Rural Press expects continued Growth

Rural Press Ltd is predicting further growth in 2004-’05.

The prediction comes on the back of a record net profit after tax and outside equity interests of $87.1 million, an increase of 27.3% over last year’s figure of $68.4 million.

Revenue increased by 9.8% to $515 million, indicating some recovery in many regional markets. While the good result was driven by the company’s core Australian publishing and printing activities, which made $ 468.3 million, Rural Press also has radio interests which contributed $7.7 million gross revenue to the bottom line, up from last year’s $6.2m.

Rural Press Chairman, John B Fairfax, says the company expects further growth this financial year: “The company’s strategies and medium term objectives are predicated on further growth which, at this stage, appears achievable.

“Despite the lingering effects of the drought, particularly in parts of the eastern interior, reasonable rainfalls at critical times were sufficient to generate a lift in the Australian agricultural sector and to enable our Australian agricultural publications to stage a market recovery over the previous year.

“The adoption of new international accounting standards will have some impact on the 2004-‘05 results including the way the company reports on assets.

“The full impact of these adjustments on the consolidated statement of financial position has not yet been determined, however this change is not anticipated to have a significant effect on either cash flows or the company’s dividend policy.”

The latest notes to the Rural Press annual reports reveal Managing Director, Brian McCarthy, was paid almost $830 000 last financial year in salary and performance bonuses. John B Fairfax received more than $131 000.

Earlier this month, Rural Press declared it was on the acquisition trail and had already earmarked the seven stations Macquarie Bank will need to divest after its purchase of DMG Radio’s regional network.

After its record profit, Brian McCarthy declared Rural Press had become a major player in the media landscape and wanted to expand.

McCarthy told an American Chamber of Commerce briefing in Sydney that the media group has a market capitalisation of $1.6 billion.

“We would be interested in any big media play that is available to us, so long as it is on the right basis.”

He says Rural Press is interested in adding scale to its own broadcasting portfolio via the seven MacBank stations: “Yes, we would. It fits our asset resource base really well. They’re in markets we understand and know, and we want to grow in regional Australia.

“Acquiring new assets is now a core competency of the group which would, in the absence of changes to cross media ownership laws, consider a major publishing acquisition such as part of its long term strategy.

“In the sector today, there are certainly metropolitan publishers. There are also some substantial regional publishers as well.”

While Rural Press has radio stations in south east Queensland and South Australia, it owns more than 200 newspapers in Australia, New Zealand and the US, plus 17 printing sites around Australia.

Asked if Rural Press has an eye on Austar or West Australian Newspapers, McCarthy said the group was interested in all big media players. He would not comment on whether the organisation was in merger discussions or the subject of takeover talks.

“Let’s just say that from time to time, there’s a lot of discussions gone on,” adding the company will look at any proposal in the interest of shareholders.

Rural Press is 54% owned by Marinya Media Pty Ltd, and this company would have to approve any expansion.

McCarthy is confident about the immediate future, saying that 10 weeks into the financial year, the group is trading ahead of both target and last year.

“We achieved our 2004 result, based on advertising volume growth, as distinct from rate rise growth, and … with volume growth comes pagination growth – therefore expense – so, if the (advertising) cycle was to soften to some degree, clearly we’re in a position where our costs can be moderated to protect us.”