Fairfax Media pulls $67.5m dividend from NZ unit in 2014

Fairfax Media Group, the Australian publisher which is merging its radio network into ASX-listed Macquarie Radio Network, pulled a $67.5 million dividend from its New Zealand unit last year, as a series of cost-cutting exercises mitigated falling advertising and circulation revenue.

The local holding company, Fairfax New Zealand, has been one of the better performers for the Australian group in recent years, embracing the drive to cut costs in the face of dwindling cash-flows as shrinking audiences eat into traditional advertising revenue.

The Australian parent has pulled $439.5 million in dividends from the New Zealand unit over the past four financial years, of which $312.8 million was paid in 2013 when the group sold its 51 percent stake in online auction site Trade Me, according to financial statements lodged with the Companies Office.

Fairfax New Zealand reported a net profit of $13.1 million in the 12 months ended June 30, 2014, down from $453.9 million a year earlier and which included a $433 million gain on the sale of the Trade Me shares.

Trading revenue for the local unit, which publishes the Dominion Post, Press and Sunday Star-Times newspapers and operates the Stuff website, dropped to $403 million from $508 million a year earlier.

Trading expenses dropped to $401.4 million in the 2014 year from $487.2 million, with the New Zealand publisher's redundancy cost almost halving to $6.4 million from $12.7 million.

As at June 30, 2014, Fairfax New Zealand provided $6.3 million for restructuring costs in the next 12 months.

In August last year, the Australian parent said New Zealand earnings before interest, tax, depreciation and amortisation rose 3.1 percent to $80.2 million. Costs fell 7.3 percent to $318.6 million, making up for a 5.4 percent decline in revenue to $398.9 million. Advertising sales in the year fell 5.2 percent to about $269 million while circulation sales declined 6.6 percent to $117.9 million.

Fairfax's cost cutting in New Zealand has included axing workers and sharing some printing with rival APN News & Media. Fairfax slashed the value of its New Zealand mastheads by more than 80 percent in 2012 to recognise a decline in traditional publishing.

The extraction of dividends in each of the past four financial years leaves Fairfax New Zealand with equity of $209.6 million, compared to the $704.8 million at the start of the 2011 financial year. The Australian parent injected $607.4 million in two tranches in 2010 and 2011.

The New Zealand group recorded its first income tax credit of $219,000 in the 2014 financial year since Fairfax bought Independent Newspapers Ltd in 2003, compared to an income tax expense of $19.5 million in 2013.

Since the June 30 balance date, Fairfax New Zealand sold two properties that were included among assets held for sale worth $8.3 million. The sale prices were "not significantly different from the carrying values," the accounts said without providing more detail.

Shares of ASX-listed Fairfax last traded at 86.5 Australian cents, valuing the group at A$2.03 billion.