Fairfax revenues down but profits up as Hywood thanks staff for being a ‘shining example’ of ‘innovation’

Despite a 5.3% decline in total revenue to $1.732b, Fairfax Media’s chief executive, Greg Hywood, has said the company’s progress is a credit to the “talents, hard work and commitment” of its people.

In a column featured in the fiscal year 2017 report, Hywood said the company had a “track record” of leading change and “doing everything it takes to drive the commercial success” of the business.

Results a credit to the talents of the people says Hywood

He thanked everyone who had contributed to making Fairfax a “shining example” of a media company “leading innovation.”

According to the report, Hywood did not receive his bonus.

His base salary was $1.757m and with total shares/rights included, he earned $2.383m.

Fairfax Media’s operating EBITDA (earnings before interest, tax, depreciation and amortisation) fell 4.3% to $271.1m.

However, the company’s net profit grew 7.6% to $142.6m.

The publishing giant’s biggest area of growth was Domain Group, which climbed 8.1% to $320.3m from $296.3m for FY16.

Domain will start trading separately in mid November, with Fairfax planning to retain 60% of Domain’s shares.

The real estate group’s chairman will be Nick Falloon, and the company is expected to draw $150m of net debt upon separation, with proceeds to go to Fairfax.

One of the real estate company’s biggest areas of growth was digital advertising revenue, up 18.8% to $232.1m.

Fairfax confirmed it would spin off Domain as a separate entity on the ASX in July, following the news it had not received a binding offer from equity houses TPG Capital and Hellman & Friedman to purchase the overall business.

After axing 125 editorial jobs in a major metro media newsroom restructure, Australian Metro Media’s annual revenue fell 9% to $522.2m.

The redundancies were part of plans to provide the publishing giant with $30m in annual savings.

Restructuring and redundancy charges cost $43.8m down from $62.7m the previous year and publishing costs were reduced by 12%, with savings in staff, technology, and print production.

EBITDA climbed 25.9% to $49.1m “reflecting transformation efforts”, according to Hywood.

Metro advertising revenue was down 17%, to $225.5m.

Hywood said: “Australian Metro Media’s next-generation publishing model was fast-tracked during the year with new talent and capability brought in to further reshape the business.

“This involved resetting the publishing cost base as well as making significant enhancements to the product suite.

“The 12% reduction in Metro publishing costs for the year reflected an acceleration in cost out in the second half,” he added.

A breakdown of redundancy cost and other impairments

Unaudited figures of paying digital subscribers revealed 21% year-on-year growth, with 236,000 subscribers across three papers (The Sydney Morning Herald, The Age, and The Australian Financial Review.)

Fairfax is expected to roll out new products and applications across its mastheads in the coming months.

Australian Community Media’s total revenue fell 11.7% to $428.2m, with a12.3% decline in advertising revenue.

Macquarie Media Limited fell 1.1% to $137m, however its EBIDTA increased by 26%.

In June this year, Fairfax refuted speculation it was seeking offers to realise its investment in Macquarie Media, after it received a request for due diligence by a consortium of investors led by John Singleton and Mark Carnegie.

Fairfax currently has a 54.5% shareholding in Macquarie Media.

New Zealand Media total revenue was down 7% to $325m.

Fairfax’s segment results for FY17

“Today’s result shows Fairfax is in great shape. We have delivered strong value for shareholders through growth and transformation initiatives,” Hywood state in a statement.

“The strategy we commenced five years ago has successfully maximised cash flows of our publishing assets and with that built growth businesses in Domain and Stan.

“Our three publishing businesses are modern, cost efficient and sustainable across digital and print. In the context of the global structural change impacting upon the media industry, the fact that our publications remain profitable and sustainable is an outstanding achievement,” he said.

“Our ongoing cost reduction programs underpinned a 6% decline in group operating expenses, not withstanding continued investment in our growth businesses.

“As we enter FY18, our immediate focus is on the successful separation of Domain, an initiative we believe demonstrates the success of our strategy and will deliver our shareholders great value over time.”


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