derivative financial instruments in Note 15.
32. Employee benefits
(a) NuMBER Of EMPLOYEES
As at 26 June 2011 the consolidated entity employed 8,806 full-time employees (2010: 8,778) and 1,825 part-time and casual
employees (2010: 1,801). This includes 2,117 (2010: 2,164) full-time employees and 378 (2010: 378) part-time and casual employees
in New Zealand.
(B) EMPLOYEE SHaRE PLaNS
The Company had three employee share plans during the period. The plans have been reopened with some changes after a suspension
now that the new tax rules for employee share plans have been finalised. The terms of each plan are set out below:
1. fairfax Exempt Employee Share Plan
This plan is open to all Australian employees with at least twelve months service with the consolidated entity in Australia, whose
adjusted taxable income is $180,000 per annum or less. Under this Plan, participants may salary sacrifice up to $1,000 of pre tax salary
per annum for the purchase of issued Fairfax shares at the market price on the open market of the ASX. The shares are purchased by
an independent trustee company on predetermined dates.
2. fairfax Deferred Employee Share Plan
This plan is open to all Australian employees with at least twelve months service with the consolidated entity in Australia. Under this
Plan, participants may salary sacrifice a minimum of $1,000 and up to a maximum of $5,000 of salary per annum for the purchase
of issued Fairfax shares at the market price on the open market of the ASX. The shares are purchased by an independent trustee
company on predetermined dates. Participants must nominate a ’lock’ period of either 3, 5 or 7 years during which their shares must
remain in the plan, unless they leave the consolidated entity in Australia.
3. Long term 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 nominally allocated
Fairfax shares, which are beneficially held in a trust. The shares will vest if the eligible employee remains in employment three years
from the date the nominal shares are allocated and certain performance hurdles are satisfied. If the allocation does not vest at the
end of year three, a re-test of the performance hurdles occurs 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.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
97
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
33. 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:
26 June 2011
$
27 June 2010
$
1,174,200
1,435,000
231,750
329,000
27,256
–
1,433,206
1,764,000
276,510
111,182
337,834
8,240
170,030
316,386
–
8,929
20,703
2,200
–
–
580,625
671,389
2,013,831
2,435,389
–
–
–
–
–
14,132
–
14,132
2,013,831
2,449,521
audit services
Ernst & Young Australia
Audit and review of financial reports
Affiliates of Ernst & Young Australia
Audit and review of financial reports
Non Ernst & Young Firms
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
Non Ernst & Young Firms
Regulatory and contractually required audit
Other
total other assurance services
total remuneration for assurance services
Non assurance services
Ernst & Young Australia
Other services
Affiliates of Ernst & Young Australia
Other services
Non Ernst & Young Firms
Other services
total non assurance services
total remuneration of auditors
98
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
34. Director and executive disclosures
(a) EQuitY iNStRuMENt DiSCLOSuRES RELatiNG tO KEY MaNaGEMENt PERSONNEL
(i) Shareholdings
2011
Directors
RC Corbett
JB Fairfax*
N Fairfax
B McCarthy*
G Hywood
S McPhee
S Morgan
L Nicholls
R Savage
P Young
M Anderson
Key management personnel
B Cassell
G Hambly
Total
2010
Directors
RC Corbett
JB Fairfax
N Fairfax
B McCarthy
S McPhee
S Morgan
L Nicholls
R Savage
P Young
Balance
27 June 2010
Net change
Other
Balance
26 June 2011
Post year-end
acquisitions
Post year-end
disposals
Post year-end
balance
99,206
235,426,781
3,892,481
1,200,462
–
–
–
–
47,899
131,117
–
–
–
–
–
–
4,783
99,206
235,426,781
3,892,481
1,200,462
–
4,783
181,500
181,500
5,401
–
–
–
5,401
47,899
131,117
–
1,061,014
178,581
–
1,061,014
(950)
177,631
–
–
–
–
–
7,712
–
7,261
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
99,206
235,426,781
3,892,481
1,200,462
–
12,495
181,500
12,662
47,899
131,117
–
1,061,014
177,631
242,037,541
190,734
242,228,275
14,973
–
242,243,248
Balance
28 June 2009
Net change
Other
Balance
27 June 2010
Post year-end
acquisitions
Post year-end
disposals
Post year-end
balance
99,206
235,426,781
3,892,481
–
–
–
99,206
235,426,781
3,892,481
1,664,043
(463,581)
1,200,462
–
–
–
47,899
131,747
–
–
–
–
(630)
–
–
–
47,899
131,117
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
99,206
235,426,781
3,892,481
1,200,462
–
–
–
47,899
131,117
1,061,014
178,581
–
242,037,541
Key management personnel
B Cassell
G Hambly
Total
1,061,014
178,581
–
–
1,061,014
178,581
242,501,752
(464,211)
242,037,541
* In the case of retired directors, the closing balance represents the number of shares at the date the director retired from the Board. For
KMP, the closing balance represents the number of shares at the date of resignation.
Stapled Preference Shares (SPS)
SPS held, acquired or disposed of in the financial year ended 26 June 2011 by directors or key management personnel have been
disclosed in the table above.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
99
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(B) RiGHtS OvER SHaRE HOLDiNGS Of DiRECtORS aND KEY MaNaGEMENt PERSONNEL
Details of equity-based incentive schemes are included in section 5.2 of the remuneration report.
Directors
B McCarthy*
G Hywood
Key management personnel
B Cassell
G Hambly
Total
Directors
B McCarthy
G Hywood
Key management personnel
B Cassell
G Hambly
Total
Opening Balance
27 June 2010
Granted as
remuneration
Net change
Other**
Closing Balance
26 June 2011
950,399
–
–
–
284,792
270,560
315,097
234,194
1,505,751
549,291
–
–
–
–
–
950,399
–
599,889
504,754
2,055,042
Opening Balance
28 June 2009
Granted as
remuneration
Net change
Other**
Closing Balance
27 June 2010
694,479
255,920
–
–
209,040
214,072
75,752
56,488
1,117,591
388,160
–
–
–
–
–
950,399
–
284,792
270,560
1,505,751
* The closing balance represents the number of shares at the date of departure following resignation. For KMP, closing balance represents
the number of shares at the date of resignation.
** Net change movements include forfeitures.
(C) LOaNS tO KEY MaNaGEMENt PERSONNEL
(i) aggregates for key management personnel
There were no loans made 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 26 June 2011 (2010: nil).
(ii) individuals with loans above $100,000 during the financial year
There are no outstanding loans above $100,000 for the financial years ended 26 June 2011 and 27 June 2010.
100
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
35. 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 29.
(C) KEY MaNaGEMENt 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 business 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 which
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.
(D) tRaNSaCtiONS WitH RELatED PaRtiES
The following transactions occurred with related parties and director-related entities on normal market terms and conditions:
26 June 2011
27 June 2010
Sales to
related
parties
$’000
2,724
4,507
Purchases
from related
parties
$’000
18,841
19,556
Amount owed
by related
parties
$’000
Amount owed
to related
parties
$’000
2,792
2,539
69
104
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
101
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
36. Notes to the cash flow statement
(A) RECONCiLiatiON Of NEt (LOSS)/PROfit aftER iNCOME tax
EXPENSE TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Net (loss)/profit for the financial year
Non-cash items
Depreciation and amortisation
Impairment of property, plant and equipment, intangibles and investments
Amortisation of borrowing costs
Share of profits of associates and joint ventures not received as dividends
Straight-line rent adjustment
Net loss on disposal of property, plant and equipment
Net gain on disposal of investments and other assets
Fair value adjustment to derivatives
Net foreign currency loss
Share-based payment expense
Non-cash superannuation expense
Changes in operating assets and liabilities, net of effects from acquisitions
Decrease/(increase) in trade receivables
(Increase)/decrease in other receivables
(Increase)/decrease in inventories
Increase in other assets
Increase/(decrease) in payables
Increase/(decrease) in provisions
Increase in tax balances
Note
26 June 2011
$’000
27 June 2010
$’000
(389,667)
282,377
3(B)
114,351
655,051
1,568
(789)
909
1,526
(785)
(6,695)
807
2,675
(70)
18,725
(2,194)
(1,592)
(1,113)
1,777
32,303
4,638
113,623
6,436
4,422
491
1,290
1,732
(322)
(2,360)
843
3,297
1,136
(45,410)
76
1,584
–
(9,826)
(16,760)
106,990
Net cash inflow from operating activities
431,425
449,619
(B) RECONCiLiatiON Of CaSH aND CaSH EQuivaLENtS
Reconciliation of cash at end of the financial year (as shown in the Statement of Cash Flow) to the related items in the financial
statements is as follows:
Cash on hand and at bank
total cash at end of the financial year
207,137
117,872
207,137
117,872
102
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
37. 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;
forward rate agreements; 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 net debt to EBITDA (earnings before interest, tax, depreciation and
amortisation) ratio. The ratio is calculated as net debt divided by underlying EBITDA. Net debt is calculated as total interest bearing
liabilities less cash and cash equivalents. Where interest bearing liabilities are denominated in a currency other than the Australian
dollar functional currency, and the liability is hedged into an Australian dollar obligation, the liability is measured for financial covenant
purposes as the hedged Australian dollar amount.
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:
•
•
sufficient finance for the business is maintained at a reasonable cost; and
sufficient funds are available for the business to implement its capital expenditure and business acquisition strategies.
Where excess funds arise with respect to the funds required to enact the Group’s business strategies, consideration is given to possible
increased dividends or returns of equity to shareholders.
The Group’s financial strategy is to target the net debt to underlying EBITDA ratio at around 2 times. The Group’s S&P credit rating
is currently BB+.
The net debt to EBITDA ratio for the Group at 26 June 2011 and 27 June 2010 is as follows:
Net debt for financial covenant purposes
EBITDA*
Net debt to EBITDA ratio
Note
18
2011
$’000
2010
$’000
1,487,601
1,435,002
608,837
644,586
2.44
2.23
* For the purposes of the debt to EBITDA ratio, underlying EBITDA is adjusted for specific items of a non-recurring nature and excludes
any unrealised profit/(loss) arising from mark to market revaluations of financial instruments. 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.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
103
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
Risk factors
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 cash flows of the Group’s financial instruments will fluctuate 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 assets 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 cash flow interest rate risk.
The Group’s risk management policy for interest rate risk 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 exposed to a fair value or cash flow 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 cross currency swaps, which have the economic
effect of converting foreign currency borrowings to local currency borrowings. Over the counter derivative contracts are carried at fair
value, which are estimated using valuation techniques based wherever possible on assumptions supported by observable market prices
or rates prevailing at the balance sheet date. For other financial instruments for which quoted prices in an active market are available,
fair value is determined directly from those quoted market prices.
Refer to Note 15 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 assets and financial liabilities exposed to interest rate risks:
as at 26 June 2011
financial assets
Cash and cash equivalents
Trade and other receivables
Available for sale 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
Total interest bearing liabilities
Derivatives
total financial liabilities
104
Floating
rate
$’000
207,137
–
–
18,446
27,339
252,922
Fixed
rate
$’000
–
–
–
–
–
Non-
interest
bearing
$’000
–
358,876
2,633
73
500
Total
$’000
207,137
358,876
2,633
18,519
27,839
–
362,082
615,004
–
–
279,669
279,669
411,438
23,815
–
–
18,425
11,633
426,478
472,543
167,700
–
453,678
1,078,354
–
–
–
–
–
–
423,071
450,293
472,543
167,700
18,425
1,532,032
120,668
54,845
11,221
186,734
574,346
1,133,199
290,890
1,998,435
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
as at 27 June 2010
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
Total interest bearing liabilities
Derivatives
total financial liabilities
Floating
rate
$’000
117,872
–
–
11,591
–
Fixed
rate
$’000
–
–
–
–
–
28,970
15,382
Non-
interest
bearing
$’000
–
380,979
4,239
–
2,575
–
Total
$’000
117,872
380,979
4,239
11,591
2,575
44,352
158,433
15,382
387,793
561,608
–
–
276,580
276,580
181,782
28,574
–
–
22,004
15,058
569,388
494,068
167,587
–
232,360
1,246,101
56,277
41,383
–
–
–
–
–
–
–
196,840
597,962
494,068
167,587
22,004
1,478,461
97,660
288,637
1,287,484
276,580
1,852,701
Sensitivity analysis
The table below shows the effect on net profit and equity after income tax if interest rates at balance date had been 30% 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 30% (2010: 30%) has been selected as this is considered reasonable given the current level of both short term and long
term Australian interest rates. A 30% sensitivity would move short term interest rates at 26 June 2011 from around 5.02% to 6.53%
representing a 151 basis point shift (2010: 149 basis point shift).
In 2011, 86% (2010: 84%) of the Group’s debt, taking into account 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 30% 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.
If interest rates were 30% higher with all other variables
held constant – increase/(decrease)
If interest rates were 30% lower with all other variables
held constant – increase/(decrease)
Impact on post-tax profit
Impact on equity
2011
$’000
2010
$’000
2011
$’000
2010
$’000
(3,725)
(3,969)
4,888
2,906
3,725
3,969
(5,181)
(3,262)
(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 currency 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 receipts and payments settled in foreign currencies and prices
dependent on foreign currencies respectively.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
105
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
The Group is exposed to foreign exchange risk from various currency exposures, primarily with respect to:
• United States Dollars;
• New Zealand Dollars;
• Euro;
• British Pounds Sterling;
• Swiss Francs;
• 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 these 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 carried 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 capital 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 financial 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 assesses 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 fair value or cash flows of the related underlying exposure. Because of the high degree
of effectiveness between the hedging instrument and the underlying exposure 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 change in fair value is immediately recognised in the income statement and this is mainly attributable
to 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 recognised in the income statement. All of the Group’s derivatives are straight forward
over-the-counter instruments with liquid markets.
Refer to Note 15 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 15% weaker/stronger base
currency movement in exchange rates at that date on a total derivative portfolio with all other variables held constant.
A sensitivity of 15% 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 currency 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.
(a) auD / NZD
Comparing the Australian Dollar exchange rate against the New Zealand Dollar, a 15% weaker Australian Dollar would result in an
exchange rate of 1.0966 and a 15% stronger Australian Dollar in an exchange rate of 1.4836 based on the year end rate of 1.2901.
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 1.0781 to 1.3746.
If the AUD exchange rate was 15% weaker against the NZD
with all other variables held constant – increase/(decrease)
If the AUD exchange rate was 15% stronger against the NZD
with all other variables held constant – increase/(decrease)
Impact on post-tax profit
Impact on equity
(hedging reserves) *
2011
$’000
2010
$’000
2011
$’000
2010
$’000
1,232
4,497
(29,147)
(30,927)
(2,086)
(3,862)
21,543
22,859
* Hedging reserves includes both the cash flow hedge reserve and net investment hedge reserve.
106
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(b) auD / uSD
Comparing the Australian Dollar exchange rate against the United States Dollar, a 15% weaker Australian Dollar would result in an
exchange rate of 0.8912 and a 15% stronger Australian Dollar in an exchange rate of 1.2058 based on the year end rate of 1.0485.
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 0.6120 to 1.0966.
If the AUD exchange rate was 15% weaker against the USD
with all other variables held constant – increase/(decrease)
If the AUD exchange rate was 15% stronger against the USD
with all other variables held constant – increase/(decrease)
Impact on post-tax profit
Impact on equity
(cash flow hedge reserve)
2011
$’000
612
2010
$’000
(32)
2011
$’000
2010
$’000
(2,468)
3,067
(145)
(1,313)
2,902
(1,896)
(c) auD / EuR
Comparing the Australian Dollar exchange rate against the Euro, a 15% weaker Australian Dollar would result in an exchange rate
of 0.6276 and a 15% stronger Australian Dollar in an exchange rate of 0.8492 based on the year end rate of 0.7384. 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 0.4795 to 0.7706.
If the AUD exchange rate was 15% weaker against the Euro
with all other variables held constant – increase/(decrease)
If the AUD exchange rate was 15% stronger against the Euro
with all other variables held constant – increase/(decrease)
Impact on post-tax profit
Impact on equity
(cash flow hedge reserve)
2011
$’000
(467)
2010
$’000
2011
$’000
2010
$’000
3,348
1,735
(1,163)
387
3,338
(868)
(4,228)
(C) CREDit RiSK
Credit risk is the risk that a contracting 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 included in the Group’s balance sheet. To help manage this
risk, the Group:
•
has a policy for establishing credit limits for the entities it deals with;
• may require collateral where appropriate; and
• manages exposures to individual entities it either transacts with or enters into derivative contracts with (through a system
of credit limits).
The Group is exposed to credit risk on financial instruments and derivatives. For credit purposes, there is only a credit risk where the
contracting 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 institutions that meet minimum credit
rating criteria in accordance with the Group’s policy requirements. At 26 June 2011 counterparty credit risk was limited to financial
institutions with credit ratings ranging from A- to AA.
The Group’s credit risk is mainly concentrated across a number of customers and financial institutions. The Group does not have
any significant credit risk 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 expected 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 credit history of these classes, it is expected that these amounts will
be received when due.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
107
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(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:
•
•
•
has a liquidity policy which targets a minimum level of committed facilities and cash relative to EBITDA;
has readily accessible funding arrangements in place; and
staggers maturities of financial instruments.
Refer to Note 18(B) for details of the Group’s unused credit facilities at 26 June 2011.
The contractual maturity of the Group’s fixed and floating rate derivatives, other financial 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 to
the values disclosed in the balance sheet.
as at 26 June 2011
financial liabilities*
Payables
Bank borrowings and loans
Notes and bonds
Finance lease liability
Derivatives – inflows*
Cross currency swaps – foreign leg (fixed)**
Cross currency swaps – foreign leg (variable)**
Derivatives – outflows*
Cross currency swaps – AUD leg (fixed)**
Cross currency swaps – AUD leg (variable)**
Cross currency swaps – NZD leg (variable)**
Interest rate swaps ***
Put option
as at 27 June 2010
financial liabilities*
Payables
Bank borrowings and loans
Notes and bonds
Finance lease liability
Derivatives – inflows*
Cross currency swaps – foreign leg (fixed)**
Cross currency swaps – foreign leg (variable)**
Derivatives – outflows*
Cross currency swaps – AUD leg (fixed)**
Cross currency swaps – AUD leg (variable)**
Cross currency swaps – NZD leg (variable)**
Interest rate swaps ***
(Nominal cash flows)
1 year
or less
$’000
1 to 2
years
$’000
2 to 5
years
$’000
More than
5 years
$’000
(279,669)
–
–
(34,099)
(156,700)
(296,456)
–
–
(708,797)
(25,961)
(334,158)
(150,920)
(10,766)
(9,130)
(21,984)
–
529,122
25,499
462
462
311,945
24,768
155,704
–
(224,110)
(382,702)
(9,056)
(8,911)
(7,007)
(9,056)
(366,846)
(129,219)
–
(5,611)
(26,734)
(136,800)
(192,479)
(85,503)
(10,547)
(5,610)
–
(169,970)
–
–
(Nominal cash flows)
1 year
or less
$’000
1 to 2
years
$’000
2 to 5
years
$’000
More than
5 years
$’000
(276,580)
–
–
(59,321)
(136,213)
(10,930)
–
–
(300,100)
(558,052)
(313,846)
(301,206)
(8,354)
(8,678)
(33,303)
–
120,134
556,064
283,383
301,659
335
335
29,628
–
(24,110)
(94,843)
(9,556)
(16,846)
(224,110)
(26,734)
(145,711)
(378,220)
(199,486)
–
(9,556)
(16,846)
(92,900)
(12,656)
(186,234)
(2,109)
* 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.
*** Net amount for interest rate swaps for which net cash flows are exchanged.
108
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(E) faiR vaLuE
The carrying amounts and fair values of financial assets and financial liabilities at balance date are:
financial assets
Cash and cash equivalents
Receivables
Derivative assets
Available for sale investments
Held to maturity investments
Other financial assets
financial liabilities
Payables
Interest bearing liabilities:
Bank borrowings
Eurobonds
Senior notes
Medium term notes
Finance lease liability
Derivative liabilities
Carrying value
2011
$’000
Fair value
2011
$’000
Carrying value
2010
$’000
Fair value
2010
$’000
207,137
358,876
27,839
2,633
–
207,137
358,876
27,839
2,633
–
18,519
18,519
117,872
380,979
44,352
4,239
11,591
2,575
117,872
380,979
44,352
4,239
10,351
2,575
615,004
615,004
561,608
560,368
279,669
279,669
276,580
276,580
423,071
472,543
450,293
167,700
18,425
423,071
473,331
451,689
167,700
28,887
186,734
186,734
196,840
494,068
597,962
167,587
22,004
97,660
196,840
495,589
599,764
167,700
32,845
97,660
1,998,435
2,011,081
1,852,701
1,866,978
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 1.94% to 13.35% (2010: 2.66% to 13.37%).
The carrying value of all other balances approximate their fair value.
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices) (level 2); and
(c)
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
109
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the table below:
as at 26 June 2011
financial assets
Derivative assets
Available for sale investments
Other financial assets
financial liabilities
Derivative liabilities
as at 27 June 2010
financial assets
Derivative assets
Available for sale investments
Other financial assets
financial liabilities
Derivative liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
–
27,839
2,633
–
–
–
–
–
18,519
27,839
2,633
18,519
2,633
27,839
18,519
48,991
–
–
186,734
186,734
–
–
186,734
186,734
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
–
44,352
4,239
–
–
2,575
4,239
46,927
–
–
97,660
97,660
–
–
–
–
–
–
44,352
4,239
2,575
51,166
97,660
97,660
110
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
38. Segment reporting
(a) DESCRiPtiON Of SEGMENtS
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors,
CEO and CFO in assessing performance and in determining the allocation of resources.
The consolidated entity is organised into seven reportable segments based on aggregated operating segments determined by the
similarity of products and services provided, economic characteristics and geographical considerations.
Reportable Segment
Products and Services
Australian Regional Media
Newspaper publishing and online for all Australian regional publications
Metropolitan Media
Specialist Media
New Zealand Media
Printing Operations
Online
Broadcasting
Other
Newspaper and magazine publishing, print and online classifieds for Sydney and Melbourne
metropolitan and community publications
Financial Review Group print and online plus Australian, NZ and USA agricultural publications
Newspaper, magazine and general publishing and online for all New Zealand publications
Australian and New Zealand printing operations
Online news sites and transactional businesses including Trade Me (New Zealand)
Metropolitan radio networks, regional radio stations and narrowcast licences
Comprises corporate, Satellite Music Australia and Oxford Scientific Films
Although the broadcasting segment does not meet the quantitative thresholds required by AASB 8, management has concluded that
disclosure of this segment would be beneficial to users of the financial statements.
(B) RESuLtS BY OPERatiNG SEGMENt
The segment information provided to the Board of Directors, CEO and CFO for the reportable segments for the year ended 26 June 2011
is as follows:
26 June 2011
Australian Regional Media
Metropolitan Media
Specialist Media
New Zealand Media
Printing Operations
Online
Broadcasting
Other
Segment
revenue
$’000
Intersegment
revenue
$’000
Revenue
from external
customers
$’000
Underlying
EBITDA
$’000
Depreciation
amortisation
$’000
Underlying
EBIT
$’000
521,309
874,464
274,888
361,405
539,332
234,299
111,723
12,041
(2,145)
(1,159)
(80)
(901)
(456,164)
(109)
–
–
519,164
873,305
274,808
360,504
83,168
234,190
111,723
12,041
149,492
83,319
55,017
67,615
103,504
118,315
26,835
3,347
(6,444)
(12,663)
(4,268)
(9,085)
(62,161)
(16,329)
(2,668)
(733)
143,048
70,656
50,749
58,530
41,343
101,986
24,167
2,614
Consolidated entity
2,929,461
(460,558)
2,468,903
607,444
(114,351)
493,093
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
111
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
27 June 2010
Australian Regional Media
Metropolitan Media
Specialist Media
New Zealand Media
Printing Operations
Online
Broadcasting
Other
Segment
revenue
$’000
Intersegment
revenue
$’000
Revenue
from external
customers
$’000
Underlying
EBITDA
$’000
Depreciation
amortisation
$’000
Underlying
EBIT
$’000
519,272
896,669
279,750
383,324
535,961
212,568
109,536
15,370
(12,626)
(1,062)
(65)
(1,029)
(452,946)
(123)
–
–
506,646
895,607
279,685
382,295
83,015
212,445
109,536
15,370
147,976
102,513
67,238
75,969
111,016
111,075
28,664
(5,395)
(7,165)
(12,141)
(3,327)
(9,431)
(66,956)
(11,640)
(1,912)
(1,051)
140,811
90,372
63,911
66,538
44,060
99,435
26,752
(6,446)
Consolidated entity
2,952,450
(467,851)
2,484,599
639,056
(113,623)
525,433
(C) OtHER SEGMENt iNfORMatiON
(i) Segment revenue
Segment revenue reconciles to total revenue and income as follows:
Total segment revenue from external customers
Interest income
Share of net profits of associates and joint ventures
total revenue and income
26 June 2011
$’000
27 June 2010
$’000
2,468,903
2,484,599
10,967
(3,362)
7,943
(2,226)
2,476,508
2,490,316
Revenue from external customers includes the operating segments share of net profits from associates and joint ventures.
The consolidated entity operates predominantly in two geographic segments, Australia and New Zealand. The amount of its revenue from
external customers in Australia is $2,011.4 million (2010: $2,010.8 million) and the amount of revenue from external customers in New
Zealand is $465.1 million (2010: $479.5 million). Segment revenues are allocated based on the country in which the customer is located.
112
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
(ii) EBit
The Board of Directors, CEO and CFO assess the performance of the operating segments based on a measure of underlying EBIT.
This measurement basis excludes the effects of non-recurring items from the operating segments such as restructuring costs and
goodwill, masthead or radio licence impairments when the impairment is the result of an isolated, non-recurring event.
Interest income and expenditure are not allocated to segments, as this type of activity is driven by the centralised treasury function,
which manages the cash position of the Group.
A reconciliation of underlying EBIT to operating (loss)/profit before income tax is provided as follows:
underlying EBit
Interest income
Finance costs
Impairment of mastheads, goodwill and customer relationships
Impairment of property, plant and equipment
Restructuring and redundancy charges
Net (loss)/profit before tax
26 June 2011
$’000
27 June 2010
$’000
493,093
10,967
(119,009)
(649,869)
(4,038)
(34,222)
525,433
7,943
(135,911)
–
–
–
(303,078)
397,465
Information provided to the Board of Directors, CEO and CFO in respect of assets and liabilities is presented on a group basis
consistent with the consolidated financial statements.
A summary of non-recurring items by operating segments is provided for the period ended 26 June 2011. There were no non-recurring
items included in EBIT in the previous period.
26 June 2011
Australian Regional Media
Metropolitan Media
Specialist Media
New Zealand Media
Printing Operations
Online
Broadcasting
Other
Consolidated entity
Impairment of
mastheads,
goodwill and
customer
relationships
$’000
Impairment of
property,
plant and
equipment
$’000
Restructuring
and
redundancy
charges
$’000
30,500
453,395
11,341
77,306
6,588
–
65,000
5,739
–
–
–
4,038
–
–
–
–
1,674
17,963
1,020
7,136
3,623
–
–
2,806
Total
$’000
32,174
471,358
12,361
88,480
10,211
–
65,000
8,545
649,869
4,038
34,222
688,129
(iii) Segment assets
The total of non-current assets other than financial instruments, deferred tax assets and employment benefit assets (there are no rights
arising under insurance contracts) located in Australia is $5,125.8 million (2010: $6,079.0 million) and the total of these non-current
assets located in New Zealand is $894.9 million (2010: $693.2 million). Segment assets are allocated to countries based on where
the assets are located.
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
113
Notes to tHe FiNANciAL stAteMeNts
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
39. Parent entity information
The following disclosures relate to Fairfax Media Limited as an individual entity,
being the ultimate parent entity of the Fairfax Media group.
financial position of parent entity
Current assets
Total assets
Current liabilities
Total liabilities
total equity of parent entity
Contributed equity
General reserve
Share-based payment reserve
Retained (losses)/profits
total equity
Result of parent entity
(Loss)/profit for the period
Other comprehensive income
total comprehensive income for the period
26 June 2011
$’000
27 June 2010
$’000
1,457,808
1,675,897
4,456,159
5,011,984
17,587
17,877
20,841
21,063
4,646,248
4,948,792
(722)
6,971
(214,216)
–
5,099
37,030
4,438,281
4,990,921
(183,040)
–
(183,040)
(722)
–
(722)
Fairfax Media Limited has entered into a Deed of Cross Guarantee with the effect that the Company guarantees debts in respect
of its subsidiaries within the Closed Group. Further details regarding the deed are set out in Note 29.
Operating lease commitments – parent entity as lessee
Fairfax Media Limited has entered into commercial leases on office premises.
Future minimum rentals payable under non-cancellable operating leases as at the period end are as follows:
Within one year
Later than one year and not later than five years
Later than five years
total operating lease commitments
26 June 2011
$’000
27 June 2010
$’000
157
243
–
400
74
–
–
74
40. Events subsequent to balance sheet date
On 27 June 2011 the medium term notes were repaid in full for $167.7 million.
Subsequent to year end, the Group announced it had commenced preparation for an Initial Public Offering (IPO) of Trade Me Limited
(Trade Me), a New Zealand subsidiary. The Group intends to sell between 30% to 35% of Trade Me through the IPO, with Trade Me being
listed on the New Zealand Exchange. The timing of the IPO has not been finalised and will depend on appropriate market conditions.
114
Directors’ DecLArAtioN
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES FOR THE PERiOd ENdEd 26 JUNE, 2011
In accordance 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 are in accordance
with the Corporations Act 2001, including:
(i) giving a true and fair view of its financial position as at 26 June 2011 and of its performance for the period ended
on that date, and
(ii) complying with Accounting Standards and Corporations Regulations 2001
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable
(d) as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified
in Note 29 will be able to meet any obligations or liabilities to which they are or may become subject to, by virtue of
the Deed of Cross Guarantee.
2. This declaration has been made after receiving the declaration required to be made to the Directors in accordance with section
295A of the Corporations Act 2001 for financial period ended 26 June 2011.
On behalf of the Board
Roger Corbett, AO
Chairman
Greg Hywood
Chief Executive Officer and Managing Director
16 September 2011
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
115
iNDepeNDeNt AUDitor’s report
TO THE mEmBERS OF FAiRFAx mEdiA LimiTEd
Independent auditor's report to the members of Fairfax Media Limited
Report on the financial report
We have audited the accompanying financial report of Fairfax Media Limited, which comprises the balance
sheet as at 26 June 2011, the income statement and statement of comprehensive income, statement of
changes in equity and cash flow statement for the year ended on that date, a summary of significant
accounting policies, other explanatory notes and the directors' declaration of the consolidated entity
comprising the company and the entities it controlled at the year's end or from time to time during the
financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation and
fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
116
Liability limited by a scheme approved
under Professional Standards Legislation
iNDepeNDeNt AUDitor’s report
TO THE mEmBERS OF FAiRFAx mEdiA LimiTEd
Opinion
In our opinion:
a.
the financial report of Fairfax Media Limited is in accordance with the Corporations Act 2001,
including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 26 June 2011
and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
b.
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Report on the remuneration report
We have audited the Remuneration Report included in pages 17 to 27 of the directors' report for the year
ended 26 June 2011. The directors of the company are responsible for the preparation and presentation
of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Fairfax Media Limited for the year ended 26 June 2011,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
Christopher George
Partner
Sydney
16 September 2011
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
117
sHAreHoLDer iNForMAtioN
FAiRFAx mEdiA LimiTEd
tWENtY LaRGESt HOLDERS Of SECuRitiES at 22 auGuSt 2011
ORDiNaRY SHaRES (fxJ)
National Nominees Limited
JP Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Marinya Media Pty Ltd
Citicorp Nominees Pty Limited
Citicorp Nominees Pty Limited
Timeview Enterprises Pty Ltd
Cogent Nominees Pty Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
Hanrine Investments Pty Ltd
Tasman Asset Management Ltd
Queensland Investment Corporation
Argo Investments Limited
JP Morgan Nominees Australia Limited
Pacific Custodians Pty Limited
Citicorp Nominees Pty Limited
Citicorp Nominees Pty Limited
AMP Life Limited
Citicorp Nominees Pty Limited
Cambooya Pty Limited
DEBENTURES
National Financial Services Corp.
OPTIONS
There were no options exercisable at the end of the financial year.
Number of
securities
443,052,990
349,836,883
305,943,037
227,650,358
166,068,863
123,241,291
91,424,185
80,116,562
24,302,008
24,073,540
20,707,867
20,564,158
15,779,138
15,750,978
12,170,284
11,061,790
10,487,839
8,114,427
8,062,318
7,718,863
1,966,127,379
%
18.84%
14.87%
13.01%
9.68%
7.06%
5.24%
3.89%
3.41%
1.03%
1.02%
0.88%
0.87%
0.67%
0.67%
0.52%
0.47%
0.45%
0.35%
0.34%
0.33%
83.60%
281
100
SUBSTANTIAL SHAREHOLDERS
Substantial shareholders as shown in substantial shareholder notices received by the Company as at 22 August 2011 are:
Marinya Media Pty Ltd
National Australia Bank Limited Group
Commonwealth Bank of Australia
Maple-Brown Abbott Limited
AXA Group
Orbis Investment Management (Australia) Pty Limited
DiStRiButiON Of HOLDiNGS at 22 auGuSt 2011
No. of securities
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 less than a marketable parcel
Ordinary shares
232,512,219
146,780,715
186,221,004
136,691,699
166,269,107
119,329,292
No. of
ordinary
shareholders
9,655
16,013
5,670
5,496
345
37,179
6,766
No. of
debenture
holders
1
–
–
–
–
1
–
VOTING RIGHTS
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. Debentures do not carry any voting rights.
118
FiVe YeAr perForMANce sUMMArY
FAiRFAx mEdiA LimiTEd ANd cONTROLLEd ENTiTiES
income Statement
Total revenue
Revenues from operations
Earnings/(loss) before depreciation,
interest and tax (EBITDA)
Depreciation
Earnings/(loss) before interest and tax
Net interest expense
Profit/(loss) before tax
Income tax expense
Net profit/(loss) attributable to
members of the Company
Net profit before significant items
Balance Sheet
Total equity
Total assets
Total borrowings
Statistical analysis
Number of shares and debentures
Number of shareholders
Number of SPS holders
EBITDA to operating revenue
EBIT to operating revenue
Basic earnings/(loss) 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
Market price per share
Market capitalisation
Number of full-time employees
Number of part-time
and casual employees
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
m
%
%
cents
cents
cents
cents
%
times
%
%
$
$m
2011
2010
2009
2008
2007
2,476.5
2,463.4
2,490.3
2,476.8
2,609.5
2,599.1
2,934.0
2,900.9
2,178.5
2,111.4
(80.7)
114.4
(195.0)
108.0
(303.1)
86.6
(390.9)
283.8
4,438.7
6,700.6
1,532.0
2,352.0
37,974
–
(3.3)
(7.9)
(17.0)
11.6
18.3
3.0
–
5.6
34.5
6.4
0.98
639.1
113.6
525.4
128.0
397.5
115.1
282.1
290.5
5,306.7
7,394.1
1,478.5
2,352.0
43,231
1,516
25.8
21.2
11.5
11.8
19.1
2.5
21.7
5.0
27.9
5.5
1.36
(59.0)
117.6
(176.6)
174.9
(351.4)
29.7
(380.1)
242.4
5,011.8
7,487.6
1,908.3
2,352.0
49,050
1,388
(2.3)
(6.8)
(21.6)
12.4
16.4
2.0
–
3.5
38.1
4.8
1.23
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
24.5
22.9
23.4
27.7
20.0
87.3
4.4
50.6
8.0
2.69
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
21.3
22.7
23.2
24.7
20.0
88.1
5.3
47.3
5.4
4.36
2,304.9
8,806
3,198.7
8,778
2,892.9
8,979
4,071.4
9,800
6,451.2
9,474
1,825
1,801
1,828
2,106
1,942
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
119
DirectorY
FAiRFAx mEdiA LimiTEd
ANNUAL GENERAL MEETING
SECURITIES EXCHANGE LISTING
The Annual General Meeting will be held at 10.30am on Thursday
10 November 2011 at the Four Seasons Hotel, 199 George
Street, Sydney NSW.
The Company’s ordinary shares are listed on the Australian
Securities Exchange as FXJ. The Stapled Preference Securities
that were previously listed on the ASX as FXJPB were
repurchased by the Company on 29 April 2011.
fiNaNCiaL CaLENDaR 2012
Interim result
Preliminary final result
Annual General Meeting
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
February 2012
August 2012
November 2012
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
HOW TO OBTAIN 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.
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. The Company no longer issues cheques except
in exceptional circumstances. A direct credit form can be obtained
from 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.
120
pUBLicAtioNs, WeBsites AND
MoBiLe DeVice AppLicAtioNs
Metropolitan Publishing
The Age
The Sunday Age
The Sun Herald
The Sydney Morning Herald
fairfax Magazines
Good Weekend
Sunday Life
Television
the(melbourne)magazine
the(sydney)magazine
Metropolitan Websites
automotive
www.countrycars.com.au
www.drive.com.au
Business and finance
www.businessday.com.au
www.investsmart.com.au
www.moneymanager.com.au
www.mysmallbusiness.com.au
www.tradingroom.com.au
Dating
www.rsvp.com.au
Employment
www.mycareer.com.au
www.jobs.com.au
Lifestyle and Entertainment
www.brisbanetimes.com.au/entertainment
www.brisbanetimes.com.au/lifestyle
www.cuisine.com.au
www.essentialbaby.com.au
www.findababysitter.com.au
www.smh.com.au/entertainment
www.smh.com.au/lifestyle
www.theage.com.au/entertainment
www.theage.com.au/lifestyle
www.thevine.com.au
www.watoday.com.au/entertainment
www.watoday.com.au/lifestyle
News
www.brisbanetimes.com.au
www.canberratimes.com.au
www.nationaltimes.com.au
www.smh.com.au
www.theage.com.au
www.watoday.com.au
Property
www.apm.com.au
www.commercialrealestate.com.au
www.desktop.com.au
www.domain.com.au
Sport
www.brisbanetimes.com.au/sport
www.leaguehq.com.au
www.realfooty.com.au
www.rugbyheaven.com.au
www.smh.com.au/sport
www.theage.com.au/sport
www.watoday.com.au/sport
travel/accommodation
www.rentahome.com.au
www.stayz.com.au
www.takeabreak.com.au
www.traveller.com.au
technology
www.brisbanetimes.com.au/technology
www.smh.com.au/digital-life
www.smh.com.au/technology
www.theage.com.au/technology
www.watoday.com.au/technology
Video
www.brisbanetimes.tv
www.smh.tv
www.theage.tv
www.watoday.tv
Weather
m.wz.com.au
www.marineweather.com.au
www.meteorology.com.au
www.sydneyweather.com
www.weathercalendar.com.au
www.weathertracker.com.au
www.weatherzone.co.nz
www.weatherzone.com.au
NSW Community
Monthly Magazines
Cronulla Magazine
Georges River Magazine
Engadine-Menai Magazine
PS Magazine
Review Magazine
Quarterly Magazines
Blue Mountains Wonderland Magazine
My Family Magazine
Publications
Auburn Review
Bankstown-Canterbury Torch
Blacktown City Sun
Blue Mountains Gazette
Camden Advertiser
Cooks River Valley Times
Fairfield City Champion
Hawkesbury Chronicle
Hawkesbury Gazette
Hills News
Holroyd Sun
Liverpool City Champion
Parramatta Sun
Penrith City Star
Rouse Hill-Stanhope Gardens News
South West Advertiser
St George & Sutherland Shire Leader
St Mary’s-Mt Druitt Star
The Campbelltown Macarthur Advertiser
Wollondilly Advertiser
Websites
www.blacktownsun.com.au
www.bluemountainsgazette.com.au
www.camdenadvertiser.com.au
www.fairfieldchampion.com.au
www.hawkesburygazette.com.au
www.hillsnews.com.au
www.liverpoolchampion.com.au
www.macarthuradvertiser.com.au
viC Community
Publications
Banyule & Nillumbik Weekly
Brimbank Weekly/North West Weekly
Casey Weekly – Berwick/Casey Weekly
– Pakenham
Casey Weekly – Cranbourne
City Weekly
Frankston Weekly
Greater Dandenong Weekly
Holiday Magazine
Hume Weekly
Knox Weekly
Macedon Ranges Weekly/Sunbury Weekly
Maribyrnong Weekly/Hobsons Bay Weekly/
Hobsons Bay Weekly – Williamstown
Maroondah Weekly/Yarra Ranges Weekly
Melbourne Times Weekly
Melbourne Weekly
Melbourne Weekly – Port Phillip
Melbourne Weekly Bayside
Melbourne Weekly Eastern
Melton Weekly/Moorabool Weekly
Monash Weekly
Moonee Valley Weekly
Northern Weekly
Peninsula Weekly/Westernport Weekly
Wyndham Weekly/Point Cook Weekly
Websites
www.berwickjournal.com.au
www.chelseaindependent.com.au
www.cranbournejournal.com.au
www.frankstonindependent.com.au
www.humeweekly.com.au
www.knoxjournal.com.au
www.macedonrangestelegraph.com.au
www.maroondahjournal.com.au
www.meltonexpress.com.au
www.monashjournal.com.au
www.morningtonpeninsulamail.com.au
www.mymooneevalley.com.au
www.parramattasun.com.au
www.penrithstar.com.au
www.southwestruraladvertiser.com.au
www.stmarysstar.com.au
www.the-advocate.com.au
www.thebanner.com.au
www.thejournal.com.au
www.theleader.com.au
www.themail.com.au
www.thenorthernnews.com.au
www.wollondillyadvertiser.com.au
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
121
pUBLicAtioNs, WeBsites AND
MoBiLe DeVice AppLicAtioNs
Regional Media
Regional Publishing (NSW)
Bay Post
Bega District News
Blayney Chronicle
Bombala Times
Boorowa News
Braidwood Times
Camden Haven Courier
Canowindra News
Central Western Daily
Cobar Age
Coffs Harbour Independent
Cooma-Monaro Express
Cootamundra Herald
Cowra Guardian
Crookwell Gazette
Daily Liberal
Dungog Chronicle
Eastern Riverina Chronicle
Forbes Advocate
Glen Innes Examiner
Gloucester Advocate
Goulburn Post
Great Lakes Advocate
Guardian News
Harden Murrumburrah Express
Hawkesbury Gazette
Hunter Valley News
Illawarra Mercury
Kiama Independent/Lake Times
Lithgow Mercury
Magnet
Manning River Times
Merimbula News Weekly
Milton Ulladulla Times
Moree Champion
Mudgee Guardian
Muswellbrook Chronicle
Myall Coast Nota
Narooma News
Narromine News
Newcastle Herald
Nyngan Observer
Oberon Review
Parkes Champion–Post
Port Macquarie News
Port Stephens Examiner
South Coast Register
Southern Highland News
Southern Weekly
Summit Sun
Tenterfield Star
The Advertiser (Cessnock)
The Armidale Express
The Bellingen Shire Courier Sun
The Grenfell Record
The Guyra Argus
The Inverell Times
The Macleay Argus
The Maitland Mercury
The Northern Daily Leader
The Ridge News
The Scone Advocate
The Singleton Argus
The Star
The Young Witness
122
Town & Country Magazine
Walcha News
Warren Advocate
Wauchope Gazette
Wellington Times
Western Advocate
Western Magazine
Wingham Chronicle
Yass Tribune
Regional Publishing victoria
The Advertiser (Bendigo)
The Advocate (Hepburn)
The Ararat Advertiser
The Border Mail
The Courier
The Standard
The Stawell Times-News
The Wimmera Mail-Times
Regional Publishing QLD/Nt
Bayside Bulletin/Redland Times
Goondiwindi Argus
Katherine Times
The North West Star
Regional Publishing taS
Coastal Times
Devonport Times
East Coast News
Island of Contrast
Launceston Times
Meander Valley News
Northern Midlands News
Tamar Community Times
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www.eyretribune.com.au
www.forbesadvocate.com.au
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www.gleninnesexaminer.com.au
www.gloucesteradvocate.com.au
www.goondiwindiargus.com.au
www.goulburnpost.com.au
www.greatlakesadvocate.com.au
www.grenfellrecord.com.au
www.guyraargus.com.au
www.hardenexpress.com.au
www.hawkesburygazette.com.au
www.hepburnadvocate.com.au
www.huntervalleynews.yourguide.com.au
www.illawarramercury.com.au
www.independentweekly.com.au
www.inverelltimes.com.au
www.irrigator.com.au
www.juneesoutherncross.com.au
www.katherinetimes.com.au
www.lakesmail.com.au
www.latrobevalleyexpress.com.au
www.launcestontimes.com.au
www.lithgowmercury.com.au
www.macleayargus.com.au
www.mailtimes.com.au
www.maitlandmercury.com.au
www.mandurahmail.com.au
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www.meandervalleynews.com.au
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www.merredinmercury.com.au
www.moreechampion.com.au
www.moynegazette.com.au
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www.myallcoastnota.com.au
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www.oberonreview.com.au
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www.portnews.com.au
www.portpirierecorder.com.au
www.portstephensexaminer.com.au
www.queanbeyanage.com.au
www.riverinaleader.com.au
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www.singletonargus.com.au
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www.southernhighlandnews.com.au
www.southernweekly.com.au
www.standard.net.au
www.stawelltimes.com.au
www.summitsun.com.au
www.suncitynews.com.au
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www.tastamartimes.com.au
www.tenterfieldstar.com.au
www.theadvocate.com.au
www.thecourier.com.au
www.theflindersnews.com.au
www.theherald.com.au
www.theislanderonline.com.au
www.theridgenews.com.au
www.therural.com.au
www.transcontinental.com.au
www.ulladullatimes.com.au
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www.walchanewsonline.com.au
www.warrenadvocate.com.au
www.wauchopegazette.com.au
www.wellingtontimes.com.au
www.westcoastsentinel.com.au
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www.westernherald.com.au
www.westernmagazine.com.au
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www.winghamchronicle.com.au
www.yasstribune.com.au
www.youngwitness.com.au
Rural Press
www.businessquickfind.com.au
www.buyersguide.com.au
www.holidaysaway.net
www.ruralpresssales.com.au
www.yourguide.com.au
financial Review Group
australia Publications
AFR BOSS
AFR Smart Investor
Asset
The Australian Financial Review
The Australian Financial Review Magazine
The Australian Financial Review
– Weekend Edition
BRW
CFO
Life & Leisure The Sophisticated Traveller
Life & Leisure Luxury
MIS Australia
asia Publications
CIO Asia
Computerworld Singapore
Computerworld Malaysia
MIS Asia
MIS Asia 100
Strategic 100
Online
www.afr.com
www.afrboss.com
www.afrmagazine.com
www.afrmarketwrap.com
www.afrsmartinvestor.com.au
www.assetmag.com.au
www.brw.com.au
www.cfoweb.com.au
www.misaustralia.com
Data
AssetLink
Fairfax Business Research
MarketBase
asia On-line
www.mis-asia.com
www.cio-asia.com
www.computerworld.com.sg
www.computerworld.com.my
agricultural Publications
National
Australasian Flowers
Australian Cotton Outlook
Australian Dairyfarmer
Australian Farm Journal
Australian Horticulture
Australian Landcare
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
field Days and Events – australia
Commonwealth Bank Ag-Quip
Elders FarmFest
Farming Small Areas Expo
Murrumbidgee Farm Fair
Northern and Southern Beef Weeks
NSW Beef Spectacular
Star Maker Quest
Tamworth Country Music Festival
field Days – New Zealand
Central District Field Days
FAIRFAX MEDIA LIMITED ANNUAL REPORT 2011
123
pUBLicAtioNs, WeBsites AND
MoBiLe DeVice AppLicAtioNs
farm Shows – uSa
Farm Progress Show
Hay Expo
Husker Harvest Days
New York Farm Show
New Zealand agricultural Publishing
Ag Trader
Lifestyle Farmer
Straight Furrow
The Dairyman
agricultural Websites
farmonline
fw.farmonline.com.au
nqr.farmonline.com.au
qcl.farmonline.com.au
sj.farmonline.com.au
sl.farmonline.com.au
theland.farmonline.com.au
www.australianfarmjournal.com.au
www.australianhorticulture.com.au
www.farmonline.com.au/farmmags/
alfalotfeeding/index.aspx
www.farmonline.com.au/farmmags/
australiancottonoutlook/index.aspx
www.farmonline.com.au/farmmags/
australiandairyfarmer/index.aspx
www.farmonline.com.au/farmmags/
australianlandcare/index.aspx
www.farmonline.com.au/horticulture
www.farmonline.com.au/horticulture/
australasianflowers/index.aspx
www.farmonline.com.au/horticulture/
goodfruitvegetables/index.aspx
www.farmonline.com.au/horticulture/
irrigationandwaterresources/index.aspx
www.grapegrowers.com.au
www.horticultureonline.com.au
www.qldsmartfarmer.com.au
www.turfcraft.com.au
New South Wales
Farm Equipment Trader
Farming Small Areas
NSW Ag Today
The Land
Queensland
North Queensland Register
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Queensland Smart Farmer
South australia
Smart Farmer
Stock Journal
The Grower
victoria
Stock and Land
Western australia
Farm Weekly
Ripe
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American Agriculturist
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Tack ‘n’ Togs
The Farmer
The Farmer-Stockman
Wallaces Farmer (Iowa)
Western Farmer-Stockman
Wisconsin Agriculturist
agricultural
www.agquip.com.au
www.farmonline.com.au
www.horsedeals.com.au
www.ruralbookshop.com.au
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USA
www.farmfutures.com
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Urban & Country
124
Employment
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www.trademe.co.nz/trade-me-property
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www.travelbug.co.nz
Mobile Devices
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Domain.com.au – Android, iPhone,WP7
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Drive.com.au – iPhone, Samsung Bada
Good Wine Guide 2011 – iPhone
MyCareer.com.au – Android, iPhone,
Samsung Bada, WP7
RSVP Dating – iPhone
SMH – iPhone
The SMH for iPad – iPad
SMH Everyday Eats 2011 – iPhone
SMH Good Cafe Guide 2011 – iPhone
SMH Good Food Guide 2011 – iPhone
SMH Good Food Shopping Guide 2011
– iPhone
SMH Good Pub Food Guide 2011
– iPhone
The Age – iPhone
The Age Cheap Eats 2011 – iPhone
The Age for iPad – iPad
The Age Good Food Guide 2011 – iPhone
The Age Newspaper – iPhone
AGE Good Cafe Guide 2011 – iPhone
AGE Good Food Shopping Guide 2011
– iPhone
WA Today – iPhone
Weekly Guide to Pregnancy from Essential
Baby – iPhone
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taranaki/Manawatu Community
Newspapers
Central District Times
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The Tribune
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Kapi-Mana News
Kapiti Observer
The Hutt News
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Upper Hutt Leader
Wairarapa News
The New Zealander (International)
South island Community Newspapers
Central Canterbury News
Clutha Leader
Discover Marlborough/Nelson
D-Scene
High Country Herald
Kaikoura Star
Mid Canterbury Herald
Motueka-Golden Bay News
Newslink
Otago Southland Farmer
South Canterbury Herald
Taieri Herald
The Christchurch Mail
The Invercargill Eye
The Leader – Nelson Leader
The Leader – Richmond & Waimea Leader
The Marlborough Midweek
The Mirror
The Northern Outlook
The Saturday Express
Waitaki Herald
New Zealand Magazines
Avenues
Boating New Zealand
CIO
Computerworld
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Fish & Game New Zealand
MIS100
New Zealand Fishing News
New Zealand Gardener
New Zealand Horse & Pony
New Zealand Trucking
NZ Autocar
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NZ Life & Leisure
NZ Lifestyle Block
NZ PCWorld
Ponies
Resellernews
Sunday (host Sunday Star–Times)
The Cut
The TV Guide
Unlimited
World
Your Weekend
New Zealand Websites
www.agtrader.co.nz
www.aucklandcityharbournews.co.nz
www.aucklandnow.co.nz
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www.businessday.co.nz
www.centralleader.co.nz
www.cio.co.nz
www.computerworld.co.nz
www.cuisine.co.nz
www.dargavillenews.co.nz
www.dompost.co.nz
www.eastandbayscourier.co.nz
www.easterncourier.co.nz
www.jobuniverse.co.nz
www.lifestyle-farmer.co.nz
www.manawatustandard.co.nz
www.manukaucourier.co.nz
www.marlexpress.co.nz
www.nelsonmail.co.nz
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www.northharbournews.co.nz
www.northshoretimes.co.nz
www.nor-westnews.co.nz
www.nzfishingnews.co.nz
www.nzgardener.co.nz
www.nzhouseandgarden.co.nz
www.nzlifeandlesuire.co.nz
www.nzx.com
www.papakuracourier.co.nz
www.pcworld.co.nz
www.press.co.nz
www.reseller.co.nz
www.rodneytimes.co.nz
www.rugbyheaven.co.nz
www.southlandtimes.co.nz
www.sstlive.co.nz
www.straightfurrow.co.nz
www.stuff.co.nz
www.sundaynews.co.nz
www.taranakidailynews.co.nz
www.timaruherald.co.nz
www.unlimited.co.nz
www.waihekemarketplace.co.nz
www.waikatotimes.co.nz
www.westernleader.co.nz
www.whangareileader.co.nz
TradeMe
automotive
www.trademe.co.nz/trade-me-motors
auctions
www.trademe.co.nz
www.safetrader.co.nz
Dating
www.findsomeone.co.nz
FAIRFAX MeDIA lIMIteD
GPO 506
Sydney NSW 2001
Sydney offices
1 Darling island Road
Pyrmont NSW 2009
Telephone 02 9282 2833
www.fxj.com.au