SYDNEY : Publishing and Broadcasting Limited (ASX : “PBL”)
today announced a profit after tax before ‘non recurring’ items for the twelve
months ended 30 June 2001 of $312.6 million compared to $324.2 million for
the prior year, a decrease of 3.6%. After including ‘non recurring’ losses
of $397.2 million (after tax), the group result was a loss of $84.6 million
compared to a profit after tax of $324.0 million for the prior year. Group
revenue for the period was $2,553 million an increase of 3.4% compared with
the prior year.
Announcing the results, Mr James Packer, Executive Chairman of PBL, said:
“Obviously this year’s results have been heavily impacted by One.Tel and other
investment write downs. The final result is clearly very disappointing.”
“To grow a business, it is necessary to make investments, not all of which
will succeed. However in the case of PBL, while we have had some disappointments,
we have made a number of very successful investments during the past three
years. I think it is important to remember that as a result PBL is a stronger
and better company today than it would have been if we had not actively grown
“The good news is that our operating businesses have performed well in a difficult
environment, particularly in the second half and it has been pleasing to see
the group capture the benefits of owning leading media and entertainment businesses.”
Mr Peter Yates, Managing Director and Chief Executive Officer of PBL, said:
“The 2001 financial results reflect a challenging environment. The advertising
market has been tough, Togel Hongkong particularly in the second half, and GST and foreign
currency issues impacted on our magazine business. However, the PBL group
increased revenue by 3.4% and achieved a profit after tax before “non recurring
items” of $312.6 million. Whilst this is 3.6% below last year, the result
compares favourably with most media companies. The result reflects the benefits
of PBL’s position as Australia’s leading media and entertainment company with
a strong management team.”
“The final result of a net loss of $84.6 million is disappointing. This includes
net writedowns and provisions of $397.2 million primarily associated with
our losses in One.Tel and other investments.”
“Over the past three years PBL, through successful acquisitions and investments,
such as Crown and ecorp, has almost doubled its revenues, earnings and employee
“Looking ahead a key focus of senior management in the short term is to bring
the group together after this period of rapid growth and to focus on our core
businesses and the benefits of this expanded group of businesses.”
“Medium term earnings growth for PBL will be driven by revenue growth from
the television, magazine and gaming businesses where growth rates in excess
of GDP can be achieved combined with cost base increases which have been held
below CPI. This will be supported by an improvement in contribution from PBL’s
growth businesses, a number of which are now close to break even.”
“PBL will also continue to examine opportunities to acquire established businesses
with strong cash flow which leverage the Group’s core competencies.”
“Our strong financial position and management team allow us to capture opportunities
that might occur in the current environment. When the advertising market recovers
we can expect substantial improvement in our businesses.”
The result before ‘non recurring’ items was struck after including the following
· Television : the negative impact on Nine’s advertising revenue share
during broadcast of the Sydney Olympic Games;
: a significant fall in the size of the television advertising market
(the first since 1991) in the second half of the fiscal year
· Crown : disruption caused by demonstrations against the World
Economic Forum held at Crown in September 2000;
· Magazines : the introduction of the GST had a negative impact on the
circulation of several magazine titles and inhibited the capacity to increase
cover prices generally
: increased paper costs resulting from the falling Australian dollar and
from an increase in paper prices generally
The result includes net equity accounted losses of $27.4 million,
compared to net losses of $23.9 million in the prior year. The current period
includes a $12.9 million loss incurred by the recently launched Charles Schwab
joint venture, together with a $3.7 million loss recorded by ninemsn on the
sale of its investment in dstore.
Interest costs increased by $5.0 million compared to the prior year, reflecting
higher average interest rates for the current year.
In the current year the group recorded non recurring losses of $397.2 million
after tax, primarily reflecting a net provision against the reduction in value
of various investments, in particular One.Tel, and losses associated with
PBL’s activities in India.
This year’s result includes $22.5 million from an above theoretical win rate
(allowing 1.28% as theoretical win rate) achieved on Crown’s VIP Program Play,
compared with $39.4 million in the prior year.
To provide a meaningful comparison of the group’s operating performance, a
proforma Profit & Loss statement is provided at Attachment A, with a proforma
breakdown of divisional performance provided at Attachment B.
Television division reported an EBITDA of $252.7 million, a decrease of $36.7
million, or 12.7%, on the prior year (the prior year numbers have been restated
to exclude “unallocated costs”, which are now separately disclosed). The Television
result reflects strong revenue growth outside of the Olympic Games period
in the first half of Fiscal 2001 and a continued focus on cost control more
than offset by a significant decline in revenue in the second half.
Divisional revenue decreased by 1.8% for the year to $761.5 million with gross
advertising revenue for our major stations (TCN-9, GTV-9 and QTQ-9) decreasing
by 3.1%. The current year included a 53rd week. Excluding the effect of the
extra week, gross revenue on a like for like basis declined by approximately
Costs for the year increased by 4.6%. However, excluding the impact of the
additional week the increase was well below the underlying inflation rate
for the year and reflects Nine’s continued cost and efficiency management.
The Nine Network finished the fiscal year leading in each of its key markets.
Overall, the East Coast won 33 of the 39 official ratings weeks. Sydney Station
TCN-9 won 32 while Melbourne’s GTV-9 won 28 and Brisbane Station QTQ-9 30
of the 39 ratings weeks. The fiscal year incorporated the Olympic period and
Nine restored its traditional leadership in the week immediately following
the closing ceremony. This performance highlights the strength and depth of
Nine’s programme schedule and the creative talents of its people.
Magazine division’s EBITDA decreased by $19.4 million to $93.8 million, or
17.1% over the prior year. Revenue increased by 1.1% on the previous corresponding
period, reflecting growth in advertising revenue and new revenue streams (eg
contract publishing) partly offset by a decline in circulation revenue following
the introduction of a GST on July 1. The GST also effectively precluded the
opportunity for any cover price increases during the year.
Costs increased by 6.0% over the prior period, reflecting increased paper
prices, up 18%, due primarily to the fall in value of the Australian dollar
and to costs associated with new revenue streams although a targeted cost
program has restricted cost increases to 1.3%, on a like for like basis.
Crown’s revenue of $1,137.2 million, an increase of $106.6 million, or 10.3%,
over the prior period reflects an across the board improvement by all Crown
business units with the exception of Food & Beverage which was impacted by
the introduction of the GST. VIP Program Play revenue increased by $77.5 million
reflecting an increase in turnover of 44% and a win percentage of 1.39% compared
with the theoretical win rate of 1.28% and the prior year win rate of 1.54%.
Costs (excluding gaming taxes and VIP Program Play expenses – commission,
rebates complimentaries etc, which have all moved directly in line with the
increase in VIP revenue, and excluding costs associated with the World Economic
Forum), have decreased over the prior year.
EBITDA for the year improved to $300.2 million with an EBITDA margin of 26.4%.
The above theoretical win rate on the VIP Program Play business had a $22.5
million positive impact on Crown’s EBITDA for the period. Adjusting actual
EBITDA to the theoretical win rate of 1.28% for VIP Program Play for the current
and previous years, EBITDA of the underlying operations improved by $44.1
million or 18.9% to $277.7 million.
During the year ecorp continued to strengthen its competitive position with
continued focus on building its existing businesses and investing in recently
launched businesses – Charles Schwab Australia, Monster.com Australia, Monster.com
Asia and Ticketek Hong Kong.
ninemsn, eBay, Ticketek and Wizard all experienced strong revenue growth during
the period, with ninemsn recording a 73 per cent increase in revenue over
the previous year; eBay, 197 per cent; Wizard, 158 per cent; and Ticketek,
26 per cent. All of these businesses are on track to be profitable and cash
flow positive in Fiscal 2002, and eBay was breakeven in the second half of
The ninemsn network continues to be Australia’s leading Internet portal, with
a total of 5.32 million unique visitors in June 2001, including Hotmail, and
an audience reach of 80.0% (source: Jupiter Media Metrix). Almost one fifth
of time spent online in Australia is spent on the ninemsn network (source:
Jupiter Media Metrix). ninemsn achieved a 73% increase in revenue for the
year, compared with the prior year. Most of ninemsn’s advertising revenue
is sourced from “traditional companies” such as Commonwealth Bank, MLC and
L’Oreal seeking to extend their advertising mix into the online medium.
Ticketek achieved strong revenue growth during the period, with the highlights
being its ticketing contract with the Sydney Organising Committee for the
Olympic Games, the increased migration of customers online and the establishment
of a joint venture operation in Hong Kong
Almost 14% of ticket sales are currently achieved online, up from 7% the previous
· eBay Australia & New Zealand
In the twelve months, eBay A&NZ; continued to extend its market position as
Australia’s leading online personal trading community attracting 532,000 unique
visitors each month, more than double that of its nearest competitor. The
business was breakeven for the second half of the fiscal year and its profit
is expected to increase further as revenues grow against its largely fixed
· Charles Schwab Australia
A 50:50 joint venture between ecorp and The Charles Schwab Corporation of
the US, Charles Schwab Australia (CSA) launched with a strategic marketing
campaign in the first quarter of calendar 2001. In the climate of declined
trading volumes, CSA has not met expectations and the business has been restructured
to reflect this slower take-up. ecorp management continues to work with Schwab
to maximize the value of this business.
Over the year, Monster.com.au attracted more than 375,000 unique monthly visitors
to its site and lifted the number of resumes six times to over 345,000.
In Asia, the Monster businesses in Hong Kong and Singapore continued to gain
momentum following their launches last financial year. The company also expanded
into the Indian market in the first quarter of calendar 2001 and its site
experienced 50,000 unique visitors in the first month.
Wizard continued to experience strong growth over the year with its loan book
expanding by 75% and the number of online loan applications increasing by
65%. During fiscal 2001, Wizard expanded its satellite network from 55 to
Acxiom’s business of data content integration, management and delivery is
focused on two key products, Abilitec (a technology which uniquely links data
across disparate databases) and Infobase (a substantial consumer demographic
database). Over the year , Acxiom expanded its range of data sales clients,
and established a number of commercial pilot projects for deployment of its
data integration services. The revenue base of Acxiom is expected to grow
strongly over the coming year with wider commercial acceptance of its data
integration services offerings.
Foxtel continues to grow both its cable and satellite businesses and now has
in excess of 744,000 subscribers. PBL has included an after tax, equity accounted
loss of $10.3 million for the year. Foxtel recently acquired the PAY TV rights
to the Australian Football League for five years commencing in the 2002 season.
· Fox Sports
PBL has a 50% interest in Fox Sports, a supplier of Sports channels to Australia’s
leading Pay TV distributors, Foxtel, Austar and recently, for Rugby League,
to Optus Vision. The business which acquired the PAY TV rights to the National
Rugby League for six years commencing in the 2001 season is trading profitably
and continues to grow strongly.
· Sky News Australia
This Australian Pay TV news channel, in which PBL has a one third interest,
supplies product to Foxtel, Optus and Austar, and is trading profitably.
New Regency has experienced a strong twelve months with the quality and depth
of its film library continuing to improve, the ongoing success of its television
series JV with Fox, particularly with ‘Malcolm in the Middle’, and with the
increased value of its 35% stake in PUMA.
Unallocated costs have been separately disclosed for the first time, with
prior year numbers adjusted accordingly. The increase in Fiscal 2001 reflects
the transfer of certain staff into corporate, from the divisional cost base,
and the fact that the prior year number included gains on asset sales which
are not repeated in Fiscal 2001.
Non Recurring Costs
The Group has recorded a provision against reduction in value of various investments
(One.Tel, TMS, PMP, Easycall etc), offset by a reversal of the provision against
its investment in New Regency, and has expensed all costs associated with
its activities in India (including a provision for costs expected to be incurred
up to close down in September 2001, and costs associated with production of
the Fiscal 2001 / 2002 cricket tours of India). The Group also provided against
certain programming commitments, against, primarily, corporate restructure
costs, costs associated with One.Tel and against certain balance sheet items.