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F A I R F A X M E D I A A N N U A L R E P O R T 2 0 1 5
G R O W
T R A N S F O R M
I N V E S T
G R O W
BUILDING AND
INVESTING IN
DOMAIN GROUP,
GROWING VERTICALS
AND LEVERAGING
AREAS WHERE WE
HAVE COMPETITIVE
STRENGTH AND SKILLS,
SUCH AS LIFE MEDIA &
EVENTS. REALISING THE
FULL POTENTIAL OF
OUR RESTRUCTURED
RADIO BUSINESS.
IV
FAIRFAX MEDIA IS AT THE FOREFRONT OF
REVOLUTIONISING MEDIA AND LEADING
THE CHANGE WITH OUR STRATEGY TO
GROW, TRANSFORM AND INVEST.
We are at the heart of
conversations that matter and
creating connections that count.
We are the trusted voice,
informing, engaging and
entertaining audiences and
communities in Australia
and New Zealand via our
newspapers, websites, radio
stations, events and dynamic
digital venues for commerce
and information.
Every day we empower millions
of people with our independent
journalism, quality content and
great experiences – and we have
been doing it for 184 years.
Our journalists perform their
jobs with independence,
insight and integrity.
Everyone in our business
is passionate and puts customers
and audiences at the centre of
everything we do.
We are focused on growing
shareholder value by engaging
audiences, communities and
businesses through compelling
content and services, monetising
across a range of business models.
We are growing and transforming
Fairfax Media, investing in it,
making it a stronger, diversified
portfolio of businesses –
spanning media, marketing
services, property services, data,
entertainment, and beyond –
sustaining the important work we
do in the communities we serve.
Independent. Always.
AUSTRALIAN
METRO MEDIA
LEADING
METROPOLITAN
NEWSPAPERS &
DIGITAL MEDIA
Publishing arm for The
Sydney Morning Herald,
The Age and The Australian
Financial Review saw
earnings growth of 52%,
resulting from cost reduction
and benefiting from the
closure of Tullamarine
and Chullora print sites in
2014. Re-scaling printing
operations for efficiency,
digital subscriptions and
other new revenue streams
helped sustain publishing
profitability in the face
of continued print
advertising declines.
DOMAIN
GROUP
REAL ESTATE MEDIA
AND SERVICES
Domain Group
continued to fast-track
its national expansion
with a 20% increase
in agent subscribers; 16%
increase in listings; and
30% increase in average
monthly visits across
main and mobile sites
and apps. Acquisitions
totalling $150 million and
operational investment
in sales and product
development have
been undertaken to
aggressively expand
Domain’s footprint and
establish it as a strong
growth vehicle.
LIFE MEDIA
& EVENTS
LIFESTYLE MEDIA
ASSETS AND EVENTS
Life Media’s strong
portfolio includes lifestyle-
oriented products
spanning travel, health,
food, parenting and
motoring combined
with our Events business
focused on running,
swimming, food and wine,
parenting and the arts.
The combination builds
on the strong natural
audience and commercial
links of the two businesses
and brings sharper
commercial focus,
speed to market and an
improved product mix to
our millions of customers.
7%+
Digital
revenue
growth
5%-
Total
revenue
52%+
Adjusted
EBITDA
growth
36%+
Digital
revenue
growth
45%+
Total
revenue
growth
46%+
EBITDA
growth
41%+
Events
revenue
growth
53%+
Number of
consumer
events
2M
Event
participant
numbers
SNAPSH OT
2
DIGITAL
VENTURES
PORTFOLIO OF
DIGITALLY-FOCUSED
ASSETS
HuffPost Australia, a local
partnership with leading
global source of news
and information The
Huffington Post, adds
to the strong portfolio of
digital-only publishing
assets. Joint venture
Subscription Video-On-
Demand service Stan
launched on Australia Day
and is fast gaining traction
with consumers. Pleasing
progress was made with
transactional businesses
and early stage investments,
with some strategic bolt-on
acquisitions made.
AUSTRALIAN
COMMUNITY
MEDIA
LEADING RURAL
AND REGIONAL
NEWSPAPERS &
DIGITAL MEDIA
ACM restructured from
65 separately run businesses
into six geographic
operating groups to create
a modern, stronger rural
and regional media network.
The transformation program
is focused on maintaining
a strong footprint for local
news, content and
sales capability, while
adopting new technology,
upgrading newsrooms, and
working more efficiently
with new systems.
NEW ZEALAND
MEDIA
LEADING NZ
NEWSPAPERS &
DIGITAL MEDIA
Building a digital future
and improving audience
monetisation through
product innovation,
marketing investment,
as well as significant editorial
and sales transformation.
The number of stories
published across digital
platforms has increased
from 400 to 1,500 a day.
Stuff.co.nz is setting an
impressive pace as our
New Zealand digital brand,
moving from seventh to
fourth largest digital site in
the country with monthly
audience of 1.8 million.
MACQUARIE
RADIO
NETWORK
LEADING NATIONAL
NEWS, TALK, SPORT
& MUSIC RADIO
NETWORK
Fairfax has a 54.5% share-
holding in the ASX-listed
Macquarie Radio Network.
The expanded MRN is the
result of the merger of Fairfax
Radio Network’s 3AW, 2UE,
4BC and 6PR stations with
MRN’s 2GB. The radio merger
unlocked significant value
and synergies, and creates
new advertiser opportunity
by bringing together the
leading news, talk and
sport stations in Sydney
and Melbourne.
$20M
FY15
investment
(excl. Stan)
OF
3 5
Partnerships with
3 of the top 5
digital-only US
media groups
300K
Stan gross
sign-ups
$60M
Targeted
annualised
savings by
end of FY16
8%-
Total
revenue
34%-
Adjusted
EBITDA
38%+
Digital
revenue
growth
5%-
Total
revenue
12%-
Adjusted
EBITDA
#1
Stations
in Sydney and
Melbourne
UP
TO
$15M
Annualised
merger synergy
benefits
$78M
Proceeds
from sale
of 96FM
SNAPSH OT
FAIRFAX MEDIA ANNUAL REPORT 2015 | 3
S
T
A
T
S
4
TRANSFORM
CONTINUING THE TRANSFORMATION TO
CREATE A SUSTAINABLE PUBLISHING BUSINESS
ON THE PRINT TO DIGITAL JOURNEY.
MAINTAINING COST DISCIPLINE AND
DELIVERING EFFICIENCIES.
WE ARE BUILDING A STRONGER,
MORE DIVERSIFIED BUSINESS
11M
7.5M
Australian audience across print,
web and mobile
Australian national and
metro masthead reach
5.1M
Audience for The Sydney
Morning Herald – Australia’s
No. 1 masthead
159K
Paid digital subscribers to
The Sydney Morning Herald
and The Age
45%
34%
Growth in Domain unique
monthly audience to 2.5m
Increase in Domain mobile app
downloads to 3.8m
20%
2.3M
Growth in Domain.com.au
agent subscribers
Listeners across MRN’s
national radio network
2.8M
New Zealanders connect
with Fairfax every day
1.8M
New Zealanders visit
Stuff.co.nz each month
FAIRFAX MEDIA ANNUAL REPORT 2015 | 5
FAIRFAX MEDIA ANNUAL REPORT 2015 | 5
FAIRFAX MEDIA
HAS ACHIEVED
A PROFOUND
TRANSFORMATION IN
THE LAST FOUR YEARS
FROM A TRADITIONAL
MEDIA BUSINESS
INTO A STRONGER,
MORE DIVERSIFIED
MEDIA COMPANY
INCREASINGLY
FOCUSED ON
HIGH-GROWTH
OPPORTUNITIES.
ROGER CORBETT, AO
Fairfax’s robust financial position
and operating earnings stability
in the last two financial years
demonstrates the success of the
Company’s strategy to optimise
its core strengths and reshape
the business for future growth
while continually adapting to
the innovation happening in the
media industry globally.
Total Group revenue grew
0.3% year-on-year to
$1,840.8 million for continuing
businesses in the 2015 financial
year. This is the first time in
eight years that the Group has
delivered revenue growth.
This achievement reflects the
many actions we have taken
over recent years, including
acquisitions, restructuring and
growth initiatives.
Fairfax anticipated and took
strategic action to prepare for
the ongoing structural shift away
from print advertising which is
taking place in both local and
international markets. In the
financial year, the pressures
faced by print were offset by
revenue growth in our real estate
and media services business
Domain Group, digital revenue
growth and new revenue
streams, and contribution from
acquisitions. The Company’s
revenue streams have evolved
to include digital subscriptions,
marketing services, property
services, events, entertainment
and more. Gone are the days
where revenue consists of just
advertising and cover price
revenue. A concerted effort to
diversify our revenue base has
resulted in improved profitability.
For the 2015 financial year,
Fairfax delivered operating
earnings before interest, tax,
depreciation and amortisation
(EBITDA) of $287.4 million for
continuing businesses, which
was about 3% lower than the
$297.7 million in the prior year.
This result has been achieved
despite significant investment
of around $42 million, the
majority in Domain, Events and
Stan which is yet to be fully
reflected in the performance
of these businesses. Earnings
before interest and tax (EBIT)
of $222.6 million is 8% higher.
For continuing businesses,
earnings per share went from
6.3 cents to 6.0 cents and paid
total dividends for the year of
4 cents per share. After taking
into account significant items, the
company reported a net profit
after tax of $83.2 million.
The reported net profit result
includes significant items expense
after tax of $60.5 million.
The Company started the
financial year with a strong
balance sheet following
significant net debt reduction
in recent years. The Company
finished the year in a net cash
position, putting us in a strong
position to both invest for
growth and undertake capital
management strategies focused
on maximising shareholder
returns. In February, the
company announced an on-
market buyback of up to 5% of
ordinary shares over 12 months.
REVOLUTIONISING MEDIA
Fairfax has been at the forefront
of revolutionising media by
thinking through the immense
challenges of reshaping,
restructuring and revitalising
the traditional media model.
Fairfax is an undisputed leader
in transforming to embrace
the new realities of modern
6
CH AIRM AN
communication and technology.
We have truly led the change.
Aggressive change has been vital
in the face of reducing traditional
revenues and the dramatic
industry transition happening
in Australia, New Zealand and
internationally.
Throughout this evolution,
Fairfax has maintained a resolute
focus on maximising shareholder
value by engaging audiences,
communities and businesses
through its compelling content
and services, monetised across
a range of business models.
The business is maintaining
and leveraging its strength and
scale as a provider of quality,
independent journalism -
across print, digital and radio
- in the local and metropolitan
communities we serve.
In the 2014 Annual Report,
I set out a number of elements
that would contribute to our
objective to build on our core
strengths, become stronger and
more digital-centric through
transformation of our publishing
businesses, and invest in our
growth engines and new
opportunities.
We have reshaped our business
model to include a range of
services - marketing services,
property services, events, and
entertainment - all driven by
our fundamental capabilities as
a leading multi-media business
with large-scale audiences. We
create commercial opportunities
by taking a 360-degree view
of clients’ needs - beyond
traditional advertising - and
offer a full suite of marketing
solutions, including data services
and content marketing, to
provide additional value to
our advertisers.
Domain is a standout performer
in extending and growing, with
its digital EBITDA up 37.1%
during the year. This is an
impressive accomplishment.
Domain is maintaining its
strong growth momentum
as it continues its aggressive
national expansion strategy.
FAIRFAX HAS BEEN AT
THE FOREFRONT OF
REVOLUTIONISING
MEDIA BY THINKING
THROUGH THE
IMMENSE CHALLENGES
OF RESHAPING,
RESTRUCTURING
AND REVITALISING
THE TRADITIONAL
MEDIA MODEL.
Our Events business has a
blossoming portfolio, having
combined with our Life Media
business of lifestyle-oriented
products spanning travel,
health, food, parenting and
motoring in order to build on
the strong natural audience and
commercial links between these
two businesses.
In December 2014 we
announced the creation of a
stronger national radio network
through the merger of Fairfax
Radio Network’s 3AW, 2UE,
4BC and 6PR stations with
Macquarie Radio Network’s 2GB.
The merger unlocks significant
value and advertiser opportunity
and brings together the leading
news, talk and sport stations in
Sydney and Melbourne. Further
significant value was realised
through Fairfax’s sale of Perth
music station 96FM for cash
consideration of approximately
$78 million, which was a
compelling offer.
I noted in my report last year that
Fairfax and Nine Entertainment
Co. had formed a 50:50 joint
venture to launch a Subscription
Video-On-Demand (SVOD)
service in 2015 to provide
unlimited access to television
shows and movies. Stan was
launched on Australia Day and is
making pleasing progress.
In 2015 we also made significant
progress in delivering greater
levels of productivity and
efficiency right across the
business. We have simplified our
operations and well exceeded
our targeted $311 million
annualised cost savings by 2015,
resulting from our Fairfax of the
Future program to become a
leaner, more agile organisation.
That program was announced in
February 2012 to run over three-
to-four years. The disciplined
and pragmatic approach
instilled through Fairfax of the
Future is now embedded in
management, with cost savings
and transformation continuing.
Transformation is delivering the
outcomes we planned for. Core
operating costs for the year
were down 4% and Metropolitan
publishing costs down 7%. We
continue to seek out efficiencies
and are constantly developing
smarter ways of doing what
we do. Restructuring of our
Australian Community Media
CH AIRM AN
FAIRFAX MEDIA ANNUAL REPORT 2015 | 7
CHAIRMAN’S REPORT CONT’D
February
2012
March
2013
Fairfax of the Future
program launched
Compact editions of
The Age and SMH
launched
April
2013
Organisational
structure
simplified
June
2013
Digital subscriptions
launched for
The Age and SMH
December
2013
Sale of
Stayz for
$220m
$83.2M
Statutory net profit
after tax
$143.6M
Underlying net
profit after tax
4¢
Total dividends
partly franked
$64M
Net cash
as at 28 June 2015
business of more than 150
rural and regional newspapers
and websites is well progressed
and on track to deliver annualised
savings of up to $60 million by
end of financial year 2016.
GROW, TRANSFORM, INVEST
We are executing a strategy to
optimise our core strengths.
Put simply there are three
elements to our strategy:
> We are growing our core
businesses. This includes
building and investing in our
major growth vehicle Domain
Group, growing verticals and
leveraging areas where we have
competitive strength and skills
- such as Life Media & Events.
In addition, we are realising the
full potential of our restructured
Radio business which now
takes the form of a 54.5%
shareholding in the ASX-listed
Macquarie Radio Network.
> We are continuing the
transformation required to
create a sustainable publishing
business, spanning metropolitan
and community titles, on
the print to digital journey.
This involves reshaping the
publishing model, continuing
to deliver efficiencies, and
maintaining cost discipline.
Setting an impressive pace
is our New Zealand digital
brand, Stuff.co.nz, which lifted
audiences 23% year-on-year
to 1.8 million, supporting 38%
growth in our digital revenues
in that market.
> We are investing to develop
new growth verticals.
An example of which is our
joint venture with leading
global source of news and
information, The Huffington
Post, to launch a local version
HuffPost Australia in August,
which is part of our Digital
Ventures portfolio of high-
potential digital businesses and
investments. We are leveraging
our balance sheet strength to
pursue strategic opportunities
and to create shareholder value.
Our strategy and strong balance
sheet puts us in a position
to invest in existing and new
business areas where our
journalism and content gives
us competitive strength. In his
report, our Chief Executive
Officer elaborates further on
our strategy and the significant
developments and milestones
that contributed to our progress.
THE FUTURE
Your Board is ever mindful to
ensure our decisions position
Fairfax to best operate in
the contemporary media
environment, ready to take full
advantage of new opportunities.
Fairfax has made its position
absolutely clear that the archaic
media ownership restrictions
currently in place in Australia
are outdated and outmoded by
technological change and shifts
in how consumers now source
their news and information.
Fairfax strongly advocates for
media ownership law reform and
the flexibility to operate across
all available media platforms.
The current legislation simply
does not meet the needs of the
industry or the community.
It is hindering the development
of modern media for Australian
consumers and has the potential
to greatly restrict the quality of
content which flows to them in
the future.
8
> June
2014
August
2014
August
2014
Closure of Chullora
and Tullamarine
print sites
Australian
Community Media
transformation
50% investment
in SVOD service
Stan
October
2014
Acquisition of
Allhomes
January
2015
March
2015
Move to 100%
ownership of Metro
Media Publishing
Merger of Radio
assets with Macquarie
Radio Network
Abolishing the reach rules, and
the two-out-of-three rule which
stops anyone owning more than
two of a newspaper, commercial
TV or radio licence in a major
market, would reset the
competitive base for a modern
media industry. Our industry
operates in an environment
of intense competition for
advertising revenue and
audiences from global media
and technology giants, such
as Google, Facebook and
Twitter. The old media rules
advantage the overseas
competitors at the expense of
Australian-owned media.
The growth in the number
of international digital media
players in Australia is challenging,
and the advertising market
is becoming increasingly
fragmented, driving the need
for Australian media companies
to be free to compete on an
even playing field.
There is a multitude of
possible scenarios should the
legislation change.
The strength of our balance
sheet, reduced cost structures
and strong market position of
our mastheads position Fairfax
to take advantage of any market
opportunities that might arise to
the benefit of our audiences and
consumers - and to maximise
value for our shareholders -
should the Government act in
the national interest on what is a
compelling and convincing case
for reform.
Turning now to another
important matter. New
remuneration arrangements for
management have now been in
operation for two years, having
been implemented following
strong support received at the
2013 Annual General Meeting.
Under these arrangements,
Key Management Personnel
will not receive short-term
performance incentives for
the 2015 financial year despite
the year’s robust financial
results. Management
recognised that there was a
strategic imperative in the 2015
financial year to concentrate on
longer-term growth, rather
than short-term earnings.
There was an economic
incentive for them to take this
approach as our remuneration
arrangements are operating
as intended, with incentives
weighted towards longer term
equity opportunities. Annual
targets have been set that
represent milestones along
the way but management’s
primary focus is on delivering
the Company’s strategic
transformation for the long term.
Your continuing support of these
arrangements is well justified by
the results to date.
This is my final report to you as
Chairman of Fairfax, a role I’ve
held since October 2009 having
joined the Board in February
2003. In March, we announced
Nick Falloon’s appointment to
the Board as a Non-Executive
Director, which was effective
1 May 2015, and that he would
assume the Chairmanship when
I leave the Board at the end of
August following the signing of
the full year accounts.
We welcome Nick to the
Board. He brings a lifetime of
experience in the media industry,
including serving as the Chief
Financial Officer and later Chief
Executive Officer of Publishing
and Broadcasting Ltd, which
included ACP Magazines, Nine
Network and Crown Casino.
He was also the Executive
Chairman of Network Ten
between 2002 and 2010, one
of the most successful periods
in the network’s history.
Nick will conduct the 2015
Annual General Meeting to be
held in Sydney in November.
At this meeting we will have three
serving Directors standing for
re-election, Jack Cowin, Michael
Anderson and James Millar.
Nick will be standing for election.
It has been a tremendous
honour to have served the
shareholders of Fairfax, an
important organisation enriching
the lives of Australians and
New Zealanders as their trusted
voice. I have every confidence
in management, Nick and the
Board. I take this opportunity to
acknowledge my fellow Board
members for the invaluable skills,
expertise and experience they
bring to your Company.
On behalf on the Board, I would
like to thank everyone who
works as part of Fairfax for their
efforts in achieving significant
progress and for doing the
important work that they do.
Your Board is confident Fairfax is
well-positioned to thrive into the
future and maximise shareholder
value, while staying true to
its proud 184-year history of
maintaining core editorial values
of independence and integrity.
There is great opportunity ahead
for Fairfax.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 9
IN 2015 FAIRFAX
MEDIA DELIVERED
REVENUE GROWTH
FOR CONTINUING
BUSINESSES FOR THE
FIRST TIME IN EIGHT
YEARS. THIS MILESTONE
IS TESTAMENT TO
OUR COMMITMENT
TO EMBRACE THE
OPPORTUNITIES
ARISING FROM THE
NEW REALITIES OF
MODERN MEDIA.
GREG HYWOOD
Our efforts to transform the
financial and operational
performance of Fairfax began
around four years ago. The
early stages of this journey
involved a resetting of our
cost base, implementing a
series of operational changes,
and strengthening the Fairfax
balance sheet through a
number of strategic asset sales.
Today, our business and
culture thrive on innovation.
Customer and digital centricity
is part of our organisational
DNA as we implement our
strategy of building and
monetising our large-scale
audiences by providing quality,
independent journalism,
content and experiences.
We are now focused on
reshaping the business for
growth and investing for
the future.
During the 2015 financial year,
we applied dedicated focus,
attention and resources to our
growth engines, which include:
> Domain Group - our
real estate media and
services business which is
fast-tracking its national
expansion.
> Life Media & Events - our
strong portfolio of lifestyle-
oriented products spanning
travel, health, food, parenting,
motoring, combined with
one of the largest events
businesses operating
across Australia and New
Zealand, focused on running,
swimming, food and wine,
parenting and the arts.
> Digital Ventures - our
specialist business unit
embracing entrepreneurial
and disruptive thinking,
with a strong portfolio of
digital publishing assets and
transactional businesses,
along with our 50:50 joint
venture Subscription
Video-On-Demand (SVOD)
service, Stan.
We are making pleasing
progress in our efforts, which
I outlined in the 2014 Annual
Report, to optimise our
strengths by building new
audiences and extending our
media core into a broadly-
based services business.
Key to this is leveraging
our multi-platform media
business and its highly valuable
audiences, content and
journalism. Our business is
stronger as a result of a more
diversified revenue base.
The Chairman’s Report outlined
three elements in Fairfax’s
strategy - grow, transform
and invest - to accelerate the
Company’s performance over
the long-term. The significant
developments and milestones
in executing our strategy are
outlined below.
GROW
In the last two years we have
implemented a strategy to
realise Domain’s full potential -
providing the business with the
autonomy, and the resources
necessary, to make it the real
estate media and services
powerhouse it is fast becoming.
Domain has aggressive growth
objectives and we believe it
is well-positioned to achieve
them. The evidence is in that
as in other international
markets, like the United
Kingdom, there is room for
two strong players in the real
estate classifieds category.
10 CEO & MD
shareholder value, with further
significant value unlocked
through our sale of Perth-based
96FM for cash consideration
of approximately $78 million.
TRANSFORM
We are well-advanced in
creating a sustainable publishing
business on the print to
digital journey.
Audiences flock to us for the
quality, independent journalism
and content we deliver in ways
our readers want it. We put
hundreds of journalists and
salespeople into communities to
be at the heart of conversations
that matter and to create
connections that count.
That localism – combined with
a national footprint and
journalism of significant scale –
is our competitive advantage.
Transforming our Australian
metropolitan publishing business
has included reorganising
newsrooms to be genuinely
digital-first, significantly reducing
costs and outsourcing where
appropriate, while
Domain has leadership in
several key markets - it is
number one in Sydney and
Canberra - and is a serious
challenger in other key markets.
We have invested $150 million
in acquisitions that expand
Domain’s footprint and broaden
its offering. This has included
buying Canberra’s leading
property portal Allhomes for
approximately $50 million in
October 2014, and moving
from 50% to full ownership of
Victoria’s premium real estate
and lifestyle-focused magazine
and newspaper business
Metro Media Publishing (MMP).
There has also been significant
operational investment in sales
and product development.
In 2015, Domain made
fast progress in executing
its strategy:
> 20% increase in agent
subscribers to 10,400;
> 16% increase in listings to more
than 350,000 with 85% overall
market penetration;
> 30% increase in average
monthly visits across main,
mobile sites and apps to 25
million; and
> National roll-out of agent
ownership model.
Domain achieved digital
revenue growth of 36% and
a 37% increase in digital earnings
before interest, tax, depreciation
and amortisation (EBITDA) to
$61 million. Including the
acquired MMP business, Domain
Group revenue increased 45%
and EBITDA increased 46% to
almost $86 million.
Domain is well positioned with
a great strategy and a great
team. Momentum in this
business is strong.
We have also grown our Events
business, having combined it
with our Life Media business,
in order to build on strong
natural audience and
commercial links.
This new structure brings
sharper commercial focus,
speed to market, and an
improved product mix to our
millions of customers.
Our journalism drives enormous
audiences and we are taking
advantage of that success.
In the year, we expanded the
number of events from 15 to 23,
with a 41% increase in revenue
reflecting strong organic growth,
new event launches, and
acquisitions such as the Baby
& Toddler Show.
Fairfax’s radio interests now take
the form of a 54.5% shareholding
in the ASX-listed Macquarie
Radio Network.
During the year Fairfax Radio
Network’s 3AW, 2UE, 4BC
and 6PR stations merged with
Macquarie Radio Network’s 2GB.
The radio merger has created
a genuine national news, talk and
sport network, bringing together
the number one stations in
Sydney and Melbourne.
MRN now has the greatest mix
of talkback talent ever assembled
in a single radio network,
engaging with a total audience
of 2.3 million.
The merger provides both
cost and revenue benefits.
Cost benefits are estimated
between $10 million and $15
million on an annualised basis
and MRN is well underway with
business integration.
The restructuring of our radio
assets has been a key driver of
CEO & MD
CEO & MD’S REPORT CONT’D
$287.4M
Underlying
EBITDA excluding
businesses divested
+
37.1%
Domain digital
EBITDA growth
$265M
Cashflow from
trading
47%
Metro
4%
Radio
19%
New Zealand
Australian Community Media
30%
Share of underlying EBITDA for continuing
businesses excluding corporate/other (%)
maintaining reach of almost 11
million Australians aged 14+
across publishing mastheads -
which is the largest audience
in the company’s history. The
Sydney Morning Herald is the
nation’s most read masthead
across print and digital platforms,
with a monthly audience well
over five million.
We have dismantled the legacy-
based, vertically-integrated
structure, and become a leaner,
more agile organisation, from
editorial production, advertising,
sales and contact centres.
We run our business on a
24/7 digital-first basis, where
the production of a physical
newspaper is important but just
one part of the process.
Smarter production methods and
increased circulation yield have
improved profitability.
Closing down our printing
operations in Tullamarine and
Chullora allowed us to replace
presses with an original cost of
$600 million with $40 million of
extra capital equipment at our
regional printing sites in Ballarat
and North Richmond.
This rescaling for efficiency saw
printing capacity utilisation in
Sydney and Melbourne markets
improve from 40% to 90%.
We have also improved
profitability through the
diversification of our revenue
base, having introduced digital
subscriptions for The Sydney
Morning Herald and The Age, with
159,000 paid digital subscribers
as at August 2. The diversification
of our revenue base can be seen
in print advertising making up just
34% of total Metropolitan revenue
in 2015.
Our Metropolitan publishing
operating costs are down by 7%,
which together with Domain and
the new revenue initiatives, have
contributed to EBITDA growth for
Metropolitan Media of 30%.
transformed the operations
and performance of our metro
business to our Australian
Community Media (ACM)
business of rural and regional
newspapers and websites.
We have restructured ACM
from 65 largely separately-run
businesses into six geographic
operating groups to create a
stronger rural and regional media
network. This approach has
involved working more closely
together and sharing resources
across our many newspapers,
websites and events.
ACM is maintaining a strong
footprint for local news, content
and sales capability, while
adopting new technology and
upgrading newsrooms.
Our people are working more
efficiently with new systems and
digital-first editorial production
practices and we have a vastly
improved local sales approach.
Our New Zealand publishing
business has also been reshaping
- through product innovation,
as well as significant editorial
and sales transformation - to
build a digital future and improve
audience monetisation.
The business reaches 2.8 million
people each day, driven largely
by Stuff.co.nz. Stuff has moved
from seventh to fourth largest
digital site in the country, ahead of
YouTube and just behind TradeMe.
Fairfax is leading the way in
shaping the modern digital
news product for Australians
and New Zealanders.
In transforming our publishing
business, we are taking advantage
of the opportunities presented
by the global nature of digital
publishing. Around 75% of the
audiences of our main metro
mastheads are coming to us on
digital platforms and increasingly
mobile. This trend underpins our
efforts to refine our digital news
product so it is tailored optimally
for our audiences.
We are applying many of the
same principles that successfully
Fairfax is in the enviable position
of having access to the best
12
intelligence and learnings in the
evolving digital environment
because of our exclusive
relationships with three of the top
five digital-only media groups
in the US, the centrepiece of
which is our relationship with
leading global source of news
and information The Huffington
Post, coupled with the alliances
formed by our Allure Media
business, which is part of the
Digital Ventures portfolio.
FAIRFAX NOW
OPERATES WITH A
REINVIGORATED AND
HIGHLY ENERGISED
CULTURE, WITH OUR
PEOPLE ADEPT AT
USING THE MODERN
TOOLS OF MEDIA
TO DRIVE AUDIENCE
ENGAGEMENT
AND COMMERCIAL
SUCCESS.
INVEST
Our Digital Ventures business
encompasses three core
components, the first being
digital-only publishing as
mentioned above. The second
component is Stan, and the third
is our range of transactional and
early stage investments such as
Tenderlink, Weatherzone, RSVP/
Oasis Active, Healthshare
and Adzuna.
During the year we invested
$20 million in Digital Ventures,
excluding our investment in
Stan. Investments included
The Huffington Post Australia,
game-based e-learning business
for children Skoolbo, publishing
and online community business
Over 60, lightning data business
Kattron (part of Weatherzone),
and Weatherzone’s joint venture
with South Africa’s leading
commercial weather services
company AfricaWeather.
We are investing $50 million
in Stan over a multi-year
period, including marketing
and advertising. Stan has
a compelling consumer
proposition in terms of value
and content. The $10 a month
service provides subscribers with
access to the largest content
library of TV shows and movies
in Australia.
The SVOD category is fast gaining
traction with media consumers
looking to supplement their free-
to-air viewing with on-demand,
internet delivered content.
Consumer interest in Stan has
exceeded expectations, with well
over 300,000 gross sign-ups as
at August 3. There has been a
strong response to SMH/The Age
subscription bundling offers.
Our publishing business has
provided valuable marketing and
advertising support to our new
and growth businesses.
Fairfax has a strong balance
sheet with net cash of $64
million, which provides us
with considerable flexibility
to continue to invest, both in
our existing businesses and via
acquisition, as we continue the
Company’s transformation.
OUR PEOPLE
Fairfax now operates with
a reinvigorated and highly
energised culture, with our
people adept at using the
modern tools of media to drive
audience engagement and
commercial success.
The Company’s solid financial
results are a reflection of the
performance of our people.
We are investing in our large,
highly talented workforce across
Australia and New Zealand and
equipping them with the new
skills and technology needed to
take our business into the future.
Everyone in our business has an
unrelenting focus on the future
and the great opportunity ahead.
Our people embrace change and
innovation and are committed to
delivering on our long-term plan
to grow, transform and invest.
Step by step, milestone by
milestone, we are doing what
some thought could not be done.
In reshaping the business,
the Fairfax team is proudly at
the forefront of developing a
contemporary media business
model, underpinned by our
contemporary journalism.
That outstanding journalism
remains at the heart of our
business. We deliver quality
journalism and content to
our large-scale audiences
across all available platforms,
while maintaining absolute
independence and integrity.
Finally, I would like acknowledge
our Chairman, Roger Corbett,
who is stepping down from
the Board after more than
12 years. Roger has made an
invaluable contribution and been
instrumental in guiding Fairfax,
its strategy and transformation.
I have valued his wise counsel
and advice.
Roger and the Board have
overseen the great progress
Fairfax has made in recent years.
Today, Fairfax is a stronger, more
diversified media company.
We are clear-sighted about the
immense opportunities ahead
and our ability to seize them.
We are confident in our
business model and strategy to
provide advertising to clients,
subscriptions to customers, and
leverage our marketing inventory
and audiences to grow new
businesses, such as Domain
and Events.
Fairfax is accelerating into
the future.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 13
FAIRFAX MEDIA’S
COMMERCIAL
SUCCESS AND
FINANCIAL
PERFORMANCE
IS VITALLY
IMPORTANT TO
THE COMPANY’S
ABILITY TO
PROVIDE
MEANINGFUL
LONG-TERM
BENEFITS TO THE
COMMUNITIES
WE SERVE
THROUGHOUT
AUSTRALIA AND
NEW ZEALAND.
In all aspects of our business,
we maintain a strong focus on
environmental and corporate
social responsibility (CSR).
We believe it is important to
play an active role in supporting
local communities. We utilise our
position as a community leader
to support initiatives and causes
which are aligned with our business
objectives through measures
including sponsorships, contra
advertising, partnerships, fundraising
campaigns as well as editorial
exposure across our extensive
network of media assets.
By driving conversations that
matter and creating connections that
count in the communities we serve,
Fairfax uses its trusted voice
to deliver a powerful public good.
Our journalism makes communities
stronger - more civil, more open and
transparent. We hold governments
and the powerful up to public
scrutiny and to account.
At Fairfax, we strive to be accurate
and fair-minded in our reporting.
We have established internal
processes which aim to ensure
this happens.
We embrace self-regulation
of the media industry, which
we actively support and fund.
Our CSR strategy considers risks
and the interests of our customers,
employees, shareholders,
communities and social
and environmental aspects
of our business activities and
the impact on long-term
financial viability.
By integrating CSR into core
business processes and stakeholder
management, Fairfax can achieve the
ultimate goal of creating both social
and corporate value.
Fairfax runs a combination of both
centralised and decentralised CSR
programs to ensure maximum
benefits to our local communities,
our customers and our employees.
There are five strategic pillars in our
CSR and sustainability strategy:
1. Environment
2. Community
3. People and Culture
4. Editorial Integrity
5. Financial Viability and
Sustainability
CORPORATE SOCIAL RESPONSIBILITY &
SUSTAIN ABILITY
14
ENVIRONMENT
Fairfax performs a vital role in educating,
informing and raising awareness in the
community about important sustainability
and environmental issues.
At the same time, the Company’s
environmental strategies ensure
positive action is taken to reduce
energy consumption and manage
our carbon footprint.
Fairfax’s Environment Policy sets out
the Company’s commitment to managing
and improving environmental performance
across all business activities, with key
impacts being in the areas of waste
generation, air and water emissions and
recycled waste.
In 2011, Fairfax made a commitment to
reduce its carbon emissions by 20% to
25% by 2020.
From FY12 to FY15, a reduction of
more than 30% of Scope 1 and Scope 2
Greenhouse Gas (GHG) emissions has
been achieved.
The table overleaf highlights Fairfax’s
improved performance against the 2020
carbon emissions reduction target.
To maintain consistency with FY11/12,
the GHG figures for following years are
from the National Greenhouse Energy
Reporting Scheme (NGERS) report.
This achievement is the result of a number
of key initiatives including:
> consolidation of printing
assets across both Australia
and New Zealand;
> education in administration and office
facilities across the property portfolio; and
> installation of energy efficient plant,
equipment and lighting across a number
of key business units.
Fairfax is continuing to focus on further
reductions in GHG emissions and
environmental performance.
A number of key initiatives are
under way, including:
> reviewing efficiency opportunities
across the Fairfax property portfolio
with potential energy and cost
savings through better management
of energy transmission and
distribution losses;
> the introduction of a monthly
energy data validation process to identify
consumption trends, review energy
intensities and pick up anomalies to
improve the quality
and accuracy of reporting overall;
> implementation of a single waste
contract and reporting standards
across Australia and New Zealand and
development of a waste reduction
strategy for all Fairfax sites;
> the introduction of a Carbon
Footprint Dashboard to provide
up-to-date energy data for
management and staff;
> the continuation of the property asset
review and real estate consolidation
program to reduce floor space, energy
consumption and property running
and maintenance costs; and
> investigation and analysis of voltage
stabilisation technology to reduce power
consumption and damage to electronic
equipment at print sites caused by
power fluctuations.
Fairfax is a co-signatory to the National
Environmental Sustainability Agreement.
The Company maintains a strong
commitment to using sustainable
technologies and materials such as
inks with a vegetable oil base and
newsprint from sustainable sources.
SUSTAIN ABILITY
FAIRFAX MEDIA ANNUAL REPORT 2015 | 15
CORPORATE SOCIAL RESPONSIBILITY
& SUSTAINABILITY CONT’D
Fairfax’s printing division is a member of
The Newspaper Works’ Environment
Advisory Group (EAG) which aims to
advance newsprint recycling, improve
product stewardship and promote
sustainability.
Fairfax’s Events business remains focused
on reducing its environmental impact,
including waste reduction, with 70% or
242.63 tonnes of food waste generated
from events successfully diverted from
landfill into compost, organics and recycling
in FY15.
IMPROVED PERFORMANCE AGAINST REPORTED 2020 CARBON EMISSIONS REDUCTION TARGET
T CO2-E (NGERS)
YEAR-ON-YEAR PERFORMANCE (%)
2013-14 PERFORMANCE C.F. 2011-12 (%)
2011-12
2012-13
2013-14
84,976
79,174
68,929
-7%
-13%
-19%
Fairfax is committed to supporting and
making a positive contribution to the
hundreds of communities in which
it operates.
We do this in many different ways,
each unique to our role as a powerful
community leader.
Fairfax newspapers and websites play an
important role in encouraging fundraising.
For example, Stuff.co.nz utilised a
‘givealittle’ page to encourage its readers
to support the Red Cross Nepal Earthquake
appeal in May 2015, raising NZ$57,717.
Fairfax also supports numerous charities
through the provision of advertising support.
In FY15, Fairfax and its divisions delivered
multi-million dollar exposure for charities
and community organisations.
FAIRFAX EVENTS
Fairfax attracted more than two million
people to its expanding calendar
of arts, business, food and wine,
parenting and sports events.
Extending our large-scale audiences
into communities provides significant
social and economic benefits. As well
as connecting us to our readers, Fairfax
Events enables the Company to build key
partnerships with local charities, clubs and
associations as well as helping to raise
valuable funds for hundreds of
deserving charities.
Our sporting events portfolio - including
City2Surf (Sydney), City2Sea (Melbourne),
City2South (Brisbane), the Swan River
Run (Perth) and Round the Bays (Auckland)
- works closely with Everyday Hero to
promote participants raising money
for charity.
Fairfax Media is proud to partner
with key stakeholders to deliver world-class,
mass participation events and experiences
in Australia and New Zealand. In FY15,
Since 1971, Fairfax Events have generated
more than $35 million in contributions to
various charities, with popular The Age Run
Melbourne contributing $8.9 million for
COMMUNITY
16
IMPROVED PERFORMANCE AGAINST REPORTED 2020 CARBON EMISSIONS REDUCTION TARGET
T CO2-E (NGERS)
YEAR-ON-YEAR PERFORMANCE (%)
2013-14 PERFORMANCE C.F. 2011-12 (%)
2011-12
2012-13
2013-14
84,976
79,174
68,929
-7%
-13%
-19%
400 charities since 2008 and the iconic
Round the Bays event in Auckland, New
Zealand, raising NZ$1.75 million over
the past 11 years for charitable causes
and initiatives.
March 2015 partnered with Melanoma
Institute Australia (MIA), the world’s largest
melanoma research and treatment centre,
by fundraising and promoting the important
work of the MIA.
In FY15, Fairfax Events raised around $7 million
for charity and community initiatives across
Australia and New Zealand.
> The Sun-Herald City2Surf, the world’s
largest community run attracting more
than 80,000 participants each year, raised
more than $4.5 million for participating
charities in August 2014.
> The Sydney Morning Herald Half
Marathon, Australia’s largest 21km
running event, in its 23rd year and
attracting 12,000+ runners, who raised
more than $875,000 for charity.
> The Sydney Morning Herald Cole Classic
of 3,600+ swimmers and SMH Sun Run
of 5,000+ runners raised more than
$140,000 in March 2015.
> Fairfax food events, such as Night Noodle
Markets, contributed more than $50,000
in cash donations to OzHarvest which
provided more than 100,000 meals to
vulnerable Australians.
Fairfax Events engages over 5,000 volunteers
annually donating more than $150,000 to
organisations including Girl Guides, Surf
Clubs, Rotary, run clubs and local Scouts.
Fairfax provides national support to the
prestigious Australian of the Year Awards,
as well as numerous arts organisations
and events including the Sydney Festival,
Melbourne Festival, Brisbane Festival, Art
Gallery of New South Wales, National
Gallery of Australia and the Melbourne and
Sydney Film and Writers’ Festivals.
The inaugural Sydney Morning Herald
Spectrum Now arts festival held in
AUSTRALIAN COMMUNITY MEDIA
Fairfax’s Australian Community Media
includes hundreds of rural and regional
newspapers and websites which proudly
support a range of charitable and
community causes across Australia,
through cash and in-kind contributions.
In FY15, ACM contributed more than
$366,000 to assist hundreds of special
groups, projects and programs.
RADIO
Fairfax’s radio assets (prior to the radio
transactions completed in early 2015)
continued to support hundreds of national
and local non-profit organisations through
community-based activities, sponsorships
and community service announcement
airtime in FY15. The total value of this
contra airtime was $3.7 million.
WORKPLACE GIVING
Fairfax’s Australian employees are
encouraged to participate in our
More than Words’ workplace giving
initiative by donating part of their pre-tax
salary to nominated charities. More than
$858,000 has been donated since the
program started in 2005.
AUSSMC
Fairfax Media is a Foundation Sponsor
of the Australian Science Media Centre
(AusSMC) - an independent, not-for-profit
service aimed at better informing public
debate on major science issues - providing
financial and in-kind support since 2005.
AusSMC works for the benefit of the
FAIRFAX MEDIA ANNUAL REPORT 2015 | 17
CORPORATE SOCIAL RESPONSIBILITY
& SUSTAINABILITY CONT’D
COMMUNITY
CONT’D
PEOPLE AND
CULTURE
broader community by fostering stronger
links between the media and the scientific
community to encourage the dissemination
of evidence-based science information.
NZ HOUSE & GARDEN HOUSE TOURS
NZ House & Garden House Tours profiles
some of New Zealand’s most stunning
homes in four regions across the country,
while supporting a charitable cause -
the NZ Breast Cancer Foundation. Fairfax
provides the NZ Breast Cancer Foundation
with a NZ$50,000 cash donation, along
with a NZ$100,000 media campaign.
NEWS IN EDUCATION PROGRAM
Stuff.co.nz’s award-winning News in
Education (NiE) program supports teachers
across New Zealand with high-quality,
motivating, curriculum-based resources
on a range of topics and subject areas. NiE
provides mini newspapers, aimed at five
different curriculum levels from Years 1-2
through to Years 9-10.
CREATIVE SPIRIT
Creative Spirit (creativespirit.org.nz) is a Fairfax
New Zealand initiative setting the challenge
to employers in all industries, especially media
and advertising, to provide employment
opportunities to people with disabilities.
Since Fairfax NZ started the Creative
Spirit journey in 2012, the number of
opportunities created within Fairfax alone
has grown substantially, with the Company
actively involved in assisting many other
businesses to do the same.
Fairfax works to actively build a diverse,
innovative and highly engaged workforce.
It is important in enhancing the quality
and creativity that underpins our brands
and businesses, and which makes Fairfax
a good place to work.
Our business is underpinned by a
robust culture, values and behaviours
and open, transparent manager-led
two-way communication.
The Company has identified its people
and culture as being critically important
in delivering its business objectives,
as well as attracting and retaining high
quality staff.
This includes promoting gender diversity,
equality and inclusiveness in our workplace
in all respects. More information on
how Fairfax creates a fair and inclusive
workplace can be found in the Corporate
Governance section of this report.
Our transformation involves significant
change and building a culture which
is adaptive, resilient and prepared to
continually evolve as the strategy develops.
While some areas of the business are
reducing headcount, in other areas of the
business we are hiring staff and investing.
Our culture and values are embedded
and reinforced across all areas of the
business, including in the performance
management system and processes,
learning and development programs, as
well and recognition and reward programs
to acknowledge success and achievement.
HEALTH & SAFETY
Fairfax has continued to put safety at the
forefront of its operating principles.
This has resulted in a significant
improvement in safety performance in
2015. Since the 2009/2010 financial year,
the Company has reduced the number
of Lost Time Injuries by 73%, achieving a
48% reduction from FY13/14 to FY14/15.
Headcount reductions contribute to this
change, however, the majority of the
reduction is the result of the Company’s
significantly improved focus on safety
accountability through various policy,
training and education measures.
Fairfax exceeded its target for Group Lost
Time Injury Frequency Rate (LTIFRMAT)
in FY15, achieving 1.47 as of June 2015
compared with a target of 2.32. This is
an overall reduction of 36.6% compared
with FY14.
CELEBRATING DIVERSITY
Across all levels of Fairfax we are
committed to pursuing gender diversity,
equality and inclusiveness for all employees.
The Company has set a target of achieving
35% of women in senior management
positions across the business by 2018.
To support Fairfax’s focus on increasing
the number of women in senior roles,
our recruitment practice has been updated.
Fairfax’s recruitment practice now requires
at least one woman be included on all
selection panels and shortlists for all
senior positions.
18
EMPLOYEE SUPPORT SERVICES
Fairfax offers independent, confidential
external assistance and counselling services,
through provider Optum, to all employees
across Australia and New Zealand and their
immediate families. This 24-hour service
provides direct counselling and support on
a wide range of issues. In FY15, 325 staff and
their families accessed the service and 708
employees utilised Optum’s online portal.
2,821
Employees received
a free flu vaccination
711
Employees made use of company-
subsidised gym facilities
205
Employees attended Leadership
Development programs
2,634
Employees attended
Learning and Development
training programs
1,028
Employees received company
subsidised entry to company-run
sporting events
Changes were also made to the Fairfax
Diversity Guidelines in FY15, including
updated recruitment and promotion
processes, development of frameworks
for identification, assessment and
development of high-performing
talent, as well as a review of talent and
succession management programs.
More information about Fairfax and diversity
is included in the Corporate Governance
section of this report.
WOMEN OF INFLUENCE AWARDS
Fairfax’s The Australian Financial Review
has been a proud partner together with
Westpac of the 100 Women of Influence
Awards since 2011. Fairfax also works with
Westpac to run the 60 Women of Influence
Awards in New Zealand. These awards have
had a profound influence in business by
raising gender diversity to the top of the
agenda, and creating a powerful platform
for the most influential, visionary and
inspirational women to share their
positive stories.
Fairfax also runs the Women of Influence
program for its employees. The initiative
has gained momentum over the past three
years and now has an alumni of 13 winners
who are positive role models for others.
MENTORING PROGRAM
Fairfax’s values and cultural drivers are
embedded within our internal employee
development programs. Our successful
Mentoring Program provides a structured
framework for our people to share
professional and personal experiences and
knowledge. The 2015 Fairfax Mentoring
Program paired 450 motivated and
committed staff in Australia and New
Zealand, building mutually beneficial
relationships between highly-skilled
mentors and high-performing mentees
to support knowledge and skills transfer
across the business.
FAIRFAX FOUNDATION
The Fairfax Foundation was established in
1959, operating separately from Fairfax Media
with the purpose of providing support to
current and former Fairfax employees and
their dependants. During the 2015 financial
year, the Foundation provided $383,185 in
financial grants, loans and other benefits to
eligible recipients.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 19
CORPORATE SOCIAL RESPONSIBILITY
& SUSTAINABILITY CONT’D
EDITORIAL
INTEGRITY
Fairfax is proud of its 184-year history of
providing quality independent journalism.
Our journalists pursue the truth without
fear or favour. All our journalists operate
with a robust code of ethics.
We maintain an uncompromising approach
to media ethics and integrity, with our
“Independent. Always.” editorial position
celebrating our point of difference and
competitive advantage as a news media
organisation, spanning print, digital, radio
and social platforms.
Fairfax’s multi-award-winning journalism
is recognised for its powerful role in
influencing change and the social agenda,
sparking public interest and debate, and
serving as a source of timely and reliable
information for its audiences
and communities.
EDITORIAL INTEGRITY IN ACTION
EXAMPLES INCLUDE:
Financial Planning Scandals: Senior
Business journalist Adele Ferguson won
Australia’s highest journalism accolade in
December 2014, The Gold Walkley, for her
tenacious reporting into financial planning
scandals. Ferguson’s collaboration with Deb
Masters and Mario Christodoulo (ABC) titled
‘Banking Bad’ prompted a Senate inquiry
and subsequent compensation for victims.
Ferguson’s work was also recognised with
Melbourne Press Club Gold Quill, NSW
Journalist of the Year Kennedy Award,
and Logie for Most Outstanding Public
Affairs Report.
International Affairs: The Sydney Morning
Herald’s Matt Wade was awarded the
2014 Australian Council for International
Development (ACFID) Media Award for
excellence in reporting on international
development issues, for his effort to
highlight the ‘forgotten famine’ in South
Sudan with a series of articles. The judges
commended Matt for articulating, in a
dignified and accessible way, the complex
historical and political situation in South
Sudan and for compassionately pursuing
stories the world had forgotten.
Women’s Rights: The Courier’s Kim Quinlan
was presented with the prestigious 2014
United Nations Association of Australia
award for Increasing Awareness and
Understanding for Women’s Rights and
Issues, following the five-month ‘It’s Up to
Us’ campaign. Under Kim’s leadership, the
stories broke down community barriers
and paved the way for a new conversation
about family violence. ‘It’s Up to Us’ was
also awarded the Rural Press Club of
Victoria best feature award and back-
to-back City of Ballarat Community
Safety Awards.
Climate Change: The Sydney Morning
Herald, The Age and Stuff.co.nz are
founding partners of the Climate Publishing
Network (CPN), a 25-strong new global
publishers’ network collaborating to
educate and inform communities about
the important issue of climate change.
The CPN is coordinated by the Global
Editors Network and connects Fairfax Media
20
20
with publishers including The Guardian,
Le Monde and China Daily in a global
conversation to raise awareness about
climate change.
The Sydney Morning Herald and The Age
have run a special ‘Climate for Change’
series on global warming.
Environment: Newcastle Herald’s Donna
Page teamed with colleagues Matthew
Kelly, Helen Gregory and Damon Cronshaw
on the investigative series ‘Toxic Truth’,
exposing the failed state-sanctioned clean-
up of pollution from a former lead smelter
at Boolaroo in Lake Macquarie NSW, and its
ongoing health effects on the community.
The series, which involved collecting
dozens of soil samples, won the United
Nations Association of Australia’s overall
media award for World Environment Day.
Toxic Truth was also used as an exemplar
in The Newspaper Works’ Influential by
Nature campaign.
Social Issues: The Age’s Aisha Dow in June
2015 uncovered the moving story of a
19-year-old homeless girl living under a
bridge in the inner city and determined to
complete her Victorian Certificate
of Education.
Within 24 hours of the story running on
The Age front page, the newspaper was
flooded with offers of support; within the
week she had a free flat for herself and
her boyfriend, additional coaching for
her studies, and a confirmed offer of
a place with La Trobe University if she
passed her exams.
The Canberra Times created a series
‘Behind Closed Doors’ in April 2015 to raise
awareness about domestic violence in the
nation’s capital, which promoted additional
funding from the government to address
the issues.
Mental Health: The Border Mail’s PANPA
award-winning ‘Ending the Suicide Silence’
campaign following a series of local youth
suicides led to the opening of a Headspace
centre in Albury, Victoria in January 2015,
signalling to the community the power of
the local masthead in advocating change -
with lasting impact.
FINANCIAL
VIABILITY AND
SUSTAINABILITY
Being financially sustainable is
necessary to serve shareholders’
interests and fulfil our corporate purpose,
which is to grow shareholder value by
engaging audiences, communities and
businesses through compelling content
and services, monetised across a range of
business models.
Fairfax is successfully delivering its
transformation plan as the traditional media
landscape continues to evolve and digital
trends continue, which presents short term
risk and immense opportunity.
The Company is taking necessary actions
to address the challenges the media faces
and to shape a new model and structure to
sustain the important work we do.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 21
INVEST
INVESTING TO DEVELOP
NEW GROWTH VERTICALS,
E.G. OUR SUBSCRIPTION
VIDEO-ON-DEMAND
JV, STAN, AND UTILISE
BALANCE SHEET STRENGTH
TO PURSUE STRATEGIC
OPPORTUNITIES TO CREATE
SHAREHOLDER VALUE.
FINANCE
TABLE OF CONTENTS
FINANCIAL
STATEMENTS
Board of Directors
Directors’ Report
Auditor’s Independence Declaration
Remuneration Report
Corporate Governance
Management Discussion and Analysis Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
1. Summary of significant accounting policies
NOTES TO THE
FINANCIAL
STATEMENTS
KEY NUMBERS
GROUP
STRUCTURE
2. Revenues
6. Business
combinations,
acquisition
and disposal
of controlled
entities
OPERATING
ASSETS AND
LIABILITIES
CAPITAL
STRUCTURE
AND FINANCIAL
COSTS
9. Intangible
assets
15. Interest
bearing
liabilities
UNRECOGNISED
ITEMS
OTHER
21. Commitments
24. Other financial
assets
3. Expenses
7. Assets and
10. Receivables
16. Derivative
financial
instruments
22. Contingencies
25. Taxation
11. Inventories
17. Financial and
capital risk
management
23. Events
subsequent to
reporting date
26. Employee
entitlements
liabilities held
for sale
8. Investments
accounted
for using the
equity method
4. Significant
items
5. Segment
reporting
12. Payables
18. Equity
13. Provisions
14. Property,
plant and
equipment
19. Dividends paid
and proposed
20. Earnings per
share
FINANCIAL
STATEMENTS
Directors’ Declaration
Independent Auditor’s Report
ASX
INFORMATION
Five Year Performance Summary
Shareholder Information
Directory
FAIRFAX MEDIA ANNUAL REPORT 2015 | 23
24
27
31
32
52
61
64
65
66
67
68
70
27. Remuneration
of auditors
28. Related parties
and entities
29. Notes to the
cash flow
statement
30. Summary
of significant
other
accounting
policies
146
147
149
150
152
BOARD OF DIRECTORS
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 50 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 Mayne Pharma Group Limited. He is also Chairman of the Salvation Army Advisory Board (Australian
Eastern Territory) and a member of the Dean’s Advisory Group of the Faculty of Medicine at the
University of Sydney.
Other Current Australian Listed Company Directorships:
Mayne Pharma (appointed November 2010).
Former Australian Listed Company Directorships in Last 3 Years:
PrimeAg Australia (resigned November 2013).
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.
During his time as Chief Executive he focused 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, focusing on target audiences
and adapting to increased competition.
He has been a leader in adapting radio to the digital era and is Director of OzTAM Pty Limited
and Chairman of Ooh! Media Limited.
MICHAEL ANDERSON
NON-EXECUTIVE
DIRECTOR
Other Current Australian Listed Company Directorships:
Ooh! Media Limited (appointed July 2013).
APPOINTED TO THE BOARD 19 JULY 2012
Mr Cowin is the Founder and Executive Chairman of Competitive Foods Australia, a business
that has grown from a single food service outlet to one that employs more than 16,000 staff
throughout Australia. Mr Cowin moved to Australia from Canada to establish his business.
In addition to operating 350 restaurants in Australia, the company operates five manufacturing
facilities producing frozen value-added meat products as well as processing fresh vegetables.
It exports to 29 countries.
Mr Cowin is also a Director of the Network Ten television business, Chairman and largest
shareholder of Domino’s Pizza Enterprises Ltd, a listed public company, and Director and
largest shareholder of BridgeClimb.
Other Current Australian Listed Company Directorships:
Ten Network Holdings Limited (appointed April 1998), Domino’s Pizza Enterprises Limited
(appointed 20 March 2014).
Former Australian Listed Company Directorships in Last 3 Years:
Chandler Macleod Group (resigned 7 April 2015).
JACK COWIN
NON-EXECUTIVE
DIRECTOR
24
NICK FALLOON
NON-EXECUTIVE
DIRECTOR
APPOINTED TO THE BOARD 1 MAY 2015
Mr Falloon was appointed to the Board in May 2015 and succeeds Mr Corbett as Chairman in
August 2015. Mr Falloon has had 30 years experience in the media industry, 19 years working
for the Packer owned media interests from 1982 until 2001.
Mr Falloon served as Chief Executive Officer of Publishing and Broadcasting Limited (PBL) from
1998 to 2001 and before that as Chief Executive Officer of PBL Enterprises and Group Financial
Director of PBL.
The PBL experiences provided a strong background in television, pay TV, magazines, radio and
digital industries. From 2002 Mr Falloon spent nine years as Executive Chairman and CEO of
Ten Network Holdings. Mr Falloon holds a Bachelor of Management Studies (BMS) from Waikato
University in New Zealand.
APPOINTED TO THE BOARD (NON-EXECUTIVE) 4 OCTOBER 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 has 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.
GREGORY HYWOOD
EXECUTIVE DIRECTOR
Other Current Australian Listed Company Directorships:
Macquarie Radio Network Limited (appointed 31 March 2015).
APPOINTED TO THE BOARD 26 FEBRUARY 2010
Ms McPhee was appointed to the Board of Directors on 26 February 2010. She is a Director
of AGL Energy Limited and Kathmandu Limited. Her previous Directorships include Scentre Group
(previously Westfield Retail Trust), 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, including 10 years
with Qantas Airways Limited.
Other Current Australian Listed Company Directorships:
AGL Energy Limited (appointed October 2006), Kathmandu Holdings Limited (appointed 16 October 2009).
SANDRA MCPHEE, AM
NON-EXECUTIVE
DIRECTOR
Former Australian Listed Company Directorships in Last 3 Years:
Scentre Group (resigned 7 May 2015), RE1 Limited and RE2 Limited (Westfield Retail Trust)
(resigned 1 July 2014).
APPOINTED TO THE BOARD 1 JULY 2012
Mr Millar is the former Chief Executive Officer of Ernst & Young (EY) in the Oceania Region and was a
Director on their Global Board. Mr Millar commenced his career in the Insolvency and Reconstruction
practice at EY, conducting some of the largest corporate workouts of the early 1990’s. He has qualifications
in both business and accounting. Mr Millar is a Non-Executive Director of Mirvac Limited, Helloworld
Limited and Macquarie Radio Network Limited. He is Chairman of both the Export Finance and Insurance
Corporation and Forestry Corporation of NSW. Mr Millar serves a number of charities where he is the
Chairman of The Smith Family, and is a Trustee of the Australian Cancer Research Foundation and the
Vincent Fairfax Family Foundation. He is a former Chairman of Fantastic Holdings Limited.
JAMES MILLAR, AM
NON-EXECUTIVE
DIRECTOR
Other Current Australian Listed Company Directorships:
Mirvac Limited (appointed 19 November 2009), Helloworld Limited (appointed 30 September 2010),
Macquarie Radio Network Limited (appointed 31 March 2015).
Former Australian Listed Company Directorships in Last 3 Years:
Fantastic Holdings Limited (resigned 30 June 2014).
FAIRFAX MEDIA ANNUAL REPORT 2015 | 25
BOARD OF DIRECTORS
APPOINTED TO THE BOARD 26 FEBRUARY 2010
Mrs Nicholls has more than 30 years’ experience as a senior executive and company Director in
Australia, New Zealand and the United States. She is currently the Chair of Japara Healthcare and
Keolis Downer and a Director of Pacific Brands, Sigma Pharmaceuticals, and Medibank Private.
Mrs Nicholls holds a Bachelor of Arts in Economics from Cornell University and a Masters of
Business Administration from Harvard Business School, where she was formerly Trustee and
Vice President of The Harvard Business School Alumni Board.
Other Current Australian Listed Company Directorships:
Japara Healthcare (appointed 19 March 2014), Medibank Private (appointed March 2014),
Pacific Brands Group (appointed October 2013), Sigma Pharmaceuticals (appointed April 1997).
LINDA NICHOLLS, AO
NON-EXECUTIVE
DIRECTOR
APPOINTED TO THE BOARD 29 MAY 2014
Mr Sampson is the national Chief Executive Officer of Australia’s leading communications company,
Leo Burnett Australia and a Non-Executive Director to the Board of Qantas Airways Limited. He has
an MBA and has spent nearly 20 years working as a strategic advisor with a diverse range of expertise
including marketing, communication, digital transformation, new media, reputational risk and
corporate turnaround. Both News Limited and The Australian Financial Review ranked him as one of
Australia’s most influential executives. He is also a writer, producer and host on a number of TV shows
including Gruen Planet, The Project and the award winning documentary Redesign My Brain. Outside
of work, he enjoys mountaineering and has climbed to the top of Mount Everest, unguided.
TODD SAMPSON
NON-EXECUTIVE
DIRECTOR
Other Current Australian Listed Company Directorships:
Qantas Airways Limited (appointed March 2015).
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 currently the Chairman of Barclays Australia and New Zealand
and Chairman of Standard Life Investments Australasia.
Mr Young was a member of the Royal Bank of Scotland’s Advisory Council in Australia. He
also served as Chairman of Investment Banking for ABN AMRO in Australia and New Zealand,
Chairman of Queensland Investment Corporation and a Director of PrimeAg Australia. 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.
Mr Young is also a member of Standard Life plc Asia Advisory Board, a member of the Barangaroo
Delivery Authority Board, the Sydney Theatre Company and Governor of the Taronga Foundation.
He is involved in a number of community, environmental and artistic activities.
Former Australian Listed Company Directorships in Last 3 Years:
PrimeAg Australia Limited (resigned November 2013), QIC Limited (resigned November 2013).
PETER YOUNG, AM
NON-EXECUTIVE
DIRECTOR
26
DIRECTOR’S 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 28 June 2015 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.
ROGER CORBETT, AO
NON-EXECUTIVE CHAIRMAN
MICHAEL ANDERSON
NON-EXECUTIVE DIRECTOR
JACK COWIN
NON-EXECUTIVE DIRECTOR
NICK FALLOON
NON-EXECUTIVE DIRECTOR
APPOINTED 1 MAY 2015
GREGORY HYWOOD
CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR
SANDRA MCPHEE, AM
NON-EXECUTIVE DIRECTOR
JAMES MILLAR, AM
NON-EXECUTIVE DIRECTOR
LINDA NICHOLLS, AO
NON-EXECUTIVE DIRECTOR
TODD SAMPSON
NON-EXECUTIVE DIRECTOR
PETER YOUNG, AM
NON-EXECUTIVE DIRECTOR
FAIRFAX MEDIA ANNUAL REPORT 2015 | 27
DIRECTOR’S REPORT
A profile of each Director holding office at the date of this report is included in the Board of Directors section of this report.
COMPANY SECRETARY
Gail Hambly is Group General Counsel and Company Secretary. She is a commercial and media law specialist. Ms Hambly is Chair of
CopyCo Pty Limited, a Director of Trade Me Limited and Sydney Story Factory. She 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, a member of Chartered Secretaries Australia and of the Australian Institute of
Company Directors. She holds degrees in Law, Economics and Science.
CORPORATE STRUCTURE
Fairfax Media Limited is a company limited by shares that is incorporated and domiciled in Australia.
PRINCIPAL ACTIVITIES
During the course of the financial year the consolidated entity operated as a multi-platform media, marketing services and real estate
services group.
The principal activities were the publishing of news, information and entertainment, advertising sales in print and digital formats, and
radio broadcasting. The group operates or holds investments in a number of digital businesses.
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 profit attributable to the consolidated entity for the financial year was $83,168,000 (2014: $224,432,000).
DIVIDENDS
An interim fully franked dividend of 2.0 cents per ordinary share and debenture was paid on 18 March 2015 in respect of the half year
ended 28 December 2014.
Since the end of the financial year, the Board has declared a partly franked dividend of 2.0 cents per ordinary share and debenture in
respect of the year ended 28 June 2015. This dividend is payable on 8 September 2015.
REVIEW OF OPERATIONS
Revenue and income for the Group was lower than the prior year at $1,878 million (2014: $1,988 million). After significant items of $61 million
loss (2014: $66.7 million) the Group generated a net profit after tax of $83.2 million (2014: $224.4 million). Earnings per share decreased to 3.5
cents (2014: 9.5 cents).
Further information is provided in the Management Discussion and Analysis Report.
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 10 July 2014, the Company repaid US$105 million (A$125 million) of senior notes.
On 2 October 2014, the Company acquired All Homes Pty Ltd and All Data Australia Pty Ltd for total consideration of $51.5 million.
On 22 January 2015, the Group acquired the remaining 50% of issued shares in MMP Holdings Pty Ltd for total consideration of $75.4
million including $18.5 million in cash.
On 30 January 2015, the Company completed an agreement to sell Radio 96FM Perth Pty Limited to APN News & Media Limited for
cash consideration of $78 million.
In March 2015, the Group commenced an on market share buyback of ordinary shares as part of the Group’s ongoing capital
management strategy. At June 2015, 37.1 million shares were repurchased and cancelled for $37.9 million.
28
On 31 March 2015, the Company entered into merger with Macquarie Radio Network Limited and has received $18 million in cash
consideration and holds a 54.5% shareholding.
There are no subsequent events after reporting date.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The consolidated entity’s prospects and strategic direction are discussed in the Management Discussion and Analysis 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 2015 financial year.
The Company reported to the Department of Climate Change on the total carbon emissions of the Group generated in the 2014
financial year under the National Greenhouse and Energy Reporting legislation. 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 68,929 (2013: 79,174) tonnes CO2-e.
REMUNERATION REPORT
A remuneration report is set out on the pages that follow and forms part of this Directors’ Report.
DIRECTORS’ INTERESTS
The relevant interest of each Director in the equity of the Company and related bodies corporate as at the date of this report are
disclosed in the remuneration report.
MEETINGS*
BOARD MEETING
AUDIT AND RISK
NOMINATIONS
PEOPLE AND CULTURE
NO.
HELD
NO.
ATTENDED
NO.
HELD
NO.
ATTENDED
NO.
HELD
NO.
ATTENDED
NO.
HELD
NO.
ATTENDED
R Corbett AO**
G Hywood***
M Anderson
J Cowin
N Falloon
S McPhee AM
J Millar AM
L Nicholls AO
T Sampson
P Young AM
9
9
9
9
2
9
8
9
9
9
9
9
9
7
2
9
7
9
7
7
4
-
-
-
-
-
4
4
-
4
4
-
-
-
-
-
4
4
-
4
3
-
-
-
-
-
3
3
-
3
3
-
-
-
-
-
3
3
-
2
6
-
7
7
-
7
-
-
-
-
6
-
7
4
-
7
-
-
-
-
*
The number of meetings held refers to the number of meetings held while the Director was a member of the Board or Committee.
** Mr Corbett, Chairman, is an ex officio member of all Board committees. Mr Corbett resigned from the People and Culture Committees on 29 May 2015.
*** Mr Hywood attends the Audit and Risk, People and Culture and Sustainability and Corporate Responsibility Committee meetings as an invitee of the Committees.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 29
DIRECTOR’S REPORT
INDEMNIFICATION AND INSURANCE OF OFFICERS
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.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to
Ernst & Young during or since the financial year.
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 27 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 follows 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 $118,141
• Overseas $63,654
Other assurance and non-assurance services:
• Australia $816,167
ROUNDING
The Company is of a kind referred to in Class Order 98/0100, 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
30
AUDITOR’S INDEPENDENCE DECLARATION
FAIRFAX MEDIA ANNUAL REPORT 2015 | 31
REMUNERATION REPORT
Dear Shareholder,
On behalf of the Board, I am pleased to present Fairfax Media’s Remuneration Report for 2015.
Fairfax’s financial results for 2015 reflect a robust financial position forming the basis for future growth.
As the Chairman’s and CEO’s reports highlight, the Company is making pleasing progress with its business strategy of maximising long
term shareholder value and transforming from a traditional media business into a stronger, more diversified media company increasingly
focused on high-growth opportunities.
Fairfax delivered underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $289.4 million for the year, excluding
significant items, which was marginally lower than last year.
This result was achieved whilst making significant investment into growth opportunities totalling around $42 million, the majority of which
is still to be fully reflected in business performance.
Specifically during the 2015 financial year we:
• made considerable investments in our growth businesses including Domain and Events;
• made substantial portfolio investment decisions including the acquisitions of All Homes and the remaining 50% of Metro Media
Publishing Holdings in Domain;
• developed partnership opportunities including Stan, the streaming venture with Nine Entertainment Co., The Huffington Post,
and the merger of our Radio business with Macquarie Radio Network including the sale of radio station 96FM;
• continued cost management control;
• commenced the transformation of our Australian Community Media division to build a modern stronger rural and regional network.
Transformation Incentive Plan (TIP)
Shareholders at the 2014 Annual General Meeting approved the Remuneration Report which included the continuation of the Company’s
Transformation Incentive Plan (TIP) for 2015. The TIP was implemented as approved. Incentives continue to be heavily weighted toward
achieving long-term growth, with a smaller portion toward delivering short-term objectives.
The TIP strongly aligns executive rewards with shareholder interests since any incentive award for executive Key Management Personnel
(KMP) is made entirely in equity, through a combination of long term options and annual deferred performance shares which are subject
to achievement of performance hurdles.
Annual Component: In 2015 we reduced the amount of incentive available to KMP for achieving budgeted outcomes. KMP were assessed
against two annual metrics, Group EBITDA and Group Revenue.
Management recognised that there was a strategic imperative to continue to focus on long term growth, as well as short term earnings,
and made certain decisions to invest to support the long term growth of the Group. As a result, KMP narrowly missed achieving targets
and no annual component will be paid in 2015. Details of the objectives and outcomes are set out later in this Remuneration Report.
Long Term Incentives: None of the allocations under the TIP were eligible to vest in 2015. However, both the 2014 and 2015 allocations
are currently tracking to satisfy performance hurdles which if achieved will deliver strong value to shareholders.
Previous Incentive Schemes
There were two allocations under the previous long term incentive schemes which were eligible to vest at the end of 2015. The 2012
allocation did not meet the performance hurdles and was totally forfeited. The performance rights in the 2013 allocation partially vested.
The vesting of these rights is reflective of strong shareholder growth over this period.
Other Remuneration elements
KMP base pay remained unchanged in 2015 and the KMP also continued to sacrifice 10% of their annual fixed remuneration into
Fairfax shares.
On behalf of the Board, I would like to thank our executives for their continued efforts in achieving significant progress for the Company
in the past year.
The Board recommends the Remuneration Report to you and asks that you support our remuneration policies and practices by voting
in favour of this Report at our 2015 Annual General Meeting.
Yours faithfully,
Sandra McPhee, AM
Chair – People and Culture Committee
32
REMUNERATION REPORT (AUDITED)
1. INTRODUCTION
This report forms part of the Company’s 2015 Directors’ Report and sets out the Fairfax Group’s remuneration arrangements for Key
Management Personnel (KMP) in accordance with the requirements of the Corporations Act 2001 and its regulations. KMP comprises
Directors and members of the senior executive team who have authority and responsibility for planning, directing and controlling the
activities of the Fairfax Group.
The KMP for the financial year are set out in Table 1.
TABLE 1
NON-EXECUTIVE DIRECTORS
Roger Corbett
Michael Anderson
Jack Cowin
Nick Falloon(1)
Sandra McPhee
James Millar
Linda Nicholls
Todd Sampson
Peter Young
EXECUTIVE DIRECTOR
Greg Hywood
OTHER EXECUTIVES
David Housego
Gail Hambly
(1) Nick Falloon joined the Board on 1 May 2015
ROLE
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer
Chief Financial Officer
Group General Counsel/Company Secretary
FAIRFAX MEDIA ANNUAL REPORT 2015 | 33
REMUNERATION REPORT (AUDITED)
2. REMUNERATION FRAMEWORK FOR 2015
The Company’s remuneration principles and framework set out below were established in 2013 and received shareholder approval in
2013 and 2014. The principles and framework remained unchanged in 2015.
2.1 REMUNERATION PRINCIPLES AND FRAMEWORK
FAIRFAX MEDIA EXECUTIVE REMUNERATION FRAMEWORK
The objectives of the Company’s executive remuneration framework are to align executive remuneration with the creation of value for
shareholders, achievement of strategic objectives, and to have regard to the employment market so as to be able to attract and retain
key people.
The executive remuneration framework comprises a mix of fixed and performance based components. The framework aims to:
• align remuneration with achievement of business strategy;
• fairly remunerate and reward for achievement of Group strategic milestones, with incentive payments deferred to promote alignment
with shareholder interests;
• attract, retain and motivate talented, qualified and experienced people in the context of industry changes; and
• be transparent and fair.
Fixed Remuneration Package
• set to attract and retain high calibre talent to drive the Company’s transformation strategy.
• has regard to the scope of the individual’s role, level of knowledge and experience, and the market
(including Fairfax’s competitors).
• most senior executives’ fixed remuneration was frozen in 2015.
• for 2015, executive KMP continued to volunteer to sacrifice 10% of their annual fixed remuneration into Fairfax shares.
• acknowledging the voluntary sacrifice, and as a further retention mechanism, if the executive KMP is still employed
at the end of a 2 year period, then Fairfax will provide one additional bonus share for every five shares purchased by
the executive through the voluntary salary sacrifice arrangement.
Performance Based Incentives - Transformation Incentive Plan
• the Transformation Incentive Plan (TIP) was implemented during 2014 replacing the former short term and long term
incentive plans. The TIP better aligns executive outcomes with shareholder interests and provides rewards on delivery
of our transformation plan.
• the TIP is designed to reward the most senior executives if they achieve the transformation plan for the Company over
3-4 years.
• under the TIP, long term options are granted. The options are exercisable only if challenging absolute shareholder return
objectives are achieved at the end of the vesting period.
• a smaller proportion of deferred performance shares are granted if specific annual business metrics linked to the
transformation of the Company are achieved. Metrics are measurable and are weighted and tailored according to
each executive’s responsibilities.
• any performance shares earned are deferred so that executives do not become entitled to the equity until later in the
transformation process which also promotes and rewards longer term service by the executives.
34
0%
20%
40%
60%
80%
100%
REMUNERATION REPORT (AUDITED)
2.2 REMUNERATION MIX
The Board considers that a significant proportion of executive remuneration should be ‘at risk’, and linked to Fairfax’s short and long
term strategy and performance. The following diagram provides the executive KMP remuneration mix for the 2015 financial year at
maximum opportunity.
EXECUTIVE KMP
0%
20%
40%
60%
80%
100%
30%
3%
47%
20%
Fixed: Base Salary, Allowances and
Superannuation
Fixed: Sacrifice of Fixed Remuneration
to purchase Company shares
At Risk: Long Term Options
At Risk: Deferred Performance Shares
Note – Long term options are granted at on-target performance. Determination of further options up to the maximum opportunity will
be at the Board’s discretion based on the outcomes against the performance hurdles at the conclusion of the performance period.
The Company encourages executives to hold Fairfax Media shares to align their interests with our shareholders, and the Company’s
remuneration framework has been developed with this in mind.
To reinforce this, during 2015 executive KMP continued to sacrifice 10% of their fixed remuneration, post-tax, into Company shares.
Furthermore the TIP rewards executives with equity grants of long term options and deferred performance shares.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 35
REMUNERATION REPORT (AUDITED)
3. REMUNERATION GOVERNANCE
The Board’s goal is to align Fairfax’s executive remuneration strategy with Company performance and shareholder interests.
Importantly, the Board is focused on delivering a remuneration framework that attracts and retains the right executive team to
establish and deliver upon Company strategy, and growth in shareholder value.
The People and Culture Committee (P&CC), comprising solely of Non-Executive Independent Directors, assists the Board in
discharging its duties.
The members of the P&CC during 2015 were:
• Sandra McPhee (Chair);
• Roger Corbett;
• Michael Anderson;
• Jack Cowin.
The CEO, CFO, Group General Counsel/Company Secretary and Group Director Human Resources attend P&CC meetings as invitees
except when their own performance or remuneration arrangements are being discussed.
The Board has a formal Charter for the P&CC which sets out the responsibilities, composition and rules of the Committee.
The Committee’s primary responsibilities include making recommendations in relation to executive remuneration that support the
remuneration strategy and the performance conditions that underpin it, to promote the achievement of the Group’s strategy, make
recommendations to the Board on Non-Executive Directors fees (within the maximum amount approved by shareholders) and
review and recommend to the Board the aggregate remuneration pool of Non-Executive Directors. Further details of the role and
responsibilities of the Committee are set out in its Charter, which is available on the Fairfax Media website, www.fairfaxmedia.com.au.
The Committee engages independent remuneration consultants to provide advice and information regarding market relativities as
required, and during the year 3 Degrees Consulting was engaged by the Committee to provide advice on governance, market practice,
emerging market considerations and regulatory developments.
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
36
REMUNERATION REPORT (AUDITED)
4. LINKING EXECUTIVE REMUNERATION TO PERFORMANCE
The remuneration structure aligns executive rewards with our shareholders over the medium and longer term and provides an
appropriate incentive to deliver on our strategy. During the 2015 financial year we:
• made considerable investments in our growth businesses including Domain and Events;
• made substantial portfolio investment decisions for the future, such as the acquisitions of All Homes and the remaining 50% of Metro
Media Publishing Holdings in Domain;
• developed partnership opportunities including Stan, the streaming venture with Nine Entertainment Co., The Huffington Post,
the merger of Fairfax Radio Network with Macquarie Radio Network, and the sale of Fairfax radio station 96FM;
• continued cost management control;
• commenced the transformation of our Australian Community Media division to build a modern stronger rural and regional network.
Management made decisions during the year to sacrifice short term EBITDA for longer term growth. In doing so, they narrowly missed
their ambitious incentive targets. This is reflected with the zero incentive outcomes for 2015.
Both the 2014 and 2015 option allocations are currently tracking to satisfy performance hurdles, indicating alignment to the long term
value for shareholders.
The following graph represents the share price performance and the TIP annual component of the CEO’s incentive.
SHARE PRICE PERFORMANCE AND CEO ANNUAL INCENTIVE
$1.20
$1.00
$0.80
Share
Price
$0.60
$0.40
$0.20
$0.00
$1,200
$1,000
$800
$600
$400
$200
$0
CEO STI
($’000)
24 June 2012
30 June 2013
29 June 2014*
28 June 2015*
Share Price
CEO Annual Incentive ($’000)
Note – share price relates to closing price at financial year end date.
* Introduction of TIP with annual incentive awarded in the form of deferred performance shares. Prior to 2014 the short term incentive
was paid in cash.
The executive KMP earned partial vesting of the 2013 legacy Long Term Incentive Plan following increase shareholder value over the last
three years. Further details can be found in section 6.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 37
REMUNERATION REPORT (AUDITED)
5. TRANSFORMATION INCENTIVE PLAN (TIP)
5.1. TIP OUTLINE
The following table sets out how the Company’s TIP operated during the 2015 financial year. The TIP is designed to reward executives
for achieving objectives linked to the Company’s transformation strategy and for creating growth in shareholder value.
Changes to the TIP for 2015
There were two changes made to the TIP which were approved by shareholders in 2014:
• for the deferred performance shares component executives can now only earn 20% of their opportunity for “on-budget” performance
rather than the 50% in previous years; and
• the options granted in 2015 will be tested based on performance over an initial period of 4 years, commencing 1 July 2013, rather than
3 years. This is the same commencement date as the performance period for the 2014 grant because 1 July 2013 was the beginning of
the Transformation Plan.
TABLE 2
DETAIL OF TRANSFORMATION INCENTIVE PLAN
Who Participates?
How is the options grant determined?
What is the performance period?
What are the performance hurdles?
Why were they chosen?
38
Senior executives whose roles and skills are critical to the strategy of the Group
are eligible to participate in the TIP.
Executive KMP are offered an incentive opportunity that comprises:
• options (70% of total incentive opportunity); and
• deferred performance shares (30% of total incentive opportunity).
Options are granted each year with an exercise price determined by the
Volume Weighted Average Price (VWAP) of Fairfax shares over the 5 trading day
period commencing on the day after the Fairfax AGM.
Each option entitles the participant to one ordinary Company share, subject to
achievement of the performance and service conditions and payment of the
exercise price.
The number of options granted is set by the Board with the assistance of an
independent valuation based on the Monte Carlo pricing model and depends
on the executives’ role and responsibilities.
Options are granted at on-target opportunity. Determination of further options
up to the maximum opportunity will be at the Board’s discretion based on
the outcomes against the performance hurdles at the conclusion of the
performance period.
The performance period for the 2015 grant will be an initial four year period
commencing on the same date as the performance period for the 2014
financial year (1 July 2013).
Options will not vest unless the compound annual growth rate (CAGR) targets
for absolute total shareholder return growth (Absolute TSR) are met. Absolute
TSR measures growth in shareholder wealth over the performance period
as it takes into account both share price growth as well as dividends paid to
shareholders.
The applicable targets are set out in the table below.
PERFORMANCE
% EXERCISABLE
ABSOLUTE TSR GROWTH
Threshold
Target
Stretch
25%
50%
100%
15% CAGR
20% CAGR
25% CAGR
REMUNERATION REPORT (AUDITED)
DETAIL OF TRANSFORMATION INCENTIVE PLAN CONT’D
What are the performance hurdles?
Why were they chosen? (cont’d)
The Board adopted Absolute TSR as the performance condition for the options
as it considers share price growth and other distributions to shareholders to be
a key indicator of Fairfax’s success over the coming years.
The Board believes that the level of growth required in order for the options
to vest would result in a healthy rate of return to shareholders. The Board
also considers absolute return targets to be appropriate during the current
rebuilding phase, rather than a relative measure against a variety of companies
that are not facing the issues Fairfax currently faces.
Notwithstanding these targets, the Board has discretion to deem performance
conditions not met if vesting would otherwise only occur as a result of
extraneous factors, such as speculation about a takeover bid for the Company.
The Company considers it important that any award of options reflects the
quality of the Company’s performance and excludes any independent factors.
Are the performance conditions re-tested?
Yes, in the year following the initial performance period.
If the performance hurdles are not achieved in the initial performance period,
there are two further re-testing opportunities at six monthly intervals.
In order for the condition to be met on re-testing, Absolute TSR on a
cumulative basis will be tested over the extended period.
If the condition is met over the extended period, the Board considers it
appropriate that executives should be rewarded along with shareholders.
Any options that remain unvested after the final re-test will lapse immediately.
DEFERRED PERFORMANCE SHARES
How is the grant of deferred performance shares
determined?
Performance shares are granted if participants achieve certain annual objectives
that are linked to the Company’s transformation strategy.
What is the deferral period?
What are the performance conditions?
The actual number of performance shares granted will be dependent on
the participants’ performance outcomes for the year and the VWAP of the
Company share price in the 5 days commencing on the day after the August
2015 results announcement.
Half (50%) of the performance shares granted following testing of performance
for FY2015, around August 2015, will be deferred for 1 year and the other half
(50%) will be deferred for 2 years.
Objectives are set annually by the Board and are linked to the transformation
strategy. For executive KMP, the 2015 opportunity was tied to the financial
measures of:
• Group EBITDA 60%; and,
• Group Revenue 40%.
The Board selected these clear and measurable objectives over which executives
have a clear line of sight in driving revenue growth and cost containment in the
transformation strategy, which translates into shareholder value.
Are the performance conditions re-tested?
No.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 39
REMUNERATION REPORT (AUDITED)
DETAIL OF TRANSFORMATION INCENTIVE PLAN CONT’D
GENERAL
Is there an ability to claw back awards under
the TIP?
Yes. The Board has the discretion to claw back awards made under the TIP to
ensure that participants do not unfairly benefit, including in the event of fraud,
dishonesty or a breach of obligation to the Company.
In addition, the Board may also claw back awards in the case of material risk or
where financial information becomes available after awards are granted, which
suggests that the initial grant was not justified.
Is there a restriction on executives hedging
awards under the TIP?
Yes. The rules prohibit employees from creating any encumbrance on unvested
awards. All executives must operate under the Fairfax Security Trading Policy.
What happens in a change of control?
What happens if the executive ceases
employment?
In the event of a takeover bid or other transaction, event or state of affairs that in
the Board’s opinion is likely to result in a change in control of the Company, the
Board has discretion to determine that vesting of some or the entire TIP should
be accelerated.
If the Board needs to exercise its discretion regarding a change of control event it
would be guided by the time remaining before the set vesting test date, whether
if, the performance hurdles were applied at the date of the likely change of
control, the vesting test would be achieved, and, the best interest of shareholders.
Where an executive resigns or their employment is terminated by mutual
agreement, the unvested transformation incentives will remain on foot and
subject to the original performance hurdle (in the case of Options) and the
deferral period (in the case of Performance Shares), as though the executive
has not ceased employment.
However, the Board may at its discretion determine to lapse any or all of the
unvested transformation incentives and ordinarily, in the case of resignation,
would be expected to do so.
Where an executive is terminated for cause such as misconduct or poor
performance all of the unvested transformation incentives will lapse or be
forfeited, unless the Board determines otherwise.
40
REMUNERATION REPORT (AUDITED)
5.2 2015 PROGRESS / OUTCOMES UNDER THE TRANSFORMATION INCENTIVE PLAN
(A) OPTIONS GRANTED
No options were available to vest under the TIP during 2015 as none of the grants have reached the end of their respective
performance periods.
Tracking of Performance
Set out in the following table is the performance to date of the 2014 and 2015 options granted as at 30 June 2015. Current Absolute
TSR demonstrates performance is tracking above stretch performance.
TABLE 3
GRANT YEAR
PERFORMANCE
PERIOD
RE-TEST
DATES
THRESHOLD
PERFORMANCE
TARGET
PERFORMANCE
STRETCH
PERFORMANCE
PERFORMANCE
TO 30 JUNE 2015
PERFORMANCE HURDLE
2014
2015
1 July 2013 – 30
June 2016
1 July 2013 – 30
June 2017
31 Dec 2016
and 30 June
2017
31 Dec 2017
and 30 June
2018
Note – Performance provided by Orient Capital Pty Ltd.
(B) DEFERRED PERFORMANCE SHARES
15% CAGR
20% CAGR
25% CAGR
34% CAGR
15% CAGR
20% CAGR
25% CAGR
34% CAGR
For 2015 the Board decided that the transformation initiatives and measures be reflected in the overall Group EBITDA and Group
Revenue targets for executive KMP. The overall Group’s performance for 2015 financial year included the effect of numerous strategic
decisions made this year for future growth and success. This meant that the 2015 results marginally missed the 2015 Group targets for
EBITDA and Revenue. Accordingly no annual incentive was paid for 2015. The table below provide a summary of the performance and
the executive KMP incentive opportunity which was forfeited.
EXECUTIVE
Greg Hywood
David Housego
Gail Hambly
THRESHOLD
OPPORTUNITY
($)
ON-TARGET
OPPORTUNITY
($)
MAXIMUM
OPPORTUNITY
($)
INCENTIVE
EARNED
($)
PERCENTAGE OF MAXIMUM
OPPORTUNITY EARNED
(%)
$192,000
$99,000
$75,000
$480,000
$247,500
$187,500
$960,000
$495,000
$375,000
$0
$0
$0
0%
0%
0%
Note - The figures that are represented above are the dollar value that each executive KMP had the opportunity to earn.
For executive KMP any annual incentive earned is award in deferred performance shares.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 41
REMUNERATION REPORT (AUDITED)
6. LONG TERM INCENTIVE PLAN PRIOR TO 2014
Prior to 2014, the Company operated a short term incentive plan and a separate long term incentive plan (LTIP). These plans were
discontinued from 2014 and replaced with the TIP.
REWARD INSTRUMENTS
Under the former LTIP, executives were granted an allocation of performance shares (FY12 grant) or performance rights (FY13 grant) that
would vest at the end of the performance period, subject to specific performance hurdles being met.
PERFORMANCE PERIODS
For the FY12 grant, the performance period was 1 July 2011 to 30 June 2014. If performance hurdles were not met at the end of the
performance period, a further re-test would take place at the end of 30 June 2015. For FY13 grant, the performance period was 1 July
2012 to 30 June 2015. No re-testing applied to the FY13 grant.
PERFORMANCE HURDLES AND VESTING SCHEDULES
Each allocation was subject to two performance hurdles. Fifty percent of the allocation was subject to achievement of a relative
TSR target. The remaining fifty percent was subject to an EPS hurdle,
TSR was measured against the S&P/ASX 300 Consumer
Discretionary Index and allocations vested as described in the
table below:
EPS was measured by the compound annual growth rate
(CAGR) of the Company’s EPS and vested according to the
table below:
TSR PERFORMANCE
% OF ALLOCATION THAT VESTS
EPS PERFORMANCE
% OF ALLOCATION THAT VESTS
Under 50th percentile
Nil
50th percentile
50% of Allocation
Less than 7% CAGR
7% CAGR
Nil
25%
50th to 75th percentile
Straight line pro rata
7% to 10% CAGR
Straight line pro rata
Above 75th percentile
100%
10% CAGR or above
100%
OUTCOMES
The FY12 grant of performance shares were re-tested for period ending 30 June 2015, and neither the TSR or EPS performance hurdles
were met and subsequently these performance shares were forfeited.
The FY13 grant of performance rights were tested for period ending 30 June 2015. The EPS hurdle was not achieved, however TSR
performance was achieved (at the 65.5th percentile, against the S&P/ASX300 Consumer Discretionary Index) and 81% of the TSR portion
of the grant due to vest.
The table below sets out the number of performance rights that was originally granted, the amount is due to vest and the amount
forfeited relating to executive KMP for the FY13 grant:
TOTAL NUMBER
OF PERFORMANCE
RIGHTS GRANTED
8,888,889
3,666,667
2,083,333
14,638,889
RIGHTS
TO VEST
3,600,000
1,485,000
843,751
5,928,751
RIGHTS TO
FORFEIT
5,288,889
2,181,666
1,239,583
8,710,138
RIGHTS TO
VEST %
RIGHTS TO
FORFEIT %
41%
41%
41%
41%
59%
59%
59%
59%
TABLE 5
NAME
Greg Hywood
David Housego
Gail Hambly
Total
42
REMUNERATION REPORT (AUDITED)
7. EXECUTIVE SERVICE AGREEMENTS
The remuneration and other terms of employment for the executive KMP are set out in written service 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 incentive opportunities and termination rights and obligations.
The Company may terminate the employment of the executive without notice and without payment in lieu of notice in some
circumstances, including if the executive commits an act of serious misconduct or a material breach of the executive service agreement
or is charged with any criminal offence which, in the reasonable opinion of the Company, may embarrass or bring the Fairfax Group
into disrepute.
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.
Also set out in the table below is the notice that the executive is required to give.
TABLE 6
NAME OF EXECUTIVE
COMPANY
TERMINATION
NOTICE PERIOD
EMPLOYEE
TERMINATION
NOTICE PERIOD
Greg Hywood
12 months
6 months
David Housego
12 months
4 months
Gail Hambly(1)
18 months
3 months
(1) Participant in the Fairfax defined benefit superannuation scheme.
POST-EMPLOYMENT RESTRAINT
• 12 month no solicitation of employees or clients
• 6 months no work for a competitor of the Fairfax Group
• 12 month no solicitation of employees or clients
• 6 months no work for a competitor of the Fairfax Group
• 12 month no solicitation of employees or clients
• 6 months no work for a competitor of the Fairfax Group
FAIRFAX MEDIA ANNUAL REPORT 2015 | 43
REMUNERATION REPORT (AUDITED)
8. EXECUTIVE KMP REMUNERATION AND EQUITY GRANTED IN 2015
(A) REMUNERATION OF KEY MANAGEMENT PERSONNEL
This table sets out details of remuneration during the financial year.
TABLE 7
BASE
SALARY,
& OTHER
BENEFITS(1)
1,575,000
1,575,000
790,156
760,000
554,232
554,210
-
750,000
2,919,388
3,639,210
G. Hywood –
Chief Executive
Officer
D. Housego –
Chief Financial
Officer
G. Hambly –
Group General
Counsel &
Company
Secretary(2)
A. Williams
– Managing
Director Australian
Publishing Media
Total
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
-
-
-
-
-
-
-
-
-
-
CASH
BONUS
SUPER-
ANNUATION
LONG
SERVICE
LEAVE
EXPENSE
TOTAL
EXCLUDING
SHARES /
RIGHTS
VALUE OF
SHARES /
RIGHTS(3)
TOTAL
INCLUDING
SHARES /
RIGHTS
23,549
1,623,549
867,916
2,491,465
17,394
1,617,394
1,244,877
2,862,271
5,385
2,357
10,863
10,829
830,541
470,252
1,300,793
787,357
545,748
1,333,105
635,863
388,172
1,024,035
635,829
427,365
1,063,194
25,000
25,000
35,000
25,000
70,768
70,790
-
-
-
-
-
25,000
14,655
789,655
406,923
1,196,578
130,768
145,790
39,797
3,089,953
1,726,340
4,816,293
45,235
3,830,235
2,624,913
6,455,148
(1) Executive KMP voluntary salary sacrifice of 10% of their fixed annual remuneration to purchase Company shares is on a
post-tax basis.
(2) Ms Hambly is a participant in the Fairfax defined benefit superannuation benefit scheme. Except for a 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) provide defined lump sum
benefits based on years of service, retirement age and the executive’s remuneration at the time of retirement.
(3) Amount includes the amortised cost of the fair value of rights to shares and options issued but not yet vested.
44
REMUNERATION REPORT (AUDITED)
(B) EQUITY GRANTED TO EXECUTIVES WHO ARE KEY MANAGEMENT PERSONNEL
DURING THE FINANCIAL YEAR
TABLE 8
EQUITY AWARD(1)
PERFORMANCE
CONDITION(2)
NUMBER OF
OPTIONS/
SHARES
GRANTED(3)
FAIR VALUE
PER OPTIONS/
SHARES(4)
VALUE OF
GRANT(5)
Options
Absolute TSR
4,666,666
$0.24
$1,120,000
Performance
Shares
Transformation
Objectives
nil
-
$0
G Hywood –
Chief Executive Officer
D Housego –
Chief Financial Officer
Options
Absolute TSR
2,406,250
Performance
Shares
Transformation
Objectives
nil
G Hambly –
Group General Counsel & Company
Secretary
Options
Absolute TSR
1,822,916
Performance
Shares
Transformation
Objectives
nil
$0.24
-
$0.24
-
$1,120,000
$577,500
$0
$577,500
$437,500
$0
$437,500
(1) No Performance Shares were granted to executives for 2015 as indicated in 5.2 (B).
(2) Performance Shares and Options are subject to performance hurdles that are outlined in section 5.1. Rights to Performance Shares
and Options lapse where the applicable performance conditions are not satisfied on testing. As the Performance Shares and Options
only vest on satisfaction of performance conditions which are to be tested in future years, the 2015 Performance Shares and Options
have not yet been forfeited or vested.
(3) Options are granted at on-target performance. Determination of further options up to the maximum opportunity will be at the
Board’s discretion based on the outcomes against the performance hurdles at the conclusion of the performance period.
(4) The Board determined the Fair value per Option to be 24 cents with a grant date 18 December 2014.
(5) 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).
FAIRFAX MEDIA ANNUAL REPORT 2015 | 45
REMUNERATION REPORT (AUDITED)
9. EXECUTIVE SHAREHOLDINGS
Executive KMP equity holdings disclosure as at 28 June 2015 is set out below:
(A) SHAREHOLDINGS OF EXECUTIVE KMP
TABLE 9
2015
EXECUTIVE KMP
BALANCE AT 29
JUNE 2014
NET CHANGE(1)
BALANCE AT 28
JUNE 2015
POST YEAR-END
ACQUISITIONS(2)
POST YEAR-
END DISPOSALS
POST YEAR-
END BALANCE
G. Hywood
D. Housego
G. Hambly
Total
2014
429,255
348,321
148,136
925,712
121,958
(228,257)
47,633
(58,666)
551,213
120,064
195,769
867,046
27,241
14,047
10,639
51,927
-
-
-
-
578,454
134,111
206,408
918,973
EXECUTIVE KMP
BALANCE AT 24
JUNE 2013
NET CHANGE(1)
BALANCE AT 29
JUNE 2014
POST YEAR-END
ACQUISITIONS(2)
POST YEAR-
END DISPOSALS
POST YEAR-
END BALANCE
G. Hywood
D. Housego
G. Hambly
A. Williams
Total
318,343
291,139
104,815
-
714,297
110,912
57,182
43,321
44,200
255,615
429,255
348,321
148,136
44,200
969,912
-
-
-
-
-
-
-
-
-
-
429,255
348,321
148,136
44,200
969,912
(1) Includes shares acquired by sacrifice of 10% of fixed remuneration.
(2) Shares acquired post year end is part of the 10% salary sacrifice arrangement as indicated in section 2.1. Share purchase dates are
predetermined by the Company and the administrator Link Market Services Ltd.
46
REMUNERATION REPORT (AUDITED)
(B) RIGHTS OVER SHAREHOLDINGS OF EXECUTIVE KMP
TABLE 10
2015
EXECUTIVE KMP
G. Hywood
D. Housego
G. Hambly
Total
2014
EXECUTIVE KMP
G. Hywood
D. Housego
G. Hambly
A. Williams
Total
BALANCE AT
29 JUNE 2014
GRANTED AS
REMUNERATION
NET CHANGE(1)
CLOSING BALANCE AT
28 JUNE 2015
18,403,380
7,791,667
5,758,825
31,953,872
5,479,324
2,840,678
2,141,742
10,461,744
(571,428)
-
(234,194)
(805,622)
23,311,276
10,632,345
7,666,373
41,609,994
BALANCE AT
24 JUNE 2013
GRANTED AS
REMUNERATION
NET CHANGE(1)
CLOSING BALANCE AT
29 JUNE 2014
10,403,380
3,666,667
2,690,313
1,837,124
18,597,484
8,000,000
4,125,000
3,125,000
3,875,000
19,125,000
-
-
(56,488)
-
(56,488)
18,403,380
7,791,667
5,758,825
5,712,124
37,665,996
(1) Net change movements due to forfeitures.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 47
REMUNERATION REPORT (AUDITED)
10. REMUNERATION OF NON-EXECUTIVE DIRECTORS
Under the Fairfax Constitution, the aggregate remuneration of Non-Executive Directors is set by resolution of shareholders.
The aggregate was last approved 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 P&CC. The Board also considers
survey data on Directors’ fees paid by comparable companies, and any independent expert advice commissioned.
Board and committee fees payable as at the date of this report are as follows:
TABLE 11
Chairman of the Board*
Other Non-Executive Director
Chair of Audit and Risk Committee
Members of Audit and Risk Committee
Chair of People and Culture Committee
Members of People and Culture Committee
Chair of the Nominations Committee
Members of Nominations Committee
$
327,600
117,000
44,000
33,000
33,000
22,000
0
0
*The Chairman of the Board does not receive committee fees for membership of Committees.
The fees above do not include statutory superannuation payments.
10.1 RETIREMENT BENEFITS FOR NON-EXECUTIVE DIRECTORS
Other than superannuation contributions made on behalf of Non-Executive Directors in accordance with statutory requirements,
Non-Executive Directors are not entitled to any retirement benefits.
48
REMUNERATION REPORT (AUDITED)
10.2 NON-EXECUTIVE DIRECTORS’ FEES
The following table outlines fees paid to Non-Executive Directors during the financial year.
TABLE 12
EXECUTIVE KMP
M. Anderson
R. Corbett
J. Cowin
N. Falloon(1)
J. Millar
S. McPhee
S. Morgan(2)
L. Nicholls
T. Sampson(3)
P. Young
Directors
NON-EXECUTIVE
DIRECTORS FEES
SUPERANNUATION
TOTAL
139,000
156,883
327,600
327,600
139,000
140,426
19,500
150,000
151,538
150,000
162,510
117,472
161,000
162,651
117,000
12,150
150,000
151,538
13,205
14,512
31,065
30,303
13,205
12,989
1,853
14,250
14,017
14,250
15,032
10,866
15,295
15,045
11,115
1,124
14,250
14,017
152,205
171,395
358,065
357,903
152,205
153,415
21,353
164,250
165,555
164,250
177,542
128,338
176,295
177,696
128,115
13,274
164,250
165,555
1,352,500
1,382,768
128,488
127,905
1,480,988
1,510,673
2015
2014
2015
2014
2015
2014
2015
2015
2014
2015
2014
2014
2015
2014
2015
2014
2015
2014
2015
2014
(1) N. Falloon joined the Board on 1 May 2015
(2) S. Morgan retired from the Board on 29 May 2014
(3) T. Sampson joined the Board on 29 May 2014
FAIRFAX MEDIA ANNUAL REPORT 2015 | 49
REMUNERATION REPORT (AUDITED)
10.3 NON-EXECUTIVE DIRECTORS’ SHAREHOLDINGS
Non-Executive Director equity holdings disclosure as at 28 June 2015 is set out below:
TABLE 13
2015
NON-
EXECUTIVE
DIRECTOR
M. Anderson
R. Corbett
J. Cowin
N. Falloon(1)
J. Millar
S. McPhee
L. Nicholls
T. Sampson(2)
P. Young
Total
2014
NON-
EXECUTIVE
DIRECTOR
M. Anderson
R. Corbett
J. Cowin
J. Millar
S. McPhee
S. Morgan(3)
L. Nicholls
T. Sampson(2)
P. Young
Total
BALANCE AT
29 JUNE 2014
NET CHANGE
OTHER
BALANCE AT
28 JUNE 2015
POST YEAR-END
ACQUISITIONS(4)
POST YEAR-
END DISPOSALS
POST YEAR-
END BALANCE
-
15,467
99,206
3,000,000
-
100,000
140,795
135,843
-
131,117
3,606,961
-
-
-
-
26,564
29,448
18,317
-
15,467
99,206
3,000,000
-
100,000
167,359
165,291
18,317
131,117
89,796
3,696,757
7,771
-
-
-
-
7,744
8,281
6,126
-
29,922
-
-
-
-
-
-
-
-
-
-
23,238
99,206
3,000,000
-
100,000
175,103
173,572
24,443
131,117
3,726,679
BALANCE AT
24 JUNE 2013
NET CHANGE
OTHER
BALANCE AT
29 JUNE 2014
POST YEAR-END
ACQUISITIONS(4)
POST YEAR-
END DISPOSALS
POST YEAR-
END BALANCE
-
99,206
3,000,000
100,000
110,893
1,564,668
107,758
-
131,117
5,113,642
-
-
-
-
29,902
-
99,206
3,000,000
100,000
140,795
-
1,564,668
28,085
135,843
-
-
-
131,117
57,987
5,171,629
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
99,206
3,000,000
100,000
140,795
1,564,668
135,843
-
131,117
5,171,629
(1) N. Falloon joined the Board on 1 May 2015.
(2) T. Sampson joined the Board on the 29 May 2014.
(3) S. Morgan retired from the Board on 29 May 2014.
(4) Shares acquired post year end is part of the salary sacrifice arrangement. Share purchase dates are predetermined by the Company
and the administrator Link Market Services Ltd.
50
REMUNERATION REPORT (AUDITED)
11. LOANS TO 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 28 June 2015 (2014: nil).
There are no outstanding loans for the financial years ended 28 June 2015 and 29 June 2014.
12. FIVE YEAR FINANCIAL PERFORMANCE OF THE COMPANY IN
KEY SHAREHOLDER VALUE MEASURES
The financial performance of the Company in key shareholder value measures over the past five years is shown below.
TABLE 14
IFRS 2015
IFRS 2014
IFRS 2013(1)
IFRS 2012
IFRS 2011
Underlying operating revenue
Underlying net profit after tax
Earnings per share after significant items
Dividends per share
*Total Shareholder Returns (TSR)
$m
$m
Cents
Cents
%
1,853
148.2
6.0
4.0
(0.7)
1,866
158.5
6.7
4.0
97.5
2,074
143.5
5.4
2.0
(3.4)
2,328
212.0
8.7
3.0
(40.5)
2,466
285.0
11.6
3.0
(23.9)
* TSR comprises share price appreciation and dividends, gross of franking credits, reinvested in the shares. Source: Bloomberg.
(1) Trade Me revenue has been included in 2013 for comparative purposes up to the date of sale on 21 December 2012.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 51
CORPORATE GOVERNANCE
Fairfax has adopted a corporate governance framework that is consistent with the 3rd edition of the ASX Corporate
Governance Council Principles and Recommendations (ASX Recommendations).
The key corporate governance practices of the Fairfax Group are set out below including summaries of the Policy on
Market Disclosure and Shareholder Communications, Risk Management Policy and Securities Trading Policy. The Fairfax
Constitution, Board Charter, Board Committee Charters, Code of Conduct and Diversity Guidelines are available at
http://www.fairfaxmedia.com.au/Company/corporate-governance.
BOARD OF DIRECTORS
COMPOSITION OF THE BOARD
Membership of the Board and its Committees during the 2015 financial year is set out below.
COMMITTEE MEMBERSHIP
DIRECTOR
R Corbett AO
G Hywood
M Anderson
J Cowin
*N Falloon
S McPhee AM
J Millar AM
L Nicholls AO
T Sampson
P Young AM
*Appointed 1 May 2015
MEMBERSHIP TYPE
AUDIT AND RISK
NOMINATIONS
Independent Chair
Member
Chair
CEO/Managing Director
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
–
–
–
–
–
–
–
–
–
–
Member
Chair
–
Member
Member
–
Member
Member
PEOPLE
AND CULTURE
Member
–
Member
Member
–
Chair
–
–
–
–
The qualifications, experience, term of office and other details of each member of the Board are set out on pages 24 to 26.
The number of Board and Committee meetings held during the 2015 financial year and each Director’s attendance at these meetings
are set out in the Directors’ Meetings section of the Directors’ Report on page 29.
52
CORPORATE GOVERNANCE
BOARD SKILLS
The following table summarises the skills, attributes and experience of the Company’s Directors.
The Board benefits from the combination of the diverse skills, experiences and expertise that its Directors bring to the Board and the
insights that results from this diversity.
Media Expertise
Expertise and experience in the media industry.
Advertising and subscriber management
Expertise and experience in advertising, advertising sales and subscriber and customer
management.
Strategy
Expertise in the development and implementation of strategic plans to deliver investor
returns over time.
Executive leadership
Experience and success in leadership of large organisations.
Marketing and product development
Expertise and experience in the development and marketing of major new products
and services.
Financial acumen
Proficiency in understanding financial accounting and reporting, corporate finance and
internal financial controls, including an ability to probe the adequacies of financial and
risk controls.
Remuneration
Experience in remuneration design to drive business success.
Capital projects, acquisitions and
divestitures
Experience in evaluating and implementing projects involving large-scale financial
commitments, investment horizons and major transactions
Governance
Technology and data
Knowledge and experience of standards of corporate governance, including ASX
Listing Rules and practices.
Expertise and experience in the adoption of new technology and technology projects
and in the use of data and data analytics to drive successful sales, marketing and
business development.
Health, safety and corporate responsibility
Expertise related to workplace health and safety, environmental, community and social
responsibility.
Public policy
Experience in public and regulatory policy, including how it affects corporations.
INDEPENDENCE OF 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 (CEO) 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 determine whether it might interfere,
or might reasonably be seen to interfere, with the Director’s capacity to bring an independent judgement to bear on issues before the
Board and to act in the best interests of Fairfax and its shareholders generally. Where appropriate, external advice will be sought to assist
the Board’s assessment.
The ASX Recommendations, in summary, state that the Board should consider whether the Director:
• is, or has been, employed in an executive capacity by Fairfax or any of its child entities and there has not been a period of at
least three years between ceasing such employment and serving on the Board;
• is, or has within the last three years been, a partner, director or senior employee of a provider of material professional services
to Fairfax or any of its child entities;
• is, or has been within the last three years, in a material business relationship with Fairfax or any of its child entities, or an officer of,
or otherwise associated with, someone with such a relationship;
FAIRFAX MEDIA ANNUAL REPORT 2015 | 53
CORPORATE GOVERNANCE
• is a substantial shareholder of Fairfax or an officer of, or otherwise associated with, a substantial shareholder;
• has a material contractual relationship with Fairfax or its child entities other than as a Director;
• has close family ties with any person who falls within any of the categories described above; or
• has been a director of Fairfax for such a period that his or her independence may have been compromised.
ROLE OF THE BOARD
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 include:
(a) setting the strategic direction of the Fairfax Group;
(b) approving performance targets for the Fairfax Group and monitoring the achievement of these targets;
(c) providing overall policy guidance and ensuring 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;
(d) determining the terms of employment and reviewing the performance of the CEO;
(e) setting and monitoring the Group’s programs for succession planning and key executive development with the aim to ensure these
programs are effective;
(f) approving acquisitions and disposals of assets, businesses and expenditure above set monetary limits; and
(g) approving the issue of securities and entry into material finance arrangements, including loans and debt issues.
The Board Charter also sets out the matters specifically reserved for the Board which include:
(a) appointment and tenure of the CEO and his director reports;
(b) determination of the CEO’s terms and conditions (including remuneration);
(c) determination of matters relating to expenditure, capital management and loan raisings above a monetary limit;
(d) approval of the Fairfax Group’s strategic plans at least annually;
(e) approval of the issue of securities; and
(f) approval of public statements which reflect significant issues of Fairfax policy, finance or strategy.
DELEGATION TO SENIOR MANAGEMENT
Subject to the Board’s reserved powers 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.
DIRECTOR APPOINTMENT, ROTATION AND SUCCESSION PLANNING
The Company’s Constitution authorises the Board to appoint Directors to fill casual vacancies and to elect the Chair. Any Director
appointed by the Board must stand for election at the next Annual General Meeting of shareholders.
One third of Directors (excluding the CEO and any Director appointed to fill a casual vacancy, and rounded down to the nearest whole
number) must retire at every Annual General Meeting. In addition, no Director (other than the CEO) may remain in office for more than
three years or beyond the third Annual General Meeting following appointment without retiring and being re-elected.
54
CORPORATE GOVERNANCE
The Company provides shareholders with material information that is relevant to a shareholder’s decision regarding whether
to elect or re-elect a Director.
The Nominations Committee assists the Board to identify potential candidates for appointment to the Board, as required.
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.
As part of the process for identifying potential Director candidates, the Committee undertakes background checks. Where appropriate,
the Committee seeks external advice on suitable candidates.
All new Directors receive an appointment letter setting out the terms of their appointment including details of their role and Committee
memberships (if any) and their expected time commitment.
DIRECTOR INDUCTION AND CONTINUING EDUCATION
The Company provides an induction program for all new Directors. As part of this program, a comprehensive induction pack is
provided containing materials to enable the Directors to understand their rights, duties and responsibilities as a Director of the Company.
Meetings between key members of senior management and the Directors are scheduled so that the Directors can gain an understanding
of the Company’s businesses, key issues, strategy and operations.
Given the Company’s recent and ongoing transformation within the industries in which it operates, and the increasing diversification of
its businesses, the Board’s development activities aim to reflect this through the provision of regular updates on each of the Group’s
activities and industry trends presented by senior management and, where appropriate external experts.
ACCESS TO INDEPENDENT PROFESSIONAL ADVICE
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.
BOARD COMMITTEES
NOMINATIONS COMMITTEE
The Board has a Nominations Committee, which operates under 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.
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 Committee is comprised solely of Non-Executive Independent Directors.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 55
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, to monitor the quality and reliability of financial
information for the Group, and to manage certain sustainability and corporate responsibility matters.
To carry out this role, the responsibilities of the Committee include:
• recommending to the Board the appointment of the external auditor, reviewing its performance, independence and effectiveness,
approving the auditor’s fee arrangements and enforcing the Company’s Charter of Audit Independence;
• ensuring that appropriate systems of control are in place to effectively safeguard assets;
• ensuring accounting records are maintained in accordance with statutory and accounting requirements;
• formulating and overseeing an effective business risk plan;
• ensuring there is an appropriate framework for compliance with all legal and Australian Securities Exchange requirements;
• reviewing the external audit process with the external auditor, including in the absence of management;
• reviewing and approving the internal audit plan; and
• receiving internal audit summaries of significant reports prepared by internal audit.
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.
PEOPLE AND CULTURE COMMITTEE
The Board has a People and Culture Committee, which operates under a formal People and Culture Committee Charter. The primary
responsibilities of the Committee are:
• overseeing the development and implementation of the HR strategy with reference to appropriate resources, policies and procedures
to support the achievement of the Company’s strategy;
• promoting a safe work culture;
• driving high performance management by providing effective remuneration policies and plans;
• overseeing effective succession management programs develop talented, motivated and engaged people available to achieve the
Company strategy; and
• reporting to shareholders in line with required legislation and governance standards.
COMPANY SECRETARY
The Company Secretary is accountable to the Board through the Chairman on all matters to do with the proper functioning of
the Board.
PERFORMANCE EVALUATION
BOARD, COMMITTEES AND DIRECTORS
The Board conducts an internal review of its structure, composition and performance annually. The Board may seek external advice to
assist in the review process. Performance evaluations of all individual Directors, the Board and each Committee, as well as governance
processes that support the Board’s work, are reviewed on a regular basis. In accordance with this process, a performance evaluation for
the Board and each Committee was conducted during the 2015 financial year.
SENIOR EXECUTIVES
Fairfax’s senior executives are employed under individual employment contracts that set out the terms of their employment.
A process for senior management evaluations is undertaken each year. The executive’s performance is measured against
his or her KPIs set at the beginning of the year. The CEO undertakes performance evaluations with each of his direct reports.
In accordance with this process, a performance evaluation for senior executives was conducted during the 2015 financial year.
56
CORPORATE GOVERNANCE
REMUNERATION
Information about the Company’s remuneration policies and practices for Non-Executive Directors, the CEO and other senior
executives, and their remuneration during the 2015 financial year, are set out in the Remuneration Report on pages 44 to 49.
RISK MANAGEMENT AND INTEGRITY OF FINANCIAL REPORTING
RISK MANAGEMENT FRAMEWORK
The Board oversees the risk management and internal compliance and control system of the Group.
The risk management process seeks to provide a consistent approach to identifying, assessing, and reporting risks, including those
related to Company performance, reputation, safety, environment, internal control, compliance and other risk areas.
The Company’s risk framework is overseen and monitored by both the Board and the Audit and Risk Committee.
Key aspects of the Company’s risk management and internal compliance and control system are summarised as follows:
• the Board, with the support of the Audit and Risk Committee, assesses the risk management framework to satisfy itself that it continues
to be sound;
• 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 projects or initiatives of a significant nature. Project teams
are responsible for managing the risks identified; and
• 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.
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.
During the 2015 financial year, the Board assessed the risk management framework and is satisfied that it continues to be sound.
INTERNAL AUDIT
The Company’s Internal Audit function comprises the Manager, Corporate Risk and Assurance 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 and Risk function is independent from the external auditor and the Manager,
Corporate Risk and Assurance meets with the Audit and Risk Committee in the absence of management as required. Internal Audit
and Risk reports its results to the Audit and Risk Committee and the Manager, Corporate Risk and Assurance attends the meetings.
MATERIAL RISKS
The Company assesses material exposure to economic, environmental and social sustainability risks on an annual basis and determines
how they are to be managed.
Like all media companies globally the Company is subject to the ongoing structural shift away from print advertising and to
fragmentation of the advertising market.
Fairfax has taken strategic action to transform its business in the face of these challenges. this is discussed in detail in the Chairman
and CEO & MD reports. The Company addresses the issues of financial, social and environmental sustainability in its Sustainability Report
beginning on page 14.
Declarations from the Chief Executive Officer and Chief Financial Officer
The Board receives written declarations from the CEO and the Chief Financial Officer (CFO) in relation to the half-year and full-year
that in their opinion:
(a) the financial statements and associated notes comply in all material respects with the accounting standards as required by the
Corporations Act 2001 (Cth) (Corporations Act);
FAIRFAX MEDIA ANNUAL REPORT 2015 | 57
CORPORATE GOVERNANCE
(b) the financial statements and associated notes give a true and fair view, in all material respects, of the financial position as at the
end of the financial year and performance of the Company and Consolidated Entity for the period then ended as required by
the Corporations Act; and
(c) the financial records of the Company have been properly maintained in accordance with the Corporations Act,
and that the statements made above are founded on a sound system of financial risk management and internal compliance and control,
which is operating effectively.
These statements to the Board are underpinned by the requirement for appropriate senior executives to provide a signed letter of
representation addressed to the CEO and CFO 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.
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.
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; and
• 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 to be read in conjunction with the codes of ethics for each masthead and the other Fairfax policies as amended
from time to time.
MARKET DISCLOSURE AND SHAREHOLDER COMMUNICATIONS
The Company has a Policy on Market Disclosure and Shareholder Communications 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 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.
58
CORPORATE GOVERNANCE
The CEO, CFO 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.
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.
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.fairfaxmedia.com.au as soon as practicable after their release to the ASX (where release is required). Several years’ worth of
historical financial information is available on the website. Webcasts and recordings of results announcements and investor briefings
can be accessed on the website for a length of time.
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 CEO’s addresses, proxy counts and results of shareholder resolutions at the meeting are also posted on
the website as soon as practicable after their release to the ASX.
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 Auditor’s Report.
Shareholders are also able to send communications to, and receive communications from, Fairfax and its share registry electronically.
TRADING IN COMPANY SECURITIES
Directors and managers 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. Outside of the trading 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.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 59
CORPORATE GOVERNANCE
DIVERSITY
Fairfax is committed to creating a workplace that is fair and inclusive and reflects the diversity of the communities in which we operate.
Fairfax values respects and encourages diversity of board members, employees, customers and suppliers. The Company believes
diversity includes but is not limited to gender, age, ethnicity and cultural background. Accordingly, Fairfax has adopted Diversity
Guidelines to establish the framework within which it will promote diversity, including the requirement for the People and Culture
Committee to endorse measurable objectives for the year and to annually review the objectives and progress towards achieving them.
Fairfax recognises the importance of its employees and aims to attract, motivate, retain and engage high performing employees.
The Company recognises that each employee brings their own unique capabilities, experiences and characteristics to their work,
and values such diversity at all levels of the Company in all that it does.
Encouraging diversity broadens the pool for the recruitment of talented employees, enhances retention and supports innovation.
Increasing the focus on high quality employees supports the Company to improve its financial performance and achieve its
strategic objectives.
The Company’s workforce gender demographics are:
• Proportion of women who are Non-Executive Directors on the Board: 22%
• Proportion of women in senior management (which, for these purposes, includes any senior manager of the Group, including those
who participate in the Group’s employee incentive schemes): 34%
• Proportion of women across the organisation: 53%
The Company has exceeded its objective of 30% female gender representation among senior managers by 2015. A new target of 35%
female participation in senior management by 2018 has been set.
In 2013, the Fairfax Women of Influence Awards was introduced. Fairfax Women of Influence Awards is an internal reward and
recognition award aiming to celebrate the contributions and successes of high-achieving female Fairfax employees to raise their
leadership profiles. The awards comprised of six categories: agenda setter, emerging leader, customer centric leader, community
leader, leadership champion, and change and innovation champion. Judging panel included members of the Board in addition to
senior leaders across the business. Participation in the awards was high and the calibre and diversity of nominees was outstanding.
The program has made a significant impact in raising the leadership profiles of females across the business.
The Company has continued in its efforts to have a senior female included in all panels for senior executive roles and at least one female
candidate in the shortlist for senior roles.
A number of employment terms are in place to positively impact on women’s participation in the workforce. These include:
• Flexible work hours
• Compressed working weeks
• Time-in-lieu
• Telecommuting
• Part-time work job sharing
• Carer’s leave
• Purchased leave
• Unpaid leave
The Company is compliant with the Workplace Gender Equality Act 2012 in Australia.
This Corporate Governance Statement is current as at 13 August 2015 and has been approved by the Board of Fairfax.
60
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
TRADING OVERVIEW
For the financial year 2015, Fairfax Media Group reported a statutory net profit excluding significant items and tax of $143.6 million
with underlying operating earnings before interest tax depreciation and amortisation (EBITDA) of $289.4 million. EBITDA for continuing
businesses after disposals of $287.4 million was 3.4% below last year.
The Australian Metropolitan Media segment performed strongly with EBITDA growth of 29.7%. Driving this result is growth in the Domain
Group and continued cost savings in the publishing business.
Print advertising revenue declined only 0.5%, reflecting the move from 50% to 100% ownership of Metro Media Publishing Holdings Pty
Ltd. (MMP) in January 2015. Excluding MMP, print revenue was down 10.7%.
Digital advertising revenue increased 22.6% driven by organic growth in Domain online and the acquisition of Canberra’s leading
property portal All Homes in October 2014.
Events revenue increased 41% reflecting strong organic growth, eight new events and the acquisition of the Baby & Toddler Show.
Domain Group delivered strong revenue performance across print and digital, reflecting organic growth and the impact of acquisitions.
Digital advertising revenue increased 36.4% and EBITDA increased by 37.1%. Domain.com.au’s revenue was 30% higher than the prior
year. During the year, the number of agent subscribers grew by 20%; listings were up 16%; and total average monthly visits to Domain
sites increased 30%.
Digital Ventures continued to execute its strategy of value creation through investment in digital opportunities and managing our
portfolio of digitally-focused assets. Total investments of approximately $20 million included publishing and online community business
Over 60, game-based e-learning business for children Skoolbo, lightning data network business Kattron (part of Weatherzone), and a
joint venture with Africa Weather. HuffPost Australia, a joint venture with The Huffington Post, was formed during the financial year.
Australian Community Media revenue declined 7.8%, with revenue from advertising down 9.1%. Declines in employment and automotive
were contributing factors, along with weaker supermarket-related advertising in the second half. Print real estate advertising experienced
an improving trend while local advertising was relatively stable.
Australian Community Media is progressing through its transformation program involving the introduction of a new operating model
and new ways of working for editorial and sales teams. The $60 million run-rate of costs benefits from transformation are on track to
achieve cost reduction target by the end of financial year 2016.
New Zealand total revenue was down 3.7%, with advertising revenue down 6.1%, in local currency terms. Digital revenue growth of
38% for the year and 52% in the second half reflected the strong momentum at Stuff.co.nz and continued investment in product
development and marketing. Stuff.co.nz is setting an impressive pace of growth, increasing its unique audience 23% year on year to
become the number four digital brand in the country. Cost control contributed to New Zealand’s improved EBITDA performance in the
second half, with a 5% decline compared with the 12% decline for the full year.
The Radio business, a 54.5% shareholding in the ASX-listed Macquarie Radio Network, made a stable EBITDA contribution of $13.9
million. The merger of Fairfax Radio Network and Macquarie Radio Network was completed in March 2015 and provides both cost and
revenue synergies from enhanced network and sales opportunities that will create a more efficient and effective network for news,
talk and sports radio along with music stations.
In January 2015, Fairfax Radio sold its Perth station 96FM for $78 million excluding working capital adjustments.
FINANCIAL POSITION
The 2015 financial year recorded significant expenses after tax totalling $61.0 million for the Group. This included restructuring
and redundancy costs of $46.6 million and impairment of intangibles, investments and property, plant and equipment of $28.5 million.
The gain of $14.1 million primarily reflects the sale of 96FM and the fair value uplift on the original MMP investment.
Net cash inflow from operating activities was $205.7 million. Cash and cash equivalents decreased by $108.6 million after payment
of financial liabilities $152.4 million, dividends paid of $95.4 million, capital expenditure of $61.8 million.
Net cash for covenant purposes was $64 million at 28 June 2015.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 61
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
RECONCILIATION OF STATUTORY TO UNDERLYING PERFORMANCE
AS REPORTED
SIGNIFICANT ITEMS (iii)
TRADING PERFORMANCE
EXCLUDING SIGNIFICANT ITEMS
NOTE
(i)
28 JUNE 2015
$’000
29 JUNE 2014
$’000
28 JUNE 2015
$’000
29 JUNE 2014
$’000
28 JUNE 2015
$’000
29 JUNE 2014
$’000
1,867,212
1,972,694
14,071
106,477
1,853,141
1,866,217
310
8,007
-
-
310
8,007
(1,665,146)
(1,609,387)
(101,094)
(47,909)
(1,564,052)
(1,561,478)
202,376
371,314
(87,023)
58,568
289,399
312,746
(64,982)
(93,517)
-
-
(64,982)
(93,517)
137,394
277,797
(87,023)
58,568
224,417
219,229
(ii)
(16,277)
(10,428)
-
-
(16,277)
(10,428)
121,117
267,369
(87,023)
58,568
208,140
208,801
(33,912)
(42,201)
26,003
8,108
(59,915)
(50,309)
87,205
225,168
(61,020)
66,676
148,225
158,492
(4,037)
(736)
541
-
(4,578)
(736)
83,168
224,432
(60,479)
66,676
143,647
157,756
3.5
9.5
6.1
6.7
Total revenue
Associate profits
Expenses
OPERATING
EBITDA
Depreciation
and amortisation
EBIT
Net finance
costs
Net profit/(loss)
before tax
Tax (expense)/
benefit
Net profit/(loss)
after tax
Net (profit)/loss
attributable to
non-controlling
interest
Net profit/(loss)
attributable to
members
of the Company
Earnings per
share
(i) Revenue from ordinary activities excluding interest income.
(ii) Finance costs less interest income.
(iii) Significant items are those items of such a nature or size that separate disclosure will assist users to understand the accounts. Refer
to Note 4 for further details of significant items for impairments, restructuring and redundancy and gains on controlled entities and
investments consistent with prior period disclosures.
62
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
RECONCILIATION OF TRADING TO OPERATING CASH FLOW
Cash Flow from trading activities
Redundancy Payments
Interest and dividends received
Finance costs and income tax paid
Net cash flow from operating activities
28 JUNE 2015
$’000
29 JUNE 2014
$’000
264,769
284,343
(35,639)
(86,397)
18,585
17,821
(41,966)
(44,285)
205,749
171,482
FAIRFAX MEDIA ANNUAL REPORT 2015 | 63
CONSOLIDATED INCOME STATEMENT
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
Revenue from operations
Other revenue and income
TOTAL REVENUE AND INCOME
Share of net profits of associates and joint ventures
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 profit from operations before income tax expense
Income tax expense
Net profit from operations after income tax expense
Net profit is attributable to:
Non-controlling interest
Owners of the parent
Earnings per share (cents per share)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
NOTE
2(A)
2(B)
8(C)
3(A)
3(B)
3(C)
25
20
20
28 JUNE 2015
$’000
29 JUNE 2014
$’000
1,838,629
39,427
1,878,056
310
(1,630,091)
(64,982)
(35,055)
(27,121)
121,117
(33,912)
87,205
4,037
83,168
87,205
3.5
3.5
1,856,762
130,806
1,987,568
8,007
(1,585,928)
(93,517)
(23,459)
(25,302)
267,369
(42,201)
225,168
736
224,432
225,168
9.5
9.5
The above Consolidated Income Statement should be read in conjunction with the accompanying Notes.
64
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
Net profit after income tax expense
87,205
225,168
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss:
Changes in fair value of available for sale financial assets
Changes in fair value of cash flow hedges
Changes in value of net investment hedges
Exchange differences on translation of foreign operations
Income tax relating to these items
Items that will not be reclassified to profit or loss:
Actuarial (loss)/gain on defined benefit plans
Income tax relating to these items
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Total comprehensive income is attributable to:
Non-controlling interest
Owners of the parent
25
25
(276)
4,183
1,104
(15,603)
(3,023)
(146)
27
(13,734)
73,471
4,037
69,434
73,471
707
511
(11,231)
22,451
3,387
518
(149)
16,194
241,362
736
240,626
241,362
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 65
CONSOLIDATED BALANCE SHEET
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES AS AT 28 JUNE 2015
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative assets
Assets held for sale
Income tax receivable
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
Liabilities directly associated with held for sale assets
Provisions
Current tax liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Interest bearing liabilities
Derivative liabilities
Provisions
Pension liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained losses
Total parent entity interest
Non-controlling interest
TOTAL EQUITY
NOTE
29(B)
10
11
16
7(A)
24
10
8
9
14
16
25
24
12
15
16
7(B)
13
15
16
13
18
18
28 JUNE 2015
$’000
29 JUNE 2014
$’000
342,830
314,719
26,333
-
70,947
3,528
1,384
759,741
822
95,831
2,276
1,523,402
330,189
16,902
76,053
1,429
16,625
2,063,529
2,823,270
241,930
27,101
3,912
187
136,716
22,039
431,885
255,858
7,137
51,949
-
10,040
324,984
756,869
452,687
295,424
25,362
213
91,494
8,725
4,858
878,763
1,232
88,801
2,488
1,312,111
407,978
1,551
86,022
1,195
1,369
1,902,747
2,781,510
218,052
119,721
13,278
4,202
118,959
9,290
483,502
235,526
21,957
49,416
440
-
307,339
790,841
2,066,401
1,990,669
4,650,798
21,034
(2,725,544)
1,946,288
120,113
2,066,401
4,646,525
55,432
(2,713,145)
1,988,812
1,857
1,990,669
The above Consolidated Balance Sheet should be read in conjunction with the accompanying Notes.
66
CONSOLIDATED CASH FLOW STATEMENT
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Redundancy payments
Interest received
Dividends and distributions received
Finance costs paid
Net income taxes paid
Net cash inflow from operating activities
29(A)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for 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, net of transaction fees and
cash disposed*
Loans advanced to other parties
Loans repaid by other parties
Net cash (outflow)/inflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payment for purchase of non-controlling interests in subsidiaries
Proceeds from borrowings and other financial liabilities
Repayment of borrowings and other financial liabilities
Payment of facility fees
Payment for on market buy-back
Dividends paid to shareholders
Dividends paid to non-controlling interests in subsidiaries
Net cash outflow from financing activities
NET DECREASE IN CASH AND CASH EQUIVALENTS HELD
Cash and cash equivalents at beginning of the financial year
Reclassification to held for sale
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of the financial year
19
7(A)
29(B)
2,032,148
(1,767,379)
(35,639)
10,618
7,967
(23,244)
(18,722)
205,749
2,044,784
(1,760,441)
(86,397)
12,933
4,888
(31,162)
(13,123)
171,482
(53,507)
(33,713)
(3,047)
(61,794)
20,152
77,671
(16,250)
5,090
(31,685)
-
5,441
(152,366)
(1,160)
(37,928)
(95,449)
(1,211)
(282,673)
(108,609)
452,687
-
(1,248)
342,830
(482)
(72,321)
12,260
222,444
-
4,986
133,174
(3,983)
12,871
(319,457)
(1,475)
-
(70,559)
(884)
(383,487)
(78,831)
533,531
(8,439)
6,426
452,687
* The prior year proceeds primarily relate to the disposal of the Stayz business on 6 December 2013.
The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying Notes.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 67
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FAIRFAX MEDIA ANNUAL REPORT 2015 | 69
NOTES TO THE FINANCIAL STATEMENTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fairfax Media Limited is a for profit company limited by ordinary shares which are publicly traded on the Australian Securities Exchange.
The financial report includes the consolidated entity consisting of Fairfax Media Limited and its controlled entities.
(A) BASIS OF PREPARATION
This financial report is for the period 30 June 2014 to 28 June 2015 (2014: the period 1 July 2013 to 29 June 2014). Reference in this
report to ‘a year’ is to the period ended 28 June 2015 or 29 June 2014 respectively, unless otherwise stated. The financial report is a
general-purpose financial report. It 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; and International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board;
• on a historical cost basis, except for those assets and liabilities disclosed in Note 17(E) which are measured at fair value; and
• in accordance with ASIC Class Order 98/0100, with all values rounded to the nearest thousand dollars unless otherwise indicated.
The financial report has been re-ordered this year. Significant accounting policies are provided throughout the notes to the financial
statements.
(B) SIGNIFICANT JUDGEMENTS AND ESTIMATES
The carrying amounts of certain assets and liabilities are determined based on estimates and assumptions of future events. The key
estimates and assumptions which are material to the financial reports are found in the following notes:
• Note 6: Business combinations, acquisition and disposal of controlled entities
• Note 9: Intangible assets
• Note 13: Provisions
• Note 14: Property, plant and equipment
• Note 25: Taxation
• Note 26: Employee entitlements
(C) SIGNIFICANT CHANGES IN THE CURRENT REPORTING PERIOD
During the current financial year, the financial position and performance of the group was particularly affected by the following events
and transactions:
• On 10 July 2014, the Company repaid US$105 million (A$125 million) of senior notes.
• On 2 October 2014, the Company acquired All Homes Pty Ltd and All Data Australia Pty Ltd for total consideration of $51.5 million.
• On 22 January 2015, the Group acquired the remaining 50% of issued shares in MMP Holdings Pty Ltd for total consideration of $75.4
million including $18.5 million in cash.
• On 30 January 2015, the Company completed an agreement to sell Radio 96FM Perth Pty Limited to APN News & Media Limited for
cash consideration of $78 million.
• In March 2015, the Group commenced an on market share buyback of ordinary shares as part of the Group’s ongoing
capital management strategy. At June 2015, 37.1 million shares were repurchased and cancelled for $37.9 million.
• On 31 March 2015, the Company entered into merger with Macquarie Radio Network Limited and has received $18 million in cash
consideration and holds a 54.5% shareholding.
For a detailed discussion about the Group’s performance and financial position please refer to the Management Discussion and Analysis.
70
NOTES TO THE FINANCIAL STATEMENTS:
KEY NUMBERS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
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
Foreign exchange gains
Gains on sale of property, plant and equipment
Gains on sale of controlled entities
Gain on investment at fair value
Other
Total other revenue and income
Total revenue and income
28 JUNE 2015
$’000
29 JUNE 2014
$’000
494,297
1,344,332
1,838,629
10,844
3,725
2,214
6,803
7,268
8,573
39,427
1,878,056
503,919
1,352,843
1,856,762
14,874
3,817
868
106,477
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4,770
130,806
1,987,568
*Revenue from the sale of goods includes revenue from circulation, subscription, printing and printing-related products.
ACCOUNTING POLICY
Revenue from advertising, circulation and subscription for newspapers, magazines and other publications is recognised on the
publication date. Revenue from the provision of advertising on websites is recognised in the period the advertisements are placed
or the impression occurs. Revenue from radio advertising is recognised when the programme is aired. Amounts disclosed as
revenue are net of commissions, rebates, discounts and returns which are recognised when they can be reliably measured.
Interest revenue is recognised as it accrues, based on the effective yield of the financial asset.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 71
NOTES TO THE FINANCIAL STATEMENTS:
KEY NUMBERS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
3. EXPENSES
(A) EXPENSES BEFORE IMPAIRMENT, DEPRECIATION,
AMORTISATION AND FINANCE COSTS
Staff costs excluding staff redundancy costs
Redundancy costs
Newsprint and paper
Distribution costs
Production costs
Promotion and advertising costs
Rent and outgoings
Repairs and maintenance
Outsourced services
Communication costs
Maintenance and other computer costs
Fringe benefits tax, travel and entertainment
Other
28 JUNE 2015
$’000
29 JUNE 2014
$’000
724,693
51,938
116,210
144,237
151,567
98,662
62,140
28,088
28,265
18,373
29,690
25,066
151,162
731,502
22,126
141,752
144,155
135,155
91,997
59,815
25,832
22,477
18,630
24,763
25,174
142,550
Total expenses before impairment, depreciation, amortisation and finance costs
1,630,091
1,585,928
(B) DEPRECIATION AND AMORTISATION
Depreciation of freehold property
Depreciation of plant and equipment
Depreciation of leasehold property
Amortisation of software
Amortisation of customer relationships and tradenames
Total depreciation and amortisation
(C) FINANCE COSTS
External parties borrowing costs
Gain on partial redemption of senior notes
Finance lease
Hedge ineffectiveness
Total finance costs
(D) OTHER EXPENSE DISCLOSURES
Operating lease rental expense
Defined contribution superannuation expense
Share-based payment expense
ACCOUNTING POLICY
BORROWING COSTS
6,548
32,791
4,408
21,076
159
64,982
22,761
-
4,358
2
27,121
44,855
49,884
5,298
6,275
54,629
4,370
27,451
792
93,517
31,172
(10,183)
4,073
240
25,302
40,580
47,658
3,870
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. Where funds are borrowed generally, borrowing costs are capitalised using a weighted
average capitalisation rate.
72
NOTES TO THE FINANCIAL STATEMENTS:
KEY NUMBERS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
4. SIGNIFICANT ITEMS
The net profit after tax includes the following items whose disclosure is relevant in explaining the financial performance of the
consolidated entity.
IMPAIRMENT OF SOFTWARE, EQUITY ACCOUNTED INVESTMENTS AND
PROPERTY, PLANT AND EQUIPMENT - COMPRISING:
Impairment of software, equity accounted investments and property,
plant and equipment (i)
Income tax benefit
Impairment of software, equity accounted investments 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
GAINS ON CONTROLLED ENTITIES AND INVESTMENTS - COMPRISING:
Gain on sale of controlled entities disclosed in other revenue and income (ii)
Gain on investment at fair value disclosed in other revenue and income
Income tax expense
Gains on controlled entities and investments, net of tax
28 JUNE 2015
$’000
29 JUNE 2014
$’000
(34,881)
6,343
(23,890)
7,056
(28,538)
(16,834)
(66,213)
19,660
(46,553)
6,803
7,268
-
14,071
(24,019)
7,094
(16,925)
106,477
-
(6,042)
100,435
Net significant items after income tax
(61,020)
66,676
(i) Software and property, plant and equipment impairments relate to assets no longer in use. Equity accounted investment impairments
are where the carrying value has been adjusted to reflect managements fair value estimate of non-listed investments.
(ii) On 6 December 2013, the Group disposed of the Stayz business for gross proceeds of $218.0 million.
ACCOUNTING POLICY
Significant items are those items of such a nature or size that separate disclosure will assist users to understand the financial
statements.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 73
NOTES TO THE FINANCIAL STATEMENTS:
KEY NUMBERS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
5. 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.
REPORTABLE SEGMENT
PRODUCTS AND SERVICES
Australian Community Media
Newspaper publishing and online for all Australian regional, community and agricultural media.
Metropolitan Media
Metropolitan news, sport, lifestyle and business media across various platforms including print,
online, tablet and mobile. Also includes classifieds (including Domain) for metropolitan publications
and transactional businesses.
New Zealand Media
Newspaper, magazine and general publishing and online for all New Zealand media.
Radio
Other
Metropolitan radio networks in Australia.
Comprises corporate and other entities not included in the segments above.
(B) RESULTS BY OPERATING SEGMENT
The segment information provided to the Board of Directors, CEO and CFO for the reportable segments for the period ended 28 June
2015 and 29 June 2014 is as follows:
SEGMENT
REVENUE
$’000
INTERSEGMENT
REVENUE
$’000
REVENUE FROM
EXTERNAL
CUSTOMERS
$’000
SHARE OF
PROFITS OF
ASSOCIATES AND
JOINT VENTURES
$’000
UNDERLYING
EBIT
$’000
539,216
830,167
358,561
108,698
16,840
1,853,482
586,569
804,088
362,672
103,955
9,602
1,866,886
(73)
(244)
(4)
-
(20)
(341)
(89)
(895)
(6)
(130)
451
(669)
539,143
829,923
358,557
108,698
16,820
1,853,141
586,480
803,193
362,666
103,825
10,053
1,866,217
2,212
2,562
(772)
(7)
(3,685)
310
2,266
3,780
-
(3)
1,964
8,007
77,447
111,460
54,263
11,084
(29,837)
224,417
112,714
63,536
59,752
10,718
(27,491)
219,229
28 JUNE 2015
Australian Community Media
Metropolitan Media
New Zealand Media
Radio
Other
Total for the Group
29 JUNE 2014
Australian Community Media
Metropolitan Media
New Zealand Media
Radio
Other
Total for the Group
74
NOTES TO THE FINANCIAL STATEMENTS:
KEY NUMBERS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(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
Gains on controlled entities and investments
Total revenue and income
28 JUNE 2015
$’000
29 JUNE 2014
$’000
1,853,141
10,844
14,071
1,878,056
1,866,217
14,874
106,477
1,987,568
Transactions between operating segments relating to management charges are on third party terms.
The consolidated entity operates predominantly in two geographic segments, Australia and New Zealand. The amount of its revenue
from external customers in Australia is $1,492.8 million (2014: $1,501.8 million) and the amount of revenue from external customers
in New Zealand is $360.3 million (2014: $364.4 million). Segment revenues are allocated based on the country in which the customer
is located.
(ii) SEGMENT RESULT - EBIT
The Board of Directors, CEO and CFO assess the performance of the operating segments based on a measure of underlying EBIT.
A reconciliation of underlying EBIT to operating profit before income tax is provided as follows:
SEGMENT RESULTS - EBIT
Interest income
Finance costs
Gains on controlled entities and investments in other revenue and income
Impairment of software, equity accounted investments, and property,
plant and equipment
Restructuring and redundancy charges
Reported net profit before tax
28 JUNE 2015
$’000
29 JUNE 2014
$’000
224,417
10,844
(27,121)
14,071
(34,881)
(66,213)
121,117
219,229
14,874
(25,302)
106,477
(23,890)
(24,019)
267,369
FAIRFAX MEDIA ANNUAL REPORT 2015 | 75
NOTES TO THE FINANCIAL STATEMENTS:
KEY NUMBERS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
A summary of significant items by operating segments is provided for the period ended 28 June 2015 and 29 June 2014.
IMPAIRMENT
OF SOFTWARE,
INVESTMENTS AND
PROPERTY, PLANT
AND EQUIPMENT
$’000
RESTRUCTURING
AND REDUNDANCY
CHARGES
$’000
GAIN ON
CONTROLLED
ENTITIES AND
INVESTMENTS
$’000
28 JUNE 2015
Australian Community Media
Metropolitan Media
New Zealand Media
Radio
Other
Consolidated entity
29 JUNE 2014
Australian Community Media
Metropolitan Media
New Zealand Media
Radio
Other
Consolidated entity
(iii) SEGMENT ASSETS
-
-
6,501
-
28,380
34,881
440
15,058
5,539
-
2,853
23,890
-
-
-
2,239
63,974
66,213
-
-
5,589
-
18,430
24,019
-
(10,468)
-
(37,075)
33,472
(14,071)
-
-
-
-
(106,477)
(106,477)
TOTAL
$’000
-
(10,468)
6,501
(34,836)
125,826
87,023
440
15,058
11,128
-
(85,194)
(58,568)
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.
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 $1,709.9 million (2014: $1,608.4 million) and the total of these non-current
assets located in New Zealand is $242.6 million (2014: $204.2 million). Segment assets are allocated to countries based on where the
assets are located.
ACCOUNTING POLICY
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 expenses 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 assess performance, make resource allocation
decisions and for which discrete financial information is available.
Information about other business activities and operating segments that are below the quantitative criteria as prescribed by
AASB 8 are combined and disclosed in a separate category for “Other segments”.
76
NOTES TO THE FINANCIAL STATEMENTS:
GROUP STRUCTURE
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
6. BUSINESS COMBINATIONS, ACQUISITION AND
DISPOSAL OF CONTROLLED ENTITIES
(A) ACQUISITIONS
The Group gained control over the following entities during the year:
ENTITY OR BUSINESS ACQUIRED
PRINCIPAL ACTIVITY
DATE OF
ACQUISITION
OWNERSHIP
INTEREST
The Baby and Toddler Show
Baby and toddler exhibition event
17 September 2014
Duskhail Pty Limited
Supplier of lightning information
All Homes Pty Limited and its controlled entities
Online real estate website
MMP Holdings Pty Ltd and its controlled entities (ii)
Community newspaper publisher
Macquarie Radio Network Limited and its
controlled entities
Radio broadcaster
1 October 2014
2 October 2014
22 January 2015
31 March 2015
(i)
(i)
100%
100%
54.5%
(i) The business assets of these entities were acquired.
(ii) The Group previously owned 50.01% of MMP Holdings Pty Ltd. On 22 January 2015 the remaining 50% ownership interest was
acquired and the Group gained control of MMP Holdings Pty Ltd and its controlled entities.
The provisionally determined fair values of the identifiable assets and liabilities acquired are detailed below. Balances are provisional as
purchase price accounting has not been finalised.
MACQUARIE RADIO
NETWORK LIMITED
$’000
OTHER
ACQUISITIONS
$’000
VALUE OF NET ASSETS ACQUIRED
Cash and cash equivalents
Receivables
Property, plant and equipment
Intangible assets
Deferred tax assets
Income tax receivable
Total assets
Payables
Provisions
Interest bearing liabilities
Deferred tax liabilities
Total liabilities
VALUE OF IDENTIFIABLE NET ASSETS
Fair value of original equity accounted investment
Non-controlling interest recognised on acquisition
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
Total purchase consideration
NET CASH INFLOW/(OUTFLOW) ON ACQUISITION
Net cash acquired with subsidiary
Cash received/(paid)
Net cash inflow/(outflow)
559
14,880
4,166
39,898
1,756
1,038
62,297
9,136
4,373
18,250
5,512
37,271
25,026
-
(38,061)
60,220
46,645
-
-
46,645
46,645
559
25,081
25,640
8,842
14,708
2,132
36,107
1,037
1,679
64,505
10,774
2,634
-
7,500
20,908
43,597
(58,020)
(5,816)
150,784
130,545
60,100
28,364
42,081
130,545
8,842
(60,100)
(51,258)
FAIRFAX MEDIA ANNUAL REPORT 2015 | 77
NOTES TO THE FINANCIAL STATEMENTS:
GROUP STRUCTURE
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
MACQUARIE RADIO NETWORK LIMITED
On 31 March 2015, Macquarie Radio Network Limited (MRN) acquired 100% of the share capital of Fairfax Radio Network Pty Limited
(FRN) from the Group. In exchange, the Group received a 54.5% ownership interest in MRN.
The acquisition of FRN by MRN is considered a reverse acquisition, with the Group being considered the parent for reporting purposes
and the business combination being accounted for under AASB 3 Business Combinations.
As a result of this acquisition, the consolidated income statement includes revenue and net loss before tax for the period ended 28
June 2015 of $14.7 million and $0.1 million respectively. Had the acquisition occurred at the beginning of the reporting period, the
consolidated income statement would have included revenue and net loss before tax of $56.3 million and $0.7 million respectively.
Goodwill of $60.2 million includes the expected synergies and future growth opportunities.
OTHER ACQUISITIONS
In addition to cash paid of $60.1 million and shares issued of $42.1 million, contingent consideration of up to $31.4 million is payable,
with an expected settlement of $28.4 million, by the Group to specified sellers if certain financial performance criteria are achieved.
This is payable over a period of up to three years.
As a result of these acquisitions, the consolidated income statement includes revenue and net profit before tax for the period ended
28 June 2015 of $42.4 million and $14.9 million respectively. Had the acquisitions occurred at the beginning of the reporting period, the
consolidated income statement would have included revenue and net profit before tax of $88.5 million and $26.7 million respectively.
Goodwill of $150.8 million includes the expected synergies and future growth opportunities.
ACCOUNTING POLICY
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, and 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.
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 the income statement.
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 the income statement or as a change to other comprehensive income.
78
NOTES TO THE FINANCIAL STATEMENTS:
GROUP STRUCTURE
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(B) DISPOSALS
The Group disposed of its interest in the following entities during the year:
ENTITY OR BUSINESS DISPOSED
PRINCIPAL ACTIVITY
DATE OF DISPOSAL OWNERSHIP INTEREST
Radio 96FM Perth Pty Limited
RSVP.com.au Pty Limited (iii)
Radio broadcaster
30 January 2015
Online dating services
1 July 2014
100%
42.2% (iii)
(iii) On 1 July 2014, the Group disposed of 42.2% of RSVP.com.au Pty Limited and RSVP acquired 100% of 3H Group Pty Ltd.
This investment was equity accounted from 1 July 2014. The Group does not have control of this company as it does not
have power to govern the financial and operating policies of the company, such as power over budget, operational plans
and appointment and removal of key personnel.
For the above entities, the major classes of assets and liabilities disposed were as follows:
Cash and cash equivalents
Trade and other receivables
Investment
Intangible assets
Property, plant and equipment
Total assets
Payables
Provisions
Total liabilities
Net assets
$’000
8,439
532
45
117,906
542
127,464
4,065
1,247
5,312
122,152
FAIRFAX MEDIA ANNUAL REPORT 2015 | 79
NOTES TO THE FINANCIAL STATEMENTS:
GROUP STRUCTURE
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
7. ASSETS AND LIABILITIES HELD FOR SALE
(A) ASSETS HELD FOR SALE
Property, plant and equipment
Macquarie Regional Radio Pty Limited disposal group
Intangible assets
Property, plant and equipment
Other assets
RSVP.com.au Pty Limited disposal group
Cash
Intangible assets
Other assets
Total assets held for sale
(B) LIABILITIES DIRECTLY ASSOCIATED WITH HELD FOR SALE ASSETS
Macquarie Regional Radio Pty Limited disposal group
Other liabilities
RSVP.com.au Pty Limited disposal group
Payables
Other liabilities
Total liabilities directly associated with held for sale assets
28 JUNE 2015
$’000
29 JUNE 2014
$’000
68,215
36,244
324
1,975
433
-
-
-
70,947
187
-
-
187
-
-
-
8,439
46,262
549
91,494
-
4,066
136
4,202
PROPERTY, PLANT AND EQUIPMENT
Assets held for sale comprise properties in Australia and New Zealand that are being actively marketed and for which the sale is highly
probable. During 2015, six properties previously held for sale were sold.
Prior to being transferred to held for sale, the properties are remeasured at the lower of carrying amount and fair value less costs to sell.
RSVP.COM.AU PTY LIMITED DISPOSAL GROUP
On 1 July 2014, the sale of 42.2% of RSVP.com.au Pty Limited was completed.
ACCOUNTING POLICY
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally
through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale
are measured at the lower of their carrying amount and fair value less costs to sell. The criteria for held for sale classification is
regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present
condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale
within one year from the date of classification.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or
loss after tax from discontinued operations in the income statement.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
80
NOTES TO THE FINANCIAL STATEMENTS:
GROUP STRUCTURE
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
8. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Shares in associates
Shares in joint ventures
Total investments accounted for using the equity method
NOTE
(A)
(B)
28 JUNE 2015
$’000
29 JUNE 2014
$’000
71,396
24,435
95,831
69,457
19,344
88,801
FAIRFAX MEDIA ANNUAL REPORT 2015 | 81
NOTES TO THE FINANCIAL STATEMENTS:
GROUP STRUCTURE
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(A) INTERESTS IN ASSOCIATES
NAME OF COMPANY
PRINCIPAL ACTIVITY
PLACE OF
INCORPORATION
OWNERSHIP INTEREST
28 JUNE 2015
29 JUNE 2014
Australian Associated Press Pty Ltd
Bellabox Pty Ltd (i)
Digital Radio Broadcasting Melbourne
Pty Ltd (ii)
News agency business and
information service
Subscription beauty box
business
Australia
Australia
Digital audio broadcasting
Australia
Digital Radio Broadcasting Perth Pty Ltd (ii)
Digital audio broadcasting
Australia
Digital Radio Broadcasting Brisbane Pty Ltd
Digital audio broadcasting
Australia
Digital Radio Broadcasting Sydney Pty Ltd (ii)
Digital audio broadcasting
Australia
Healthshare Pty Ltd
Homebush Transmitters Pty Ltd
MMP Holdings Pty Ltd (iii)
New Zealand Press Association Ltd
NGA.net Pty Ltd
Perth FM Facilities Pty Ltd (iv)
Information technology tools
for healthcare practitioners
and consumers
Australia
Rental of a transmission
facility
Community newspaper
publisher
Australia
Australia
News agency business and
financial information service
New Zealand
Provider of e-recruitment
software to corporations
Rental of a transmission
facility
Australia
Australia
RSVP.com.au Pty Limited (v)
Online dating services
Australia
Skoolbo Pty Ltd (vi)
Online education provider
Singapore
The Seniors Ad Network Pty Ltd (vii)
The Video Network Pty Ltd
Digital community for over
60s
Australia
Internet delivered television
network
Australia
Times Newspapers Ltd
Newspaper publishing
New Zealand
Xchange IT Software Pty Ltd
Provider of EDI software
Australia
Xchange IT Newsagents Pty Ltd
Provider of EDI software
Australia
47.0%
50.3%
18.2%
16.7%
25.0%
11.3%
28.2%
47.0%
-
18.2%
33.3%
25.0%
11.3%
19.7%
50.0%
50.0%
100.0%
50.01%
49.2%
23.7%
-
57.5%
20.0%
33.3%
28.6%
49.9%
33.3%
25.0%
49.2%
23.7%
33.3%
100.0%
-
-
28.6%
49.9%
33.3%
25.0%
(i)
This investment was acquired on 2 September 2014. The Group does not have control of this company as it does not have power
to govern the financial and operating policies of the company, such as power over budget, operational plans and appointment and
removal of key personnel.
The Group has significant influence in the entity due to its right to participate in policy setting for the entity.
(ii)
(iii) Control was obtained on 22 January 2015 when the Group acquired the remaining 50% ownership interest. The results of the entity
have been consolidated from this date.
(iv) This investment was disposed on 30 January 2015 as part of the Radio 96FM Perth Pty Limited disposal.
(v)
On 1 July 2014, the Group disposed of 42.2% of RSVP.com.au Pty Limited and RSVP acquired 100% of 3H Group Pty Ltd.
This investment was equity accounted from 1 July 2014. The Group does not have control of this company as it does not
have power to govern the financial and operating policies of the company, such as power over budget, operational plans
and appointment and removal of key personnel.
(vi) This investment was acquired on 17 December 2014.
(vii) This investment was acquired on 2 July 2014.
82
NOTES TO THE FINANCIAL STATEMENTS:
GROUP STRUCTURE
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(i) SHARE OF ASSOCIATES' PROFITS
Revenue
Profit before income tax expense
Income tax expense
Net profit after income tax expense
(ii) SHARE OF ASSOCIATES' ASSETS AND LIABILITIES
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
28 JUNE 2015
$’000
29 JUNE 2014
$’000
78,163
3,579
(1,300)
2,279
21,422
51,931
73,353
12,493
4,883
17,376
79,853
8,284
(2,398)
5,886
28,001
28,363
56,364
14,333
3,634
17,967
(B) INTERESTS IN JOINT VENTURES
NAME OF COMPANY
PRINCIPAL ACTIVITY
Adzuna Australia Pty Ltd (ix)
Job advertisements
search engine
PLACE OF
INCORPORATION
Australia
Fermax Distribution Company Pty Ltd Letterbox distribution of
Australia
Future Foresight Group Pty Ltd (x)
Gilgandra Newspapers Pty Ltd
newspapers
Weather safety and risk
information provider
Newspaper publishing
and printing
Gippsland Regional Publications
Partnership
Newspaper publishing
and printing
Neighbourly Limited (xi)
Private neighbourhood
website service
South Africa
Australia
Australia
New Zealand
Pricemaker Ltd (xii)
Online shopping platform
New Zealand
Stan Entertainment Pty Ltd (xiii)
Torch Publishing Company Pty Ltd
Provider of subscription
video on demand
Newspaper publishing and
printing
Australia
Australia
OWNERSHIP INTEREST
28 JUNE 2015
29 JUNE 2014
49.3%
50.0%
50.0%
50.0%
50.0%
22.5%
51.4%
50.0%
50.0%
50.0%
-
50.0%
50.0%
-
50.0%
-
50.0%
50.0%
(ix) This investment is classified as a joint venture, rather than an associate, as all significant decisions require unanimous consent.
(x) This investment was acquired on 19 May 2015.
(xi)
This investment was acquired on 10 December 2014. This investment is classified as a joint venture, rather than an associate,
as all significant decisions require unanimous consent.
The Group does not have control of this company as it does not have power to govern the financial and operating policies of
the company, such as power over budget, operational plans and appointment and removal of key personnel.
(xii)
(xiii) This investment was acquired on 1 September 2014. The Group has committed to providing up to $50 million in loans to Stan
Entertainment Pty Ltd over a multi-year period.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 83
NOTES TO THE FINANCIAL STATEMENTS:
GROUP STRUCTURE
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(i) SHARE OF JOINT VENTURES’ (LOSSES)/PROFITS
Revenues
Expenses
(Loss)/profit before income tax expense
Income tax expense
Net (loss)/profit after income tax expense
(ii) SHARE OF JOINT VENTURES’ ASSETS AND LIABILITIES
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
28 JUNE 2015
$’000
29 JUNE 2014
$’000
10,540
(12,418)
(1,878)
(91)
(1,969)
39,602
55,350
94,952
71,720
12,830
84,550
10,449
(8,208)
2,241
(120)
2,121
5,126
17,789
22,915
1,330
177
1,507
(C) SHARE OF NET PROFITS OF ASSOCIATES AND JOINT VENTURES
Profit before income tax expense
Income tax expense
Net profit after income tax expense
ACCOUNTING POLICY
28 JUNE 2015
$’000
29 JUNE 2014
$’000
1,701
(1,391)
310
10,525
(2,518)
8,007
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.
IMPAIRMENT OF ASSETS
Investments accounted for using the equity method are tested for impairment at each reporting date where there is an indication
that the asset may be impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount.
Assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
84
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
9. INTANGIBLE ASSETS
Mastheads and tradenames
Goodwill
Radio licences
Software
Customer relationships
Total intangible assets
ACCOUNTING POLICY
MASTHEADS AND TRADENAMES
28 JUNE 2015
$’000
29 JUNE 2014
$’000
982,693
355,648
115,211
53,249
16,601
1,523,402
972,022
177,898
114,037
46,974
1,180
1,312,111
The Group’s mastheads and tradenames operate in established markets with limited licence 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 useful lives as there is no foreseeable limit to the period over which the assets
are expected to generate net cash inflows for the Group. These assets are not amortised but are tested for impairment
annually. Tradenames that have been assessed to have a definite useful life and are amortised using a straight-line method
over twenty years.
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 entity at the date of acquisition. Goodwill is not amortised but is tested for impairment annually.
RADIO LICENCES
Radio licences consist of commercial radio licences held by the consolidated entity under the provisions of the Broadcasting
Services Act 1992 and have been assessed as having indefinite useful lives as there is no foreseeable limit to the period over
which the assets are expected to generate net cash inflows for the Group. These assets are not amortised but are tested for
impairment annually.
SOFTWARE, DATABASES AND WEBSITES
Internal and external costs directly incurred in the purchase or development of software or databases are capitalised as intangible
assets, including subsequent upgrades and enhancements, when it is probable that they will generate future economic benefits
attributable to the Group. Software licences and databases are amortised on a straight-line basis over their useful lives, which are
between three and six years.
Internal and external costs directly incurred in the development of websites are capitalised as intangible assets and amortised
on a straight-line basis over their useful lives, which are between two and four years.
CUSTOMER RELATIONSHIPS
Customer relationships purchased in a business combination are amortised on a straight-line basis over their useful lives,
which are between two and thirteen years.
IMPAIRMENT OF ASSETS
Intangibles are tested for impairment where there is an indication that the asset may be impaired. Goodwill and other indefinite
life assets are further tested at least annually in June each year. 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.
Assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment whenever there is an
indication of a potential reversal and at least annually.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 85
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
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:
MASTHEADS &
TRADENAMES
$’000
NOTE
GOODWILL
$’000
RADIO
LICENCES
$’000
SOFTWARE
$’000
CUSTOMER
RELATIONSHIPS
$’000
TOTAL
$’000
PERIOD ENDED 29
JUNE 2014
Balance at beginning
of the financial year
Additions
Capitalisations from
works in progress
14
Disposals
Disposal of
controlled entities
Assets classified as
held for sale
Acquisition
through business
combinations
Amortisation
3(B)
Exchange differences
At 29 June 2014,
net of accumulated
amortisation and
impairment
AT 29 JUNE 2014
Cost
Accumulated
amortisation and
impairment
966,223
294,385
114,037
-
-
-
-
-
-
(2,867)
(104,149)
(5,850)
(39,717)
-
(33)
14,549
26,890
-
489
-
-
-
-
-
-
-
-
56,840
12,735
8,028
(1,327)
6,549
1,438,034
-
-
-
12,735
8,028
(1,327)
(3,803)
(4,695)
(115,514)
(695)
-
(46,262)
1,350
(27,451)
1,297
-
(759)
85
28,240
(28,243)
16,420
972,022
177,898
114,037
46,974
1,180
1,312,111
3,791,271
1,676,208
143,700
285,513
8,342
5,905,034
(2,819,249)
(1,498,310)
(29,663)
(238,539)
(7,162)
(4,592,923)
Net carrying amount
972,022
177,898
114,037
46,974
1,180
1,312,111
86
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
MASTHEADS &
TRADENAMES
$’000
NOTE
GOODWILL
$’000
RADIO
LICENCES
$’000
SOFTWARE
$’000
CUSTOMER
RELATIONSHIPS
$’000
TOTAL
PERIOD ENDED 28
JUNE 2015
Balance at beginning
of the financial year
Additions
Capitalisations from
works in progress
14
Disposals
Disposal of
controlled entities
Assets classified as
held for sale
Acquisition
through business
combinations
Amortisation
Impairment
972,022
177,898
114,037
-
-
-
-
-
-
46,974
27,950
35
(183)
(33,000)
(38,400)
(244)
-
(324)
-
-
-
-
-
-
1,180
1,312,111
-
-
-
-
-
27,950
35
(183)
(71,644)
(324)
17,250
211,004
39,898
3,280
15,577
287,009
3(B)
(34)
-
-
-
Exchange differences
(6,545)
(254)
-
-
-
(21,076)
(2,693)
(794)
(125)
(21,235)
-
(31)
(2,693)
(7,624)
At 28 June 2015,
net of accumulated
amortisation and
impairment
AT 28 JUNE 2015
Cost
Accumulated
amortisation and
impairment
982,693
355,648
115,211
53,249
16,601
1,523,402
3,766,713
1,847,606
144,874
286,494
24,610
6,070,297
(2,784,020)
(1,491,958)
(29,663)
(233,245)
(8,009)
(4,546,895)
Net carrying amount
982,693
355,648
115,211
53,249
16,601
1,523,402
FAIRFAX MEDIA ANNUAL REPORT 2015 | 87
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(i) INDEFINITE LIVED INTANGIBLE ASSETS: IMPAIRMENT TESTING
Goodwill and intangible assets with indefinite useful lives have been allocated to the following cash generating units (CGUs) for
impairment testing purposes:
AT 28 JUNE 2015
OPERATING SEGMENT
ALLOCATION TO CGU GROUPS
Metropolitan Media
Metropolitan Media
Australian Digital Transactions
Metropolitan Media
Australian Regional Media
Australian Community Media
Agricultural Media
Australian Community Media
Radio
Radio
New Zealand Media
New Zealand Media
Total goodwill, licences,
mastheads and tradenames
AT 29 JUNE 2014
OPERATING SEGMENT
ALLOCATION TO CGU GROUPS
Metropolitan Media
Metropolitan Media
Australian Digital Transactions
Metropolitan Media
Australian Regional Media
Australian Community Media
Agricultural Media
Australian Community Media
Radio
Radio
New Zealand Media
New Zealand Media
Total goodwill, licences,
mastheads and tradenames
LICENCES,
MASTHEADS AND
TRADENAMES
$’000
GOODWILL
$’000
241,363
30,880
-
-
83,405
-
404,385
520
299,224
122,333
115,211
156,231
TOTAL
$’000
645,748
31,400
299,224
122,333
198,616
156,231
355,648
1,097,904
1,453,552
LICENCES,
MASTHEADS AND
TRADENAMES
$’000
GOODWILL
$’000
91,558
30,155
-
-
56,185
-
387,135
564
299,224
122,333
114,037
162,766
TOTAL
$’000
478,693
30,719
299,224
122,333
170,222
162,766
177,898
1,086,059
1,263,957
88
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
The recoverable amount of a CGU is determined based on value in use calculations, using a discounted cash flow methodology which
requires the use of assumptions. The calculations use cash flow projections based on the annual budget approved by the Board and
adjusted cash flow forecasts for up to five years. Cash flows beyond the forecast period are extrapolated using the estimated growth
rates stated below.
The cash flow projections are based on the following key assumptions:
KEY
APPROACH
Year 1 cash flows
• Based on board approved annual budget.
Year 2 -5 cash flows
• A revenue decline has been assumed for the publishing businesses as management expect
a cyclical downturn and structural change to continue. Assumptions have been made in line
with past performance and management’s expectation of market development.
• Revenue growth is assumed in the digital businesses based on market maturity and the
introduction of digital subscription – these assumptions are in line with industry trends and
management’s expectation of market development.
• Expenses expected to decrease based on announced restructuring initiatives which have
already produced a cost saving trend. Future savings are expected to continue in line with
the current trend.
• Given the impact and timing of Project Transcend cost savings on Australian Community
Media, cashflows have been forecast over five years rather than three.
Long term growth rate
• These rates are consistent with industry forecasts specific to the industry in which the CGU operates.
Discount rate
• Reflects current market assessment of the time value of money and the risks specific to the
relevant segments and countries in which the CGU operates.
Each of the above factors is subject to significant judgement about future economic conditions and the ongoing structure of the
publishing and digital industries. Specifically, the Directors note that the extent and duration of the structural change in print advertising
is difficult to predict. The Directors have applied their best estimates to each of these variables but cannot warrant their outcome.
The long term growth rates and discount rates used in the current year calculations are:
METROPOLITAN
MEDIA
AUSTRALIAN
DIGITAL
TRANSACTIONS
AUSTRALIAN
REGIONAL
MEDIA
AGRICULTURAL
MEDIA
Long term growth rate
Discount rate
-
10.5%
3.5%
11.3%
-
10.5%
-
10.5%
NEW
ZEALAND
MEDIA
-
10.8%
RADIO
2.5%
10.5%
Impairment testing as outlined above resulted in a $46.8 million masthead impairment and $46.8 million reversal of masthead
impairment in the Australian Regional Media CGU Group as a result of the allocation of savings from the Transcend cost saving program.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 89
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(ii) IMPACT OF A REASONABLY POSSIBLE CHANGE IN KEY ASSUMPTIONS
The calculations are sensitive to changes in key assumptions as set out below:
Metropolitan Media
• Discount rate – increase from 10.5% to 11% would result in an impairment of $34.4 million.
• Year one cash flow forecasts – reduction of 5% would result in an impairment of $51 million.
• Terminal cash flow forecasts – reduction of 5% would result in an impairment of $42.4 million.
Australian Regional Media
• Discount rate –increase from 10.5% to 11% would result in an impairment of $16.6 million.
• Year one cash flow forecasts – reduction of 5% would result in no additional impairment.
• Terminal cash flow forecasts – reduction of 5% would result in an impairment of $12 million.
Agricultural Media
• Discount rate – increase from 10.5% to 11% would result in an impairment of $4.4 million.
• Year one cash flow forecasts – reduction of 5% would result in no impairment.
• Terminal cash flow forecasts – reduction of 5% would result in an impairment of $3 million.
New Zealand Media
• Discount rate – increase from 10.8% to 11.3% would result in an impairment of $8.2 million.
• Year one cash flow forecasts – reduction of 5% would result in an impairment of $34.7 million.
• Terminal cash flow forecasts – reduction of 5% would result in an impairment of $8.1 million.
Adjusting the cashflow forecasts and discount rate for the above key assumptions would not result in an impairment within the
Australian Digital Transactions and Radio CGUs and therefore management has concluded that no reasonable possible change in
the key assumptions would result in an impairment in respect of the Australian Digital Transactions and Radio CGU’s.
90
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
10. RECEIVABLES
CURRENT
Trade debtors*
Provision for doubtful debts
Prepayments
Other
Total current receivables
Non-current
Other
Total non-current receivables
28 JUNE 2015
$’000
29 JUNE 2014
$’000
282,843
(8,862)
273,981
16,024
24,714
314,719
822
822
266,955
(8,253)
258,702
20,250
16,472
295,424
1,232
1,232
* Trade debtors are non-interest bearing and are generally on 7 to 45 day terms.
IMPAIRED TRADE DEBTORS
As at 28 June 2015, trade debtors of the Group with a nominal value of $8.9 million (2014: $8.3 million) were impaired and provided for.
No individual amount within the provision for doubtful debts is material. Refer to Note 17(C) for the factors considered in determining
whether trade debtors are impaired.
As at 28 June 2015, an analysis of trade debtors that are not considered impaired is as follows:
Not past due
Past due 0 - 30 days
Past due 31 - 60 days
Past 60 days
28 JUNE 2015
$’000
29 JUNE 2014
$’000
206,606
51,877
11,752
3,746
273,981
190,229
48,026
9,885
10,562
258,702
Based on the credit history of the trade debtors, it is expected that these amounts will be received. All other receivables are not past due
and not considered impaired.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 91
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
Movements in the provision for doubtful debts are as follows:
Balance at the beginning of the financial year
Additional provisions
Disposal of controlled entities
Receivables written off as uncollectible
Other
Balance at the end of the financial year
ACCOUNTING POLICY
2015
$’000
8,253
1,997
-
(1,514)
126
8,862
2014
$’000
10,014
2,608
(523)
(4,072)
226
8,253
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 recognised when there is objective evidence that the Group will not be able to collect the debts.
92
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
11. INVENTORIES
Raw materials and stores - at net realisable value
Finished goods - at cost
Work in progress - at cost
Total inventories
28 JUNE 2015
$’000
29 JUNE 2014
$’000
18,786
6,739
808
26,333
19,990
4,753
619
25,362
During the year, newsprint and paper expense (excluding cartage) of $114.8 million (2014: $139.7 million) was recognised in the income
statement.
During the year, no write down (2014: $0.4 million) to net realisable value on raw materials and stores was recognised within other
expenses in the income statement.
ACCOUNTING POLICY
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.
12. PAYABLES
Trade and other payables*
Income in advance
Interest payable
Total current payables
28 JUNE 2015
$’000
29 JUNE 2014
$’000
183,639
54,220
4,071
241,930
155,599
56,413
6,040
218,052
* Trade payables are non-interest bearing and are generally on 30 day terms.
ACCOUNTING POLICY
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.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 93
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
13. PROVISIONS
CURRENT
Employee benefits
Restructuring and redundancy
Property
Other
Total current provisions
NON-CURRENT
Employee benefits
Property
Total non-current provisions
28 JUNE 2015
$’000
29 JUNE 2014
$’000
84,515
41,228
3,981
6,992
136,716
10,936
41,013
51,949
85,478
25,394
1,116
6,971
118,959
8,287
41,129
49,416
RECONCILIATION
Reconciliations of the carrying amount of each class of provision, other than employee benefits, during the financial year are set
out below:
PERIOD ENDED 28 JUNE 2015
Balance at beginning of the financial year
Additional provision
Utilised
Acquisition through business combinations
Disposal of controlled entities
Exchange differences
Balance at end of the financial year
AT 28 JUNE 2015
Current
Non-current
Total provisions, excluding employee benefits
PROPERTY
$’000
RESTRUCTURING
AND REDUNDANCY
$’000
42,245
7,744
(5,077)
244
(100)
(62)
44,994
3,981
41,013
44,994
25,394
49,781
(33,880)
-
-
(67)
41,228
41,228
-
41,228
OTHER
$’000
6,971
3,114
(3,093)
-
-
-
6,992
6,992
-
6,992
94
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
ACCOUNTING POLICY
PROVISIONS
Provisions are recognised when the Group has a legal or constructive obligation to make a future sacrifice of economic benefits
to others as a result of past transactions or 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 reporting 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 or corporate 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 reporting date.
(i) EMPLOYEE BENEFITS
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 reporting 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 reporting date and, where material, 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
reporting date on corporate 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.
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.
(ii) RESTRUCTURE AND REDUNDANCY
The provision is in respect of amounts payable in connection with restructuring and redundancies, including termination benefits,
on-costs, outplacement and consultancy services.
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.
(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 fifteen years.
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.
(iv) OTHER
Other provisions includes defamation and various other costs relating to the business.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 95
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
14. PROPERTY, PLANT AND EQUIPMENT
FREEHOLD LAND AND BUILDINGS
At cost
Accumulated depreciation and impairment
Total freehold land and buildings
LEASEHOLD BUILDINGS
At cost
Accumulated depreciation and impairment
Total leasehold buildings
PLANT AND EQUIPMENT
At cost
Accumulated depreciation and impairment
Total plant and equipment
Capital works in progress - at cost
Total property, plant and equipment
RECONCILIATIONS
28 JUNE 2015
$’000
29 JUNE 2014
$’000
169,358
(25,670)
143,688
57,661
(18,487)
39,174
497,360
(370,319)
127,041
20,286
330,189
226,959
(34,956)
192,003
115,711
(66,245)
49,466
1,091,328
(942,820)
148,508
18,001
407,978
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 &
EQUIPMENT
$’000
NOTE
TOTAL
$’000
AT 30 JUNE 2013
Cost
33,222
273,198
110,574
1,061,360
1,478,354
Accumulated depreciation and impairment
-
(59,774)
(70,785)
(868,862)
(999,421)
Net carrying amount
33,222
213,424
39,789
192,498
478,933
PERIOD ENDED 29 JUNE 2014
Balance at beginning of financial year
Additions/capitalisations
Capitalisation to software
Disposals
Disposal of controlled entities
Acquisition through business combinations
Depreciation
Assets classified as held for sale
Reclasses between asset categories
Impairment
Exchange differences
At 29 June 2014, net of accumulated
depreciation and impairment
9
3(B)
96
33,222
(930)
(8,028)
(4)
-
-
-
(20)
(6,340)
-
101
213,424
39,789
192,498
478,933
17,716
8,497
34,524
59,807
-
-
-
(8,028)
(4,611)
(696)
(2,553)
(7,864)
-
-
(6,275)
(32,782)
-
-
(112)
51
(112)
51
(4,370)
(54,629)
(65,274)
-
(99)
(32,901)
13,303
6,044
(13,007)
-
(12,388)
3,616
-
(10,421)
(22,809)
202
2,256
6,175
18,001
192,003
49,466
148,508
407,978
NOTES TO THE FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
CAPITAL WORKS
IN PROGRESS
$’000
FREEHOLD LAND
& BUILDINGS
$’000
LEASEHOLD
BUILDINGS
$’000
PLANT &
EQUIPMENT
$’000
NOTE
TOTAL
$’000
AT 29 JUNE 2014
Cost
18,001
226,959
115,711
1,091,328
1,451,999
Accumulated depreciation and impairment
-
(34,956)
(66,245)
(942,820)
(1,044,021)
Net carrying amount
18,001
192,003
49,466
148,508
407,978
PERIOD ENDED 28 JUNE 2015
Balance at beginning of financial year
18,001
192,003
49,466
148,508
407,978
Additions/capitalisations
Capitalisation to software
Disposals
Disposal of controlled entities
Acquisition through business combinations
Depreciation
Assets classified as held for sale
Impairment
Exchange differences
At 28 June 2015, net of accumulated
depreciation and impairment
9
3(B)
AS 28 JUNE 2015
Cost
3,124
(35)
-
-
-
-
-
-
(804)
8,163
4,459
18,069
33,815
-
(7,763)
-
-
-
(906)
(50)
1,238
-
(35)
(2,558)
(11,227)
(372)
5,060
(422)
6,298
(6,548)
(4,408)
(32,791)
(43,747)
(37,535)
(10,325)
(3,162)
(51,022)
(3,485)
(1,147)
-
(5,840)
(9,325)
(300)
127
(2,124)
20,286
143,688
39,174
127,041
330,189
20,286
169,358
57,661
497,360
744,665
Accumulated depreciation and impairment
-
(25,670)
(18,487)
(370,319)
(414,476)
Net carrying amount
20,286
143,688
39,174
127,041
330,189
During the current year, an impairment charge of $9.3 million (2014: $22.8 million) was recorded on property, plant and equipment.
This impairment primarily relates to freehold land and buildings and plant and equipment at various sites in the Group’s print network.
The impairment was recognised following a review of the fair value less costs to sell.
ACCOUNTING POLICY
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: up to 60 years; Printing presses: up to 10 years;
Other production equipment: up to 15 years; Other equipment: up to 20 years; Computer equipment: up to 6 years.
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each reporting 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.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 97
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
15. INTEREST BEARING LIABILITIES
CURRENT INTEREST BEARING LIABILITIES - UNSECURED
Other loans
Senior notes
Other
Finance lease liability
Total current interest bearing liabilities
NON-CURRENT INTEREST BEARING LIABILITIES - UNSECURED
Bank borrowings
Other loans
Senior notes
Other
Finance lease liability
Total non-current interest bearing liabilities
NET DEBT
Cash and cash equivalents
Current interest bearing liabilities
Non-current interest bearing liabilities
Derivative financial instruments liabilities*
Net cash
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
(C)
(D)
(D)
(B)
(C)
(D)
(D)
25,352
503
1,246
27,101
111,637
3,316
4,768
119,721
165,191
138,055
90,667
-
-
255,858
95,722
503
1,246
235,526
29(B)
(342,830)
(452,687)
27,101
255,858
(4,518)
(64,389)
119,721
235,526
29,879
(67,561)
* Debt hedging instruments are 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 cash, taking into account all debt related derivative financial instruments, was $64.4 million as at 28 June 2015
(2014: Net cash of $67.6 million).
The Group has sufficient unused committed facilities and cash at the reporting date to finance maturing current interest bearing
liabilities. The Group has a number of finance facilities which are guaranteed by the Group and are covered by deeds of negative pledge.
(B) BANK BORROWINGS
A $325.0 million syndicated bank facility (2014: $275.0 million) is available to the Group with maturities in July 2018 and July 2019. At 28
June 2015, $125.0 million was drawn (2014: $125.0 million). The interest rate for drawings under this facility is the applicable bank bill rate
plus a credit margin.
A $50.0 million revolving cash advance facility is available to Macquarie Radio Network Limited until March 2017. At 28 June 2015, $39.4
million was drawn (29 June 2014: nil). The interest rate for drawings under this facility is the applicable bank bill rate plus a credit margin.
A NZ$40.0 million revolving cash advance facility is available to the Group until July 2018. At 28 June 2015, nil was drawn (29 June 2014:
NZ$15.5 million). The interest rate for drawings under this facility is the applicable bank bill rate plus a credit margin.
98
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(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 4.7% p.a. and 5.9% 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 2011 to January 2019. Senior notes of US$50
million were repaid in January 2011, US$148 million were repaid in July 2013 and US$13 million were repaid in January 2014.
The weighted average maturity of the issue is approximately 0.6 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 2013 to July 2017. Senior notes of US$76 million were repaid in July 2013 and
US$105 million were repaid in July 2014. The maturity of the remaining issued note is approximately 2 years. The issued note include
fixed and floating rate coupon note, paying a coupon of 7.5% p.a. semi-annually in arrears. 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 1.0%
p.a. step up margin is payable on the coupons, effective from 10 July 2009.
(D) OTHER LOANS AND FINANCE LEASE LIABILITY
The Chullora site in Sydney is partially financed by a finance lease facility and loans with a maturity date of 30 September 2015.
This comprises a finance lease of $1.2 million (2014: $6.0 million), which was entered into in February 1996, and principal and interest
outstanding of $0.5 million (2014: $3.8 million) in the form of a fixed rate loan with an established repayment schedule.
ACCOUNTING POLICY
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 21).
FAIRFAX MEDIA ANNUAL REPORT 2015 | 99
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
16. DERIVATIVE FINANCIAL INSTRUMENTS
CURRENT ASSETS
Forward contracts
Total current derivative assets
NON-CURRENT ASSETS
Cross currency swap - cash flow hedge
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
Cross currency swap - net investment 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
Cross currency swap - net investment hedge
Total non-current derivative liabilities
28 JUNE 2015
$’000
29 JUNE 2014
$’000
-
-
16,902
16,902
1,582
9
1,537
784
3,912
7,137
-
-
-
7,137
213
213
1,551
1,551
-
4
13,274
-
13,278
14,711
5,254
73
1,919
21,957
The Group is exposed to interest rate risk on interest bearing assets and liabilities, as well as foreign exchange risk on USD denominated
senior notes. The Group uses derivative financial instruments to reduce exposure to these risks.
The Group:
• formally designates hedging instruments against an underlying exposure;
• formally documents the risk management objectives and strategies for undertaking hedge transactions; and
• assess 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 levels of effectiveness, value changes in the derivatives are generally offset by changes in the fair value of the 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 generally highly liquid instruments entered into in the “over the counter” market.
100
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
HEDGING ACTIVITIES
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; or
• Net investment hedges: hedges of the net investment in a foreign operation.
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.
(i) CASH FLOW HEDGES - INTEREST RATE AND CROSS CURRENCY SWAPS
At 28 June 2015, 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 28 June 2015, the notional principal amounts and period of expiry of the swaps for each counterparty are as follows:
INTEREST RATE
Pay fixed, receive floating - AUD$59.5m
Pay fixed, receive floating - AUD$22.6m
MATURITY DATE
10/07/17
10/07/17
2015
7.52%
7.46%
2014 PAYMENT TERMS
7.52% Interest receivable settles semi-
7.46%
annually and interest payable each
90 days. These dates coincide with
the interest payable dates on the
underlying senior notes.
At 28 June 2015, 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 28 June 2015, the notional principal amount and period of expiry of the swap is as follows:
Pay fixed, receive floating - AUD$125m
12/10/2015
MATURITY DATE
INTEREST RATE
2015
6.52%
2014 PAYMENT TERMS
6.52% Interest receivable and interest payable
settle each 90 days. These dates
coincide with the interest payable dates
on the underlying AUD denominated
bank borrowings.
At 28 June 2015, the above hedges were assessed to be highly effective with a combined unrealised gain in fair value of $4.4
million (2014: $1.4 million gain) recognised in equity for the period. During the period no material ineffectiveness (2014: no material
ineffectiveness) was recognised in the income statement attributable to the cash flow hedges.
During the year no material gain was transferred from equity to finance costs (2014: $0.1 million).
FAIRFAX MEDIA ANNUAL REPORT 2015 | 101
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(ii) CASH FLOW HEDGES - FORWARD FOREIGN EXCHANGE CONTRACTS
During the year, forward exchange contracts were used by the Group to hedge future foreign capital and non-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 28 June 2015, the Group held no forward exchange contracts (2014: $0.2 million).
The foreign currency contracts are considered to be fully effective hedges as they are matched against the highly probable foreign
capital and non-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.
ACCOUNTING POLICY
The fair value of interest rate swap contracts is determined by reference to market values for similar instruments.
The measurement of the fair value of forward foreign exchange contracts is calculated by reference to current forward
exchange rates for contracts with similar maturity profiles.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are 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.
102
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(iii) FAIR VALUE HEDGES
At 28 June 2015, the Group held cross currency swap agreements designated as hedging changes in the underlying value of USD
denominated senior notes (refer to Note 15). 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, as discussed in Note (iv) below.
At 28 June 2015, the cross currency swap agreements had a combined derivative liability position of $1.5 million (2014: $18.5 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.
The terms of these cross currency swaps are as follows:
Pay floating NZD receive fixed USD - USD$19m
MATURITY DATE
15 January 2016
For the Group, the remeasurement of the hedged items resulted in a loss before tax of $3.9 million (2014: $13.9 million gain) and the
changes in the fair value of the hedging instruments resulted in a gain before tax of $3.7 million (2014: $14.0 million loss) resulting in a
net loss before tax of $0.2 million (2014: $0.1 million loss) recorded in finance costs.
ACCOUNTING POLICY
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.
(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 28 June 2015, the hedges were assessed to be highly effective with an unrealised gain of $0.8 million (2014: $7.9 million loss)
recognised in equity. During the current financial period there was an unrealised gain of $0.1 million (2014: $0.2 million loss) recognised
in the income statement attributable to the ineffective portion of the net investment hedges.
ACCOUNTING POLICY
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 the income statement. 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.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 103
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
17. 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 and
bank loans. The main purpose of these financial instruments is to manage liquidity and to raise finance for the Group’s operations.
The Group has various other financial instruments, such as trade and other receivables and trade and other payables, which arise
directly from its operations.
The Group uses derivatives in accordance with Board approved policies to reduce the Group’s exposure to fluctuations in interest rates
and foreign exchange rates. These derivatives create an obligation or right that effectively transfers one or more of the risks associated
with an underlying financial instrument, asset or obligation. Derivative instruments that the Group uses to hedge risks such as interest
rate and foreign currency movements include:
• cross currency swaps;
• interest rate swaps;
• forward foreign currency contracts; and
• forward rate agreements.
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 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, buy back
shareholder equity, issue new shares or sell assets to reduce debt. The Group reviews the capital structure to ensure:
• sufficient finance capacity for the business is maintained at a reasonable cost;
• sufficient funds are available for the business to implement its capital expenditure and business acquisition strategies; and
• all financial covenants are complied with.
Where excess funds arise with respect to the funds required to enact the Group’s business strategies, consideration is given to increased
dividends or buy back of shareholder equity. Refer to Note 18 for details on the buy back of shareholder equity.
104
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
RISK FACTORS
The key financial risk factors, including market risk, that arise from the Group’s activities, including the Group’s policies for managing
these risks are outlined 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.
The Group seeks to maintain 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 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.
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 reporting 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 16 for further details of the Group’s derivative financial instruments and details of hedging activities.
At reporting date, the Group had the following mix of financial assets and financial liabilities exposed to interest rate risks:
AS AT 28 JUNE 2015
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
Finance lease liability
Total interest bearing liabilities
Derivatives
Total financial liabilities
Total interest bearing liabilities
Notional principal hedged
Net exposure to cash flow interest rate risk*
FLOATING RATE
$’000
FIXED RATE
$’000
NON-INTEREST
BEARING
$’000
342,830
-
-
18,009
-
360,839
-
165,191
-
-
165,191
2,330
167,521
165,191
(123,306)
41,885
-
-
-
-
-
-
-
503
116,019
1,246
117,768
8,719
126,487
117,768
(91,092)
26,676
TOTAL
$’000
342,830
299,517
2,276
18,009
16,902
679,534
-
299,517
2,276
-
16,902
318,695
241,930
241,930
-
-
-
-
-
241,930
-
-
-
165,694
116,019
1,246
282,959
11,049
535,938
282,959
(214,398)
68,561
FAIRFAX MEDIA ANNUAL REPORT 2015 | 105
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
AS AT 29 JUNE 2014
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
Finance lease liability
Total interest bearing liabilities
Derivatives
Total financial liabilities
Total interest bearing liabilities
Notional principal hedged
Net exposure to cash flow interest rate risk*
FLOATING RATE
$’000
FIXED RATE
$’000
NON-INTEREST
BEARING
$’000
452,687
-
-
6,227
-
458,914
-
138,055
-
-
138,055
20,518
158,573
138,055
(123,654)
14,401
-
-
-
-
-
-
-
3,819
207,359
6,014
217,192
14,717
231,909
217,192
(78,012)
139,180
TOTAL
$’000
452,687
276,406
2,488
6,227
1,764
-
276,406
2,488
-
1,764
280,658
739,572
218,052
218,052
-
-
-
-
-
218,052
-
-
-
141,874
207,359
6,014
355,247
35,235
608,534
355,247
(201,666)
153,581
* For floating rate instruments, this represents the unhedged portion. For fixed rate instruments, this represents amounts hedged
to floating.
SENSITIVITY ANALYSIS
The Group performs sensitivity analysis to determine the effect on net profit and equity after income tax if interest rates at reporting date
had been 30% higher or lower with all other variables held constant, taking into account all underlying exposures and related hedges.
Based on the sensitivity analysis the impact to the Group’s post tax profit would be $0.6 million (2014: $0.7 million) and the Group’s
equity would be $0.1 million (2014: $0.9 million).
106
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(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.
The Group is exposed to foreign exchange risk from various currency exposures, primarily with respect to:
• United States Dollars; and
• New Zealand Dollars.
The Group hedges the currency risk on foreign currency borrowings by entering into cross currency swaps, which have the economic
effect of converting foreign currency borrowings to local currency borrowings.
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 reporting 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 16 for further details of the Group’s derivative financial instruments and details of hedging activities.
SENSITIVITY ANALYSIS
The Group performs sensitivity analysis to determine the effect on net profit and equity after income tax if foreign exchange rates at
reporting date had been 15% higher or lower with all other variables held constant, taking into account all underlying exposures and
related hedges. Based on the sensitivity analysis the impact to the Group’s post tax profit would be $0.1 million (2014: $0.1 million)
and the Group’s equity would be $3.4 million (2014: $3.6 million).
FAIRFAX MEDIA ANNUAL REPORT 2015 | 107
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(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 28 June 2015 counterparty credit risk was limited to financial
institutions with S&P 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 10 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.
108
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(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 15(B) for details of the Group’s unused credit facilities at 28 June 2015.
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 28 JUNE 2015
(NOMINAL CASH FLOWS)
1 YEAR OR LESS
$’000
1 TO 2 YEARS
$’000
2 TO 5 YEARS
$’000
MORE THAN 5
YEARS
$’000
FINANCIAL LIABILITIES*
Payables
Bank borrowings and loans
Notes and bonds
Finance lease liability
DERIVATIVES - INFLOWS*
(241,930)
(6,957)
(32,271)
(2,533)
-
(45,855)
(97,115)
-
-
(137,236)
-
-
Cross currency swaps - foreign leg (fixed)**
32,333
6,746
90,369
DERIVATIVES - OUTFLOWS*
Cross currency swaps - AUD leg (fixed)**
Cross currency swaps - NZD leg (variable)**
Interest rate swaps ***
(6,149)
(28,164)
(1,359)
(6,149)
(82,262)
-
-
-
-
-
-
-
-
-
-
-
-
FAIRFAX MEDIA ANNUAL REPORT 2015 | 109
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
AS AT 29 JUNE 2014
FINANCIAL LIABILITIES*
Payables
Bank borrowings and loans
Notes and bonds
Finance lease liability
DERIVATIVES - INFLOWS*
Cross currency swaps - foreign leg (fixed)**
Forward foreign currency contracts
DERIVATIVES - OUTFLOWS*
Cross currency swaps - AUD leg (fixed)**
Cross currency swaps - AUD leg (variable)**
Cross currency swaps - NZD leg (variable)**
Interest rate swaps ***
Forward foreign currency contracts
(NOMINAL CASH FLOWS)
1 YEAR OR LESS
$’000
1 TO 2 YEARS
$’000
2 TO 5 YEARS
$’000
MORE THAN 5
YEARS
$’000
(218,052)
(10,153)
(126,273)
(9,848)
-
(144,842)
(26,213)
(2,533)
-
-
(78,886)
-
118,304
4,169
26,264
-
78,886
-
(6,149)
(125,043)
(938)
(4,706)
(4,112)
(6,149)
(88,411)
-
(29,341)
(1,177)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* 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.
110
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(E) FAIR VALUE
The carrying amounts and fair values of financial assets and financial liabilities at reporting date are the same with the exception of
the following:
Interest bearing liabilities:
Bank borrowings
Senior notes
Finance lease liability
CARRYING VALUE
2015
$’000
FAIR VALUE
2015
$’000
CARRYING VALUE
2014
$’000
FAIR VALUE
2014
$’000
165,694
116,019
1,246
166,885
116,368
2,454
141,874
207,359
6,014
143,220
207,386
10,859
Exchange traded listed share prices have been used to determine the fair value of listed available for sale investments.
The fair value of the senior notes and lease liabilities have been calculated by discounting the future cash flows by interest rates for
liabilities with similar risk profiles. The discount rates applied range from 5.57% to 13.29% (2014: 5.57% to 13.29%).
The carrying value of all other balances approximate their fair value.
The Group uses various methods in estimating fair value. 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 ANNUAL REPORT 2015 | 111
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
The fair value of assets and liabilities held at fair value, as well as the methods used to estimate the fair value, are summarised in the
table below:
AS AT 28 JUNE 2015
ASSETS AT FAIR VALUE
Derivative assets
Available for sale investments
Assets held for sale
Property, plant and equipment
LIABILITIES AT FAIR VALUE
Derivative liabilities
AS AT 29 JUNE 2014
ASSETS AT FAIR VALUE
Derivative assets
Available for sale investments
Assets held for sale
Property, plant and equipment
LIABILITIES AT FAIR VALUE
Derivative liabilities
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
-
2,276
-
2,276
-
-
16,902
-
-
16,902
11,049
11,049
-
-
68,215
68,215
-
-
16,902
2,276
68,215
87,393
11,049
11,049
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
-
2,488
-
2,488
1,764
-
-
1,764
-
-
35,235
35,235
-
-
29,963
29,963
-
-
1,764
2,488
29,963
34,215
35,235
35,235
Held for sale property, plant and equipment are carried at the Directors’ determination of fair value which takes into account latest
independent valuations and evidence of fair value from disposal negotiations. The key assumptions in determining the valuation of the
properties are the estimated weighted average yield and costs of dismantling plant and equipment where relevant. Significant movement
in these assumptions in isolation would result in a higher or lower fair value of the properties.
Derivatives assets and liabilities are valued using valuation techniques with market observable inputs (refer to Note 16).
112
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
18. EQUITY
ORDINARY SHARES
2,383,370,791 ordinary shares authorised and fully paid
(2014: 2,351,955,725)
UNVESTED EMPLOYEE INCENTIVE SHARES
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
(A)
4,672,097
4,667,944
11,407,603 unvested employee incentive shares (2014: 11,594,031)
(B)
(21,299)
(21,419)
DEBENTURES
281 debentures fully paid (2014: 281)
Total contributed equity
* Amount is less than $1000.
RECONCILIATIONS
(C)
*
*
4,650,798
4,646,525
Movements for each class of contributed equity, by number of shares and dollar value, are set out below:
28 JUNE 2015
NO. OF SHARES
29 JUNE 2014
NO. OF SHARES
28 JUNE 2015
$’000
29 JUNE 2014
$’000
(A) ORDINARY SHARES (i)
Balance at beginning of the financial year
2,351,955,725
2,351,955,725
4,667,944
4,667,944
Shares issued
Shares acquired and cancelled as part of on market
buyback
68,519,821
(37,104,755)
-
-
42,081
(37,928)
-
-
Balance at end of the financial year
2,383,370,791
2,351,955,725
4,672,097
4,667,944
(B) UNVESTED EMPLOYEE INCENTIVE SHARES
Balance at beginning of the financial year
11,594,031
11,723,026
(21,419)
(21,696)
Release of shares
(186,428)
-
Reclassification due to prior distribution of shares
-
(128,995)
120
-
-
277
Balance at end of the financial year
11,407,603
11,594,031
(21,299)
(21,419)
(C) 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
281
281
*
*
*
*
4,650,798
4,646,525
FAIRFAX MEDIA ANNUAL REPORT 2015 | 113
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(i) 57,916,616 ordinary shares issued on 20 February 2015 are subject to the following voluntary escrow arrangements:
• 28,958,321 ordinary shares will be held in escrow from the date of issue and will be released on 1 July 2016.
• 9,652,765 ordinary shares will be held in escrow from the date of issue and will be released (either in whole or part), at the earliest,
on 1 January 2016.
• 9,652,765 ordinary shares will be held in escrow from the date of issue and will be released (either in whole or part), at the earliest,
on 1 January 2017.
• 9,652,765 ordinary shares will be held in escrow from the date of issue and will be released (either in whole or part), at the earliest,
on 1 January 2018.
ACCOUNTING POLICY
(A) ORDINARY SHARES
Ordinary shares are classified as equity and 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.
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.
(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 and are entitled to one vote per
share at a meeting of the Company.
(C) 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) any provision of the Foreign Acquisitions and Takeovers Act 1975;
(ii) any undertaking given by the Company to the Foreign Investment Review Board or at the request of the Foreign Investment
Review Board from time to time; or
(iii) any other applicable law including, without limitation the Broadcasting Act 1942.
114
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
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
Impairment losses transferred to the income statement
Disposal of available for sale investments
Tax effect on available for sale investments
Balance at end of the financial year
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
(A)
(B)
(C)
(D)
(E)
(F)
(G)
477
(125,751)
(2,672)
(17,338)
14,819
158,336
(6,837)
21,034
753
(257)
-
(19)
-
477
753
(110,148)
(4,179)
(18,094)
11,231
182,706
(6,837)
55,432
41
820
16
(129)
5
753
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.
(B) FOREIGN CURRENCY TRANSLATION RESERVE
Balance at beginning of the financial year
Exchange differences on currency translation
Balance at end of the financial year
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
(110,148)
(15,603)
(125,751)
(132,599)
22,451
(110,148)
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 30(B).
FAIRFAX MEDIA ANNUAL REPORT 2015 | 115
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
(C) CASHFLOW HEDGE RESERVE
Balance at beginning of the financial year
Gains arising during the year on interest rate and cross currency swaps
Losses arising during the year on currency forward contracts
Reclassification adjustments for losses/(gains) included in the
income statement
Tax effect of net changes on cashflow hedges
Balance at end of the financial year
(4,179)
4,389
(211)
5
(2,676)
(2,672)
(4,703)
1,410
(774)
(125)
13
(4,179)
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 16.
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
(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
(18,094)
1,104
(348)
(17,338)
(10,232)
(11,231)
3,369
(18,094)
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 16.
(E) SHARE-BASED PAYMENT RESERVE
Balance at beginning of the financial year
Release of shares
Reclassification due to prior distribution of shares
Share-based payment expense
Tax effect on share-based payment expense
Balance at end of the financial year
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
11,231
(120)
-
5,298
(1,590)
14,819
8,799
-
(277)
3,870
(1,161)
11,231
The share-based payment 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 26.
116
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(F) ACQUISITION RESERVE
Balance at beginning of the financial year
Non-controlling interest arising on the disposal of
Fairfax Radio Network Pty Limited as part of the acquisition
of Macquarie Radio Network Limited
Acquisition of non-controlling interest
Balance at end of the financial year
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
182,706
181,048
(24,412)
42
158,336
-
1,658
182,706
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
Balance at beginning of the financial year
Balance at end of the financial year
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
(6,837)
(6,837)
(6,837)
(6,837)
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.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 117
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
19. DIVIDENDS PAID AND PROPOSED
(A) ORDINARY SHARES
Interim 2015 dividend: fully franked 2.0 cents -
paid 18 March 2015
(2014: fully franked dividend 2.0 cents -
paid 19 March 2014)
2014 dividend: fully franked 2.0 cents -
paid 17 September 2014
(2013: fully franked dividend 1.0 cent -
paid 17 September 2013)
CONSOLIDATED
28 JUNE 2015
$’000
CONSOLIDATED
29 JUNE 2014
$’000
COMPANY
28 JUNE 2015
$’000
COMPANY
29 JUNE 2014
$’000
48,410
47,039
48,410
47,039
47,039
23,520
47,039
23,520
Total dividends paid
95,449
70,559
95,449
70,559
(B) DIVIDENDS PROPOSED AND NOT RECOGNISED AS A LIABILITY
Since reporting date the Directors have declared a dividend of 2.0 cents per fully paid ordinary share, partly franked at the corporate tax
rate of 30%. The aggregate amount of the dividend to be paid on 8 September 2015 out of profits, but not recognised as a liability at the
end of the year, is expected to be $47.7 million.
(C) FRANKED DIVIDENDS
Franking account balance as at reporting date at 30% (2014: 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
2015
$’000
COMPANY
2014
$’000
8,019
34,063
1,513
9,532
1,262
35,325
On a tax-paid basis, the Company’s franking account balance is approximately $8.0 million (2014: $34.1 million). The impact on
the franking account of the dividend declared by the Directors since reporting date will be a reduction in the franking account to
approximately $0.7 million.
118
NOTES TO THE FINANCIAL STATEMENTS:
CAPITAL STRUCTURE AND FINANCIAL COSTS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
20. EARNINGS PER SHARE
BASIC EARNINGS PER SHARE
Net profit attributable to owners of the parent
DILUTED EARNINGS PER SHARE
Net profit attributable to owners of the parent
EARNINGS RECONCILIATION - BASIC
Net profit attributable to owners of the parent
EARNINGS RECONCILIATION - DILUTED
Net profit attributable to owners of the parent
28 JUNE 2015
¢ PER SHARE
29 JUNE 2014
¢ PER SHARE
3.5
3.5
9.5
9.5
28 JUNE 2015
$’000
29 JUNE 2014
$’000
83,168
224,432
83,168
224,432
28 JUNE 2015
NUMBER
‘000
29 JUNE 2014
NUMBER
‘000
Weighted average number of ordinary shares used in calculating basic EPS
2,369,820
2,351,956
Weighted average number of ordinary shares used in calculating diluted EPS
2,399,176
2,365,174
ACCOUNTING POLICY
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.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 119
NOTES TO THE FINANCIAL STATEMENTS:
UNRECOGNISED ITEMS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
21. COMMITMENTS
OPERATING LEASE COMMITMENTS - GROUP AS LESSEE
The Group has entered into commercial leases on office and warehouse premises, motor vehicles and office equipment.
Future minimum rentals payable under non-cancellable operating leases as at the period end are as follows:
Within one year
Later than one year and not later than five years
Later than five years
Total operating lease commitments
28 JUNE 2015
$’000
29 JUNE 2014
$’000
45,223
147,966
254,289
447,478
42,661
143,080
266,212
451,953
Non-cancellable leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases can be
renegotiated. The leases have remaining terms of between one and twenty-three years and usually include a clause to enable upward
revision of the rental charge on an annual basis according to prevailing market conditions.
OPERATING LEASE COMMITMENTS - GROUP AS LESSOR
The Group has entered into commercial subleases on office premises. Future minimum rentals receivable under non-cancellable
operating leases as at the period end are $29.2 million.
FINANCE LEASE COMMITMENTS - GROUP AS LESSEE
The Group has a finance lease for property, plant and machinery with a carrying amount of $6.3 million (2014: $7.0 million). The lease
has a remaining term of three months (2014: one year) and a weighted average interest rate of 13.3% (2014: 13.3%). The future minimum
lease payments under the finance lease are $1.3 million (2014: $6.3 million). The present value of the net minimum lease payments are
$1.2 million (2014: $6.0 million).
CONTINGENT RENTALS UNDER FINANCE LEASE
A component of the finance lease payments are contingent on movements in the consumer price index. At reporting date, the rent
payable over the remaining lease term of three months which is subject to such movements amounts to $1.2 million (2014: $6.0 million).
120
NOTES TO THE FINANCIAL STATEMENTS:
UNRECOGNISED ITEMS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
CAPITAL COMMITMENTS
At 28 June 2015, 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
OTHER COMMITMENTS
28 JUNE 2015
$’000
29 JUNE 2014
$’000
3,117
-
-
3,117
4,619
109
-
4,728
The Group has committed to providing up to $50 million in loans to Stan Entertainment Pty Ltd over a multi-year period.
ACCOUNTING POLICY
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.
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.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 121
NOTES TO THE FINANCIAL STATEMENTS:
UNRECOGNISED ITEMS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
22. CONTINGENCIES
GUARANTEES
Under the terms of ASIC Class Order 98/1418 (as amended), the Company and certain controlled entities (refer Note 28), have
guaranteed any deficiency of funds if any entity to the class order is wound-up. No such deficiency exists at reporting date.
The Group has provided a bank guarantee of $2.5 million in relation to a property sublease for a period of 30 months commencing
4 July 2013.
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 13, that are expected to result in
a material impact.
122
NOTES TO THE FINANCIAL STATEMENTS:
UNRECOGNISED ITEMS
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
23. EVENTS SUBSEQUENT TO REPORTING DATE
No significant events subsequent to the balance sheet date have occurred.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 123
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
24. 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
ACCOUNTING POLICY
28 JUNE 2015
$’000
29 JUNE 2014
$’000
1,384
1,384
67
16,558
16,625
4,858
4,858
67
1,302
1,369
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. These assets are measured at amortised
cost using the effective interest method.
124
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
25. TAXATION
CONSOLIDATED INCOME STATEMENT
Income tax expense is reconciled to prima facie income tax payable as follows:
Net profit before income tax expense
Prima facie income tax at 30% (2014: 30%)
Tax effect of differences:
Share of net profits of associates and joint ventures
Capital gains not taxable
Non-assessable external dividends
Adjustments in respect of current income tax of previous years *
Temporary differences not recognised on intangible and other asset write-offs
Other
Income tax expense
28 JUNE 2015
$’000
29 JUNE 2014
$’000
121,117
36,335
(106)
(4,664)
(1,459)
(3,917)
8,322
(599)
33,912
267,369
80,211
(1,813)
(24,581)
(11)
(11,686)
(891)
972
42,201
* The 2015 adjustment includes $2.8 million of prior year R&D tax claims finalised in the current year (2014: $9.8 million).
The major components of income tax expense in the income statement are:
Current income tax expense
Deferred income tax expense
Adjustments in respect of current income tax of previous years
Income tax expense in the income statement
28 JUNE 2015
$’000
29 JUNE 2014
$’000
44,328
(6,499)
(3,917)
33,912
32,842
21,045
(11,686)
42,201
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Deferred tax related to items charged or credited directly to other comprehensive income during the year:
Unrealised gain on available for sale financial assets
Net gain/(loss) on actuarial gains and losses
Net (loss)/gain on revaluation of cash flow hedges
Net (loss)/gain on hedge of net investment
Income tax on items of other comprehensive income
28 JUNE 2015
$’000
29 JUNE 2014
$’000
-
27
(2,676)
(347)
(2,996)
5
(149)
13
3,369
3,238
FAIRFAX MEDIA ANNUAL REPORT 2015 | 125
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are attributable to the following:
ASSETS
LIABILITIES
NET
28 JUNE 2015
$’000
29 JUNE 2014
$’000
28 JUNE 2015
$’000
29 JUNE 2014
$’000
28 JUNE 2015
$’000
29 JUNE 2014
$’000
30,300
15,987
28,438
-
-
6,057
13,340
52,847
12,753
6,019
-
2,146
-
-
6,120
16,677
44,980
7,208
5,134
-
941
767
163
11,461
6,039
-
-
-
-
541
7,177
1,068
364
2,059
194
-
-
130
-
33
1,862
(767)
(163)
(5,404)
7,301
52,847
12,753
6,019
-
1,605
8,810
(1,068)
(364)
4,061
16,483
44,980
7,208
5,004
-
908
123,462
97,047
47,409
11,025
76,053
86,022
(47,409)
(11,025)
(47,409)
(11,025)
-
-
76,053
86,022
-
-
76,053
86,022
Property, plant and
equipment
Inventories
Investments
Intangible assets
Other assets
Provisions
Payables
Other liabilities
Tax losses
Other
Gross deferred tax assets/
liabilities
Set-off of deferred tax
assets/liabilities
Net deferred tax assets/
liabilities
MOVEMENT IN TEMPORARY DIFFERENCES DURING THE FINANCIAL YEAR
BALANCE
29 JUNE 2014
$’000
RECOGNISED ON
ACQUISITION
$’000
RECOGNISED
IN INCOME
$’000
RECOGNISED
IN EQUITY
$’000
BALANCES
DISPOSED
$’000
BALANCE
28 JUNE 2015
$’000
8,810
1,228
(7,002)
(1,227)
53
1,862
(1,068)
(364)
4,061
16,483
44,980
7,208
5,004
-
908
-
(62)
(13,426)
-
(2,227)
(676)
(46)
-
394
86,022
(14,815)
301
288
5,043
(6,507)
7,248
5,517
1,016
-
595
6,499
-
(25)
(1,082)
(2,675)
2,853
710
45
-
(292)
(1,693)
-
-
-
-
(7)
(6)
-
-
-
40
(767)
(163)
(5,404)
7,301
52,847
12,753
6,019
-
1,605
76,053
Property, plant and
equipment
Inventories
Investments
Intangible assets
Other assets
Provisions
Payables
Other liabilities
Tax losses
Other
126
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
Property, plant and
equipment
Inventories
Investments
Intangible assets
Other assets
Provisions
Payables
Other liabilities
Tax losses
Other
BALANCE
30 JUNE 2013
$’000
RECOGNISED ON
ACQUISITION
$’000
RECOGNISED
IN INCOME
$’000
RECOGNISED
IN EQUITY
$’000
BALANCES
DISPOSED
$’000
BALANCE
29 JUNE 2014
$’000
1,496
(3,055)
(515)
1,248
12,764
62,524
10,669
9,272
8,144
1,767
-
-
-
(405)
-
95
10
-
-
-
7,417
1,987
146
1,695
336
(17,434)
(3,431)
(4,068)
(8,143)
450
104,314
(300)
(21,045)
-
-
5
-
3,383
-
-
-
-
(1,309)
2,079
(103)
8,810
-
-
1,523
-
(205)
(40)
(200)
(1)
-
974
(1,068)
(364)
4,061
16,483
44,980
7,208
5,004
-
908
86,022
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 $308.4 million
(2014: $146.0 million) 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 $741.2 million
(2014: $755.6 million).
FUTURE ASSESSABLE TEMPORARY DIFFERENCES
At 28 June 2015, there are no material unrecognised future assessable temporary differences associated with the Group’s investments in
associates or joint ventures, as the Group has no material liability should the associates or joint ventures retained earnings be distributed
(2014: Nil).
FAIRFAX MEDIA ANNUAL REPORT 2015 | 127
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
ACCOUNTING POLICY
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 reporting 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 reporting
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.
TAX CONSOLIDATION - AUSTRALIA
Fairfax Media Limited (the head entity) and its wholly-owned Australian entities 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.
128
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
26. EMPLOYEE ENTITLEMENTS
(A) NUMBER OF EMPLOYEES
As at 28 June 2015 the Group employed 6,169 full-time employees (2014: 6,410) and 1,010 part-time and casual employees (2014:
1,211). This includes 1,405 (2014: 1,636) full-time employees and 150 (2014: 259) part-time and casual employees in New Zealand.
(B) EMPLOYEE SHARE PLANS
The Company had three employee share plans during the period. 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 employees of the consolidated entity.
2013 Financial Year
For 2013, participants in the plan received an allocation of performance rights (rights) which allow the executives to acquire shares for no
consideration subject to achievement of the performance hurdles. No dividends are payable to participants on the unvested rights.
The number of rights to which a participant was entitled depended on the participant’s role and responsibilities. Allocations were set at
a fixed percentage of the executive’s fixed remuneration at the time they participate in the scheme. The value of the rights at the time of
allocation was determined by an independent external valuer.
2014 & 2015 Financial Year
For 2014 & 2015, participants in the plan were granted options following the AGM with the exercise price set at the share price around
the time of issue. The options have a vesting hurdle of absolute total shareholder return over three years from issue with a retest in the
fourth year. No dividends are payable to participants on the unvested options.
Participants are also entitled to receive performance shares for no consideration subject to achievement of certain performance hurdles.
Half of the shares granted are deferred for one year and the other half are deferred for two years. Participants must remain employed
during the deferral period or the shares will be forfeited.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 129
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
ACCOUNTING POLICY
Share-based compensation benefits can be provided to employees in the form of equity instruments.
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 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 equity instruments issued to employees for no cash consideration under the Long Term Incentive Plan is
recognised as an employee benefits expense over the vesting period.
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 18).
130
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
27. REMUNERATION OF AUDITORS
During the financial year the following amounts were paid or payable for services provided by the auditor of the Company and its
related parties:
AUDIT SERVICES
Ernst & Young Australia
Audit and review of financial reports
Affiliates of Ernst & Young Australia
Audit and review of financial reports
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 audits
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
28 JUNE 2015
$
29 JUNE 2014
$
1,280,557
885,800
165,006
228,521
-
23,251
1,445,563
1,137,572
118,141
36,218
63,654
-
178,249
110,164
71,948
-
3,031
-
2,160
-
221,044
362,521
1,666,607
1,500,093
779,949
-
-
779,949
-
-
-
-
2,446,556
1,500,093
FAIRFAX MEDIA ANNUAL REPORT 2015 | 131
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
28. RELATED PARTIES AND ENTITIES
(A) ULTIMATE PARENT
Fairfax Media Limited is the ultimate parent company.
(B) CONTROLLED ENTITIES
Interests in controlled entities are set out in (F) in this Note.
(C) KEY MANAGEMENT PERSONNEL
TRANSACTIONS WITH DIRECTOR-RELATED ENTITIES
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.
COMPENSATION OF KEY MANAGEMENT PERSONNEL OF THE GROUP
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payment
Total compensation paid to key management personnel
28 JUNE 2015
$’000
29 JUNE 2014
$’000
2,919
131
40
-
1,726
4,816
3,639
146
45
-
2,625
6,455
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management
personnel.
INTERESTS HELD BY KEY MANAGEMENT PERSONNEL UNDER THE SENIOR EXECUTIVE PLAN
Share options held by key management personnel under the Senior Executive Plan to purchase ordinary shares have the following expiry
dates and exercise prices:
ISSUE DATE
EXPIRY DATE
2014
2015
Total
(i)
(i)
EXERCISE PRICE
$
0.58
0.82
28 JUNE 2015
NUMBER
OUSTANDING
15,250,000
8,895,832
24,145,832
29 JUNE 2014
NUMBER
OUTSTANDING
19,125,000
-
19,125,000
(i) Share options expire three years from the date that the options vest. Refer to details of Transformation Incentive Plan in Section 5
of the Remuneration Report.
132
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(D) TRANSACTIONS WITH RELATED PARTIES
The following transactions for the sale and purchase of goods and services occurred with related parties on normal market terms and
conditions:
SALES TO RELATED
PARTIES
$’000
PURCHASES FROM
RELATED PARTIES
$’000
AMOUNT OWED BY
RELATED PARTIES
$’000
AMOUNT OWED TO
RELATED PARTIES
$’000
ASSOCIATES
28 June 2015
29 June 2014
JOINT VENTURES
28 June 2015
29 June 2014
1,907
3,588
212
348
24,640
17,753
4,833
3,101
91
343
178
35
82
64
19
155
(E) 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
Acquisition reserve
Share-based payment reserve
Retained losses
Total equity
RESULT OF PARENT ENTITY
Profit for the period
Other comprehensive income
Total comprehensive income for the period
28 JUNE 2015
$’000
29 JUNE 2014
$’000
1,236,650
1,956,755
13,428
23,289
1,492,947
1,900,484
13,395
13,395
4,650,798
4,646,525
(722)
(10,672)
14,819
(722)
(10,672)
11,231
(2,720,757)
(2,759,273)
1,933,466
1,887,089
133,966
138,744
-
-
133,966
138,744
FAIRFAX MEDIA ANNUAL REPORT 2015 | 133
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
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 (G) in this Note.
OPERATING LEASE COMMITMENTS - PARENT ENTITY AS LESSEE
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
(F) CONTROLLED ENTITIES
The following entities were controlled as at the end of the financial year:
28 JUNE 2015
$’000
29 JUNE 2014
$’000
-
-
-
-
-
-
-
-
NOTES
COUNTRY OF
INCORPORATION
OWNERSHIP INTEREST
2015
%
2014
%
Fairfax Media Limited
(a)
Australia
CONTROLLED ENTITIES
2GTHR Pty Limited
ACN 000 128 281 Pty Limited (In Liq)
ACN 000 834 257 Pty Limited
ACN 001 004 815 Pty Limited (In Liq)
ACN 001 260 671 Pty Limited (In Liq)
ACN 091 950 462 Pty Limited (In Liq)
ACN 101 806 302 Pty Limited
ACN 129 831 072 Pty Limited
ACN 113 587 527 Pty Limited (In Liq)
Agricultural Publishers Pty Limited
Alldata Australia Pty Limited
All Homes Pty Limited
Allure Media Pty Ltd
Associated Newspapers Pty Limited
Aussie Destinations (1) Pty Ltd
Australian Capital Territory Real Estate
Media Pty Limited
Australian Property Monitors Pty
Limited
AZXC Pty Ltd
Border Mail Printing Pty Ltd
Bridge Printing Office Pty Limited
(a)
(i)
(i)
(i)
(i)
(a)
(b)
(i)
(a)
(a) (c)
(a) (c)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
134
100
-
100
-
-
-
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
70
100
100
-
-
100
100
100
-
100
100
100
100
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
Buyradio Pty Ltd
Carpentaria Newspapers Pty Ltd
Commerce Australia Pty Ltd
Commercial Real Estate Holdings Pty
Limited
Commercial Real Estate Media
Nominees Pty Limited
Commercial Real Estate Media Pty
Limited
Country Publishers Pty Ltd
CountryCars.com.au Pty Ltd
Creative House Publications Pty Ltd
David Syme & Co Pty Limited
Debt Retrieval Agency Limited
Examiner Properties Pty Ltd
Fairfax Business Media (South Asia) Pte
Ltd (in liq)
Fairfax Community Newspapers Pty
Limited
Fairfax Corporation Pty Limited
Fairfax Digital Australia & New Zealand
Pty Limited
Fairfax Digital Pty Limited
Fairfax Entertainment Pty Limited
Fairfax Group Finance New Zealand
Limited
Fairfax Media (UK) Limited
Fairfax Media Group Finance Pty
Limited
Fairfax Media Management Pty Limited
Fairfax Media Operations Limited
Fairfax Media Publications Pty Limited
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 Media (Tasmania) Pty
Limited
Fairfax Regional Printers Pty Limited
Financial Essentials Pty Ltd (In Liq)
NOTES
COUNTRY OF
INCORPORATION
(d)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(d)
(d)
(a)
(a)
(e)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Singapore
Australia
Australia
Australia
Australia
Australia
New Zealand
United Kingdom
Australia
Australia
New Zealand
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
OWNERSHIP INTEREST
2015
%
55
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
55
55
100
100
-
2014
%
-
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
FAIRFAX MEDIA ANNUAL REPORT 2015 | 135
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
NOTES
COUNTRY OF
INCORPORATION
Find a Babysitter Pty Ltd
Golden Mail Pty Limited
Gunnedah Publishing Co Pty Ltd
Harbour Radio Pty Ltd
Harris and Company Pty Limited
Harris Enterprises Pty Ltd
Harris Print Pty Ltd
Hunter Distribution Network Pty Ltd
Illawarra Newspapers Holdings Pty Ltd
Integrated Publication Solutions Pty
Limited
Internet Marketing Australia Pty Ltd
Internet Products Sales & Services Pty Ltd
JFRF Nominee Pty Ltd
John Fairfax & Sons Pty Limited
John Fairfax (US) Limited
John Fairfax Pty Limited
Lime Digital Pty Limited (In Liq)
Mackamedia Pty Ltd
Macquarie Media Network Pty Ltd
Macquarie Radio Network Limited
Macquarie Regional Radio Pty Ltd
Mamiko Co Pty Ltd
Map & Page Pty Ltd
Mapshed Pty Ltd
Mayas Pty Ltd
Mayas Unit Trust
Media Investments Pty Ltd
Metro Media Publishing Pty Ltd
(a)
(a)
(d)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(i)
(a)
(d)
(d)
(d)
(a)
(d)
(a)
(a)
(f)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Metro Media Services Pty Ltd
(a) (f)
Australia
Micosh Pty Ltd (In Liq)
Milton Ulladulla Publishing Co. Pty Ltd
Mistcue Pty Limited
MMP (CGE) Pty Ltd
MMP (DVH) Pty Ltd
MMP (Melbourne Times) Pty Ltd
MMP Bayside Pty Ltd
MMP Community Network Pty Limited
MMP Eastern Pty Ltd
MMP Greater Geelong Pty Ltd
(i)
(a)
Australia
Australia
Australia
(a) (f)
Australia
(f)
(f)
(f)
(a) (f)
(a) (f)
(f)
Australia
Australia
Australia
Australia
Australia
Australia
136
OWNERSHIP INTEREST
2015
%
100
100
100
55
100
100
100
100
100
100
100
100
100
100
100
100
-
100
55
55
55
100
55
100
100
100
100
92
100
-
100
65
100
63
90
78
100
100
38
2014
%
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
100
-
100
100
100
100
-
-
100
100
65
-
-
-
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
NOTES
COUNTRY OF
INCORPORATION
MMP Holdings Pty Ltd
MMP Moonee Valley Pty Ltd
MMP Star Pty Ltd
Mountain Press Pty Ltd
Namoi Media & Marketing Pty Ltd
National Real Estate Media Nominees
Pty Limited
National Real Estate Media Pty Limited
Netus Pty Limited
New South Wales Real Estate Media Pty
Limited
Network Classifieds Pty Ltd
Newcastle Newspapers Pty Ltd
Newsagents Direct Distribution Pty Ltd
North Australian News Pty Ltd
Northern Newspapers Pty Ltd
Northern Territory Real Estate Media
Pty Limited
Ollority Pty Ltd
Online Marketing Group Pty Limited
OSF Australia Pty Limited (In Liq)
Port Lincoln Times Pty Ltd
Port Stephens Publishers Pty Ltd
Port Stephens Publishers Trust
Property Data Solutions Pty Ltd
Queensland Community Newspapers
Pty Ltd
Queensland Real Estate Media Pty
Limited
Radio 1278 Melbourne Pty Limited
Radio 2CH Pty Ltd
Radio 2UE Sydney Pty Ltd
Radio 3AW Melbourne Pty Limited
Radio 4BC Brisbane Pty Limited
Radio 6PR Perth Pty Limited
Radio 96FM Perth Pty Limited
Radio Magic 882 Brisbane Pty Limited
Regional Press Australia Pty Limited
(In Liq)
Regional Printers Pty Limited
(a) (f)
(a) (f)
(f)
(a)
(a)
(a)
(a)
(f)
(a)
(a)
(a)
(a)
(a)
(a)
(e)
(a)
(a)
(a)
(a)
(d)
(d)
(d)
(d)
(d)
(d)
(g)
(d)
(e)
(a)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
OWNERSHIP INTEREST
2015
%
100
100
67
100
100
100
100
100
100
67
100
100
100
100
100
100
100
-
100
100
100
100
100
100
55
55
55
55
55
55
-
55
-
100
2014
%
50
-
-
100
100
-
-
100
-
-
100
100
100
100
-
100
100
100
100
100
100
100
100
-
100
-
100
100
100
100
100
100
100
100
FAIRFAX MEDIA ANNUAL REPORT 2015 | 137
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
NOTES
COUNTRY OF
INCORPORATION
OWNERSHIP INTEREST
2015
%
2014
%
Regional Publishers (Tasmania) Pty Ltd
(In Liq)
Regional Publishers (Victoria) Pty
Limited
Regional Publishers (Western Victoria)
Pty Limited
Regional Publishers Pty Ltd
Review Property (SA) Pty Ltd
Review Property Pty Ltd
RSVP.com.au Pty Limited
Rural Press Printing (Victoria) Pty
Limited
Rural Press Printing Pty Limited
Rural Press Pty Limited
Rural Press Queensland Pty Ltd
Rural Press Regional Media (WA) Pty
Limited
Rural Publishers Pty Limited
S.A. Regional Media Pty Limited
Satellite Music Australia Pty Limited
South Australia Real Estate Media Pty
Limited
Southern Weekly Partnership
Stock Journal Publishers Pty Ltd
Suzannenic Pty Limited
Tasmania Real Estate Media Pty Limited
The Advocate Newspaper Proprietary
Limited
The Age Company Pty Limited
The Age Print Company Pty Ltd
The Barossa News Pty Limited
The Border Morning Mail Pty Limited
The Border News Partnership
The Federal Capital Press of Australia
Pty Limited
The Independent News Pty Ltd (In Liq)
The Wagga Daily Advertiser Pty Ltd
The Warrnambool Standard Pty Ltd
The Weather Company Pty Limited
Tricom Group Pty Ltd (In Liq)
Weatherzone Japan LLC
138
(e)
(a)
(a)
(a)
(f)
(f)
(h)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(d)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(e)
(a)
(a)
(e)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Japan
-
100
100
100
100
50
-
100
100
100
100
100
100
100
55
100
75
100
100
100
100
100
100
100
100
63
100
-
100
100
75
-
75
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
-
75
100
100
-
100
100
100
100
100
63
100
100
100
100
75
100
75
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
NOTES
COUNTRY OF
INCORPORATION
West Australian Rural Media Pty Ltd
Western Australian Primary Industry
Press Pty Ltd
Western Australia Real Estate Media Pty
Limited
Western Magazine Pty Ltd
Western Magazine Settlement Trust
Whyalla News Properties Pty Ltd (In Liq)
Winbourne Pty Limited
(a)
(a)
(e)
(a)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
OWNERSHIP INTEREST
2015
%
100
100
100
75
75
-
100
2014
%
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)
This company was formerly called TheVine.com.au Pty Limited. The remaining interest in this company was acquired on 22 July 2014.
(c) Acquired on 2 October 2014.
(d)
On 31 March 2015, Macquarie Radio Network Limited acquired 100% of the share capital of Fairfax Radio Network Pty Limited from
the Group. In exchange, the Group received a 54.5% ownership interest in Macquarie Radio Network Limited.
(e) Deregistered on 8 January 2015.
(f)
Control was obtained on 22 January 2015 when the Group acquired the remaining 50% ownership interest in MMP Holdings Pty Ltd.
(g) Disposed on 30 January 2015.
(h) On 1 July 2014, the Group disposed of 42.2% of RSVP.com.au Pty Limited. This investment was equity accounted from 1 July 2014.
Refer to Note 8 for further details.
(i) Deregistered on 14 July 2014.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 139
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(G) DEED OF CROSS GUARANTEE
Fairfax Media Limited and certain wholly-owned entities (the ‘Closed Group’) identified at (F) in this Note 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 28 June 2015 and consolidated balance sheet as at 28 June 2015, comprising the members of
the Closed Group after eliminating all transactions between members are set out below:
BALANCE SHEET
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative assets
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
Pension assets
Other financial assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Payables
Interest bearing liabilities
Derivative liabilities
Liabilities directly associated with held for sale assets
Provisions
Current tax liabilities
Total current liabilities
140
28 JUNE 2015
$’000
29 JUNE 2014
$’000
305,104
221,740
21,307
-
64,297
1,384
613,832
171
87,828
7
1,176,198
254,006
16,902
76,647
951
820,028
2,432,738
3,046,570
13,891
27,101
3,912
-
114,466
20,635
180,005
444,707
230,103
20,674
213
83,784
4,858
784,339
1,248
87,667
2,488
1,141,818
341,196
1,551
84,773
-
574,070
2,234,811
3,019,150
103,074
119,721
13,278
4,202
99,958
3,132
343,365
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
NON-CURRENT LIABILITIES
Interest bearing liabilities
Derivative liabilities
Provisions
Pension liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained losses
Total equity
INCOME STATEMENT
Total revenue
Share of net profits of associates and joint ventures
Expenses before finance costs
Finance costs
Net profit from operations before income tax expense
Income tax expense
Net profit from operations after income tax expense
28 JUNE 2015
$’000
29 JUNE 2014
$’000
213,973
7,137
48,820
-
10,040
279,970
459,975
235,526
21,957
47,041
440
-
304,964
648,329
2,586,595
2,370,821
4,650,798
4,646,525
(203,254)
(12,711)
(1,860,949)
(2,262,993)
2,586,595
2,370,821
28 JUNE 2015
$’000
29 JUNE 2014
$’000
1,404,364
1,637,018
1,038
8,012
(1,192,956)
(1,350,936)
(25,824)
186,622
(19,387)
167,235
12,040
306,134
(41,847)
264,287
FAIRFAX MEDIA ANNUAL REPORT 2015 | 141
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
29. NOTES TO THE CASH FLOW STATEMENT
(A) RECONCILIATION OF NET PROFIT AFTER INCOME TAX EXPENSE TO NET CASH INFLOW
FROM OPERATING ACTIVITIES
NOTE
3(B)
Net profit for the period
NON-CASH ITEMS
Depreciation and amortisation
Impairment of property, plant and equipment, intangibles and
investments
Amortisation of borrowing costs
Share of losses/(profits) of associates and joint ventures not received as
dividends
Straight-line rent adjustment
Net gain on disposal of property, plant and equipment
Net gain on disposal of investments and other assets
Fair value adjustment to derivatives
Net foreign currency gains
Share-based payment expense
Non-cash superannuation expense
Gain on partial redemption of senior notes
Other non-operating gains
CHANGES IN OPERATING ASSETS AND LIABILITIES,
NET OF EFFECTS FROM ACQUISITIONS
(Increase)/decrease in trade receivables
Decrease/(increase) in other receivables
(Increase)/decrease in inventories
Increase in other assets
Decrease in payables
Increase/(decrease) in provisions
Increase in tax balances
Net cash inflow from operating activities
28 JUNE 2015
$’000
29 JUNE 2014
$’000
87,205
225,168
64,982
35,055
492
7,483
(151)
(1,226)
(13,808)
2
(3,665)
5,298
(12)
-
(335)
(1,306)
5,592
(1,206)
(314)
(10,446)
16,919
15,190
205,749
93,517
23,459
1,764
(3,266)
312
(121)
(106,345)
(157)
(5,526)
3,870
(731)
(10,183)
-
8,751
(11,153)
5,916
(1,286)
(3,287)
(78,298)
29,078
171,482
142
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(B) RECONCILIATION OF CASH AND CASH EQUIVALENTS
Reconciliation of cash at end of the financial year (as shown in the Cash Flow Statement) 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
ACCOUNTING POLICY
NOTE
28 JUNE 2015
$’000
29 JUNE 2014
$’000
342,830
342,830
452,687
452,687
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.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 143
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
30. SUMMARY OF SIGNIFICANT OTHER 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 is for the consolidated entity,
consisting of Fairfax Media Limited and its controlled entities. Fairfax Media Limited was incorporated in Australia.
(A) PRINCIPLES OF CONSOLIDATION
(I) CONTROLLED ENTITIES
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 business combinations by the Group (refer to Note 6). Intercompany
transactions, balances and unrealised gains on transactions between Group entities are eliminated.
Non-controlling interests in the earnings and equity of controlled entities are shown separately in the income statement, statement
of comprehensive income, statement of changes in equity and balance sheet respectively.
(B) 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 of monetary
assets and liabilities denominated in foreign currencies are generally recognised in the income statement. These are deferred in equity
if they relate to qualifying cash flow hedges and qualifying net investment hedges, until the entity is disposed. Tax charges and credits
attributable to exchange differences on borrowings are also recognised in equity.
Non-monetary items that are measured at fair value in a foreign currency (i.e. available for sale financial assets) are translated
using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair
value are 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 monthly exchange rates during the financial year; 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 entity are 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.
144
NOTES TO THE FINANCIAL STATEMENTS:
OTHER
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 28 JUNE 2015
(C) 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.
(D) NEW ACCOUNTING STANDARDS AND URGENT ISSUES GROUP (UIG) INTERPRETATIONS
(i) CHANGES IN ACCOUNTING POLICY AND DISCLOSURE
New standards and interpretations that are applicable for the first time for the June 2015 year end report are:
• AASB 1031 Materiality
• AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities
• AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets
• AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting
• AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments
These standards have introduced new disclosures but did not affect the Group’s accounting policies or any of the amounts
recognised in the financial statements.
(ii) ACCOUNTING STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE
Certain new accounting standards and interpretations have been published that are not mandatory for 28 June 2015 reporting
periods. The Group has elected not to early adopt these new standards or amendments in the financial statements. The Group has
yet to fully assess the impact the following accounting standards and amendments to accounting standards will have on the financial
statements, when applied in future periods. They include:
• AASB 9 Financial Instruments
• AASB 15 Revenue from Contracts with Customers.
Other standards and interpretations that have been issued but are not yet effective are not expected to have any significant impact on
the Group’s financial statements in the year of their initial application.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 145
DIRECTOR’S DECLARATION
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 statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 28 June 2015 and of its performance for the
year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) the financial statements and notes also comply 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; and
(d) as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in
Note 28 will be able to meet any obligations or liabilities to which they are or may become subject, by virtue of the Deed of
Cross Guarantee.
2. This declaration has been made after receiving the declarations required to be made to the Directors from the Chief Executive
Officer and the Chief Financial Officer in accordance with section 295A of the Corporations Act 2001 for the financial year
ended 28 June 2015.
On behalf of the Board
Roger Corbett, AO
Chairman
13 August 2015
Gregory Hywood
Chief Executive Officer and Managing Director
13 August 2015
146
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF FAIRFAX MEDIA LIMITED
FAIRFAX MEDIA ANNUAL REPORT 2015 | 147
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF FAIRFAX MEDIA LIMITED
148
FIVE YEAR PERFORMANCE SUMMARY
FAIRFAX MEDIA LIMITED AND CONTROLLED ENTITIES AS AT 28 JUNE 2015
2015
2014
2013
2012
2012
2011
RESTATED*
AS
REPORTED
1,878.1
1,838.6
1,987.6
1,856.8
2,045.4
2,010.5
2,224.9
2,199.9
2,339.2
2,310.9
2,476.5
2,463.4
202.4
65.0
137.4
16.3
121.1
33.9
371.3
93.5
277.8
10.4
267.4
42.2
(119.2)
(2,644.6)
(2,558.6)
100.8
103.5
107.5
(220.0)
(2,748.1)
(2,666.1)
55.0
109.7
111.7
(274.9)
(2,857.8)
(2,777.8)
37.9
(73.0)
(52.0)
(80.7)
114.4
(195.0)
108.0
(303.1)
86.6
83.2
224.4
(16.4)
(2,732.4)
(2,732.4)
(390.9)
143.6
157.8
128.0
205.4
205.4
283.8
2,066.4
2,823.3
283.0
1,990.7
2,781.5
355.2
1,816.2
3,016.7
638.2
2,042.7
2,042.7
4,006.6
4,006.6
1,207.4
1,207.4
4,438.7
6,700.6
1,532.0
2,383.4
28,120
2,352.0
30,071
11.0
7.5
3.5
6.1
8.6
4.0
114.3
17.8
13.7
7.0
0.85
20.0
15.0
9.5
6.7
7.3
4.0
42.1
30.0
17.8
7.9
0.93
2,352.0
34,805
(5.9)
(10.9)
(0.7)
2,352.0
2,352.0
2,352.0
35,174
35,174
37,974
(120.2)
(124.9)
(116.2)
(110.7)
(115.4)
(116.2)
(3.3)
(7.9)
(17.0)
5.4
7.9
2.0
-
5.8
35.1
7.0
0.50
8.7
11.4
3.0
-
3.8
59.1
10.1
0.58
8.7
11.6
11.4
3.0
-
4.5
59.1
10.1
0.58
18.3
3.0
-
5.6
34.5
6.4
0.98
INCOME STATEMENT
Total revenue
Revenues from operations
Earnings/(loss) before
depreciation, interest and tax
(EBITDA)
Depreciation and amortisation
Earnings/(loss) before interest
and tax
Net interest expense
Profit/(loss) before tax
Income tax expense/(benefit)
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
EBITDA to operating revenue
EBIT to operating revenue
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
m
%
%
Basic earnings/(loss) per share
cents
cents
cents
cents
%
Times
%
%
$
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
2,025.9
2,175.6
1,164.2
1,364.1
1,364.1
2,304.9
6,169
6,410
7,043
8,416
8,416
8,806
1,010
1,211
1,384
1,748
1,748
1,825
* 2012 ‘Restated’ figures reflect adjustments made to the 2012 ‘As Reported’ as a result of applying the discontinued operations standard
AASB 5. For further details of discontinued operations, refer to Note 5 of the 2014 financial statements where the standard was applied.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 149
SHAREHOLDER INFORMATION
FAIRFAX MEDIA LIMITED
TWENTY LARGEST HOLDERS OF SECURITIES AT 7 AUGUST 2015
NUMBER OF SECURITIES
472,487,566
415,511,287
400,660,205
400,232,084
94,820,237
36,452,973
33,389,089
33,032,228
24,643,824
21,951,224
12,071,502
11,592,369
10,568,281
8,246,799
7,760,000
6,299,917
5,118,416
5,000,000
4,782,155
4,635,230
%
19.82
17.43
16.81
16.79
3.98
1.53
1.40
1.39
1.03
0.92
0.51
0.49
0.44
0.35
0.33
0.26
0.21
0.21
0.20
0.19
2,009,255,386
84.29
NUMBER OF SECURITIES
281
%
100
ORDINARY SHARES (FXJ)
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
National Nominees Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
AMP Life Limited
Citicorp Nominees Pty Limited
RBC Investor Services Australia Nominees Pty Limited
UBS Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
RBC Investor Services Australia Nominees P/L
Pacific Custodians Pty Limited
Share Direct Nominees Pty Ltd <10026 A/C>
National Nominees Limited
SBN Nominees Pty Limited <10004 ACCOUNT>
RBC Investor Services Australia Nominees Pty Limited
RBC Investor Services Australia Nominees Pty Limited
Wilmar Enterprises Pty Ltd
UBS Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited - A/C 3
DEBENTURES
National Financial Services Corp.
OPTIONS
There were no options exercisable at the end of the financial year.
150
SHAREHOLDER INFORMATION
FAIRFAX MEDIA LIMITED
SUBSTANTIAL SHAREHOLDERS
Substantial shareholders as shown in substantial shareholder notices received by the Company as at 7 August 2015 are:
Morgan Stanley & Co
IOOF Holdings Limited
Ausbil Dexia Limited
SAS Trustee Corporation
Dimensional Fund Advisors Group
DISTRIBUTION OF HOLDINGS AT 7 AUGUST 2015
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
VOTING RIGHTS
ORDINARY SHARES
358,946,063
154,618,018
149,340,606
118,279,205
117,713,482
NO. OF ORDINARY
SHAREHOLDERS
NO. OF DEBENTURE
SHAREHOLDERS
8,127
11,132
3,922
4,584
341
28,106
5,136
1
–
–
–
–
1
–
Voting rights of ordinary shareholders are governed by Rules 5.8 and 5.9 of the Company’s Constitution which provide that every
member present personally or by proxy, attorney or representative shall on a show of hands have one vote and on a poll, shall have
one vote for every share held. Debentures do not carry any voting rights.
FAIRFAX MEDIA ANNUAL REPORT 2015 | 151
DIRECTORY
FAIRFAX MEDIA LIMITED
ANNUAL GENERAL MEETING
SECURITIES EXCHANGE LISTING
The Annual General Meeting will be held at 10.30am
on Thursday, 5 November 2015 at the
Heritage Ballroom
Level 6, The Westin Sydney
No. 1 Martin Place
Sydney NSW 2000
FINANCIAL CALENDAR 2016
Interim result
February 2016
Preliminary final result
August 2016
Annual General Meeting
November 2016
COMPANY SECRETARY
Gail Hambly
REGISTERED OFFICE
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
The Company’s ordinary shares are listed on the Australian
Securities Exchange as FXJ.
WEBSITE
Corporate information and the Fairfax annual report can be
found via the Company’s website at www.fairfaxmedia.com.au.
The Company’s family of websites can be accessed through
www.fairfaxmedia.com.au
HOW TO OBTAIN THE FAIRFAX
ANNUAL REPORT
A soft copy of the annual report is available at
www.fairfaxmedia.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 via post or email.
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 either by post or
email. 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.
152
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INDEPENDENT. ALWAYS.
FAIRFAX MEDIA LIMITED
GPO 506 SYDNEY NSW 2001 | 1 DARLING ISLAND ROAD PYRMONT NSW 2009 | T: +61 2 9282 2833
WWW.FAIRFAXMEDIA.COM.AU
@FAIRFAXMEDIA