Record profit for media group

Statement from Wilson & Horton Holdings

Wilson & Horton Holdings, publishers of the New Zealand Herald, yesterday announced record operating profits before interest and tax for the year 2000 of $96.7 million, up 12.3 per cent on the previous year.

This result was delivered on operating revenue growth of 3.9 per cent.

While revenues flattened in the second half after an unseasonably strong first half, WHH outperformed market conditions following a number of strategic initiatives.

Excluding operating losses from WHH's New Media businesses, underlying operating profits improved 15.8 per cent.

A dividend of 20c a share will be paid on the company's cumulative exchangeable preference shares, in accordance with the issue documents.

The payment date will be May 31, with this dividend fully imputed for taxation purposes.

During 2000, WHH restructured the majority of its foreign currency borrowings into New Zealand-denominated debt, thereby ensuring that most of the adverse currency movements which had been a feature of the company's results in past years are now eliminated.

As a result, the interest charge has increased by $32.1 million and the exceptional items include foreign exchange losses of $34.2 million. This foreign exchange loss has no impact on the consolidated profit and loss account of Independent News & Media (INM) under Irish Accounting Standards.

WHH is a wholly owned subsidiary of INM, which is a global newspaper and media company with leading market positions in New Zealand, Australia, Ireland, South Africa and Britain.

When WHH cumulative exchangeable preference shares mature in 2003, holders may elect to exchange one preference share for either $8 cash, or two INM ordinary shares.

As a result, the underlying value and performance of WHH shares are determined by the consolidated performance of INM.

On Monday, INM's ordinary shares were quoted on the Irish Stock Exchange at €2.89 ($6.21), which translates to $12.42 for each WHH preference share held.

A meeting will be held June 6 in Auckland to fully brief WHH shareholders on the 2000 performance of INM, and specifically WHH.

The chief executive of Wilson & Horton, John Sanders, said the New Zealand Herald had had another successful year, with solid advances in revenues, readership and editorial accolades.

From its excellent coverage of the America's Cup, to the Olympics, to the Fiji coup, the New Zealand Herald's position as New Zealand's No 1 newspaper was further enhanced, Mr Sanders said.

It had secured a substantial number of prestigious awards, including Best Newspaper Overall for the Weekend Herald at both the Qantas Media Awards and the Commonwealth Newspaper of the Year Awards, Best Daily Newspaper for the weekday New Zealand Herald at the Commonwealth Awards, Qantas Awards and the Pacific Area Newspaper Publishers Association Newspaper of the Year Awards.

These accolades were underscored by impressive advances in readership, Mr Sanders said. The Herald was now read regularly by almost one million New Zealanders each week.

During 2000, the company invested in new product development, world-class prepress systems, increased training programs, new office environments, and critically, invested in its people, with many senior editorial staff appointments - including the recent promotion of well-known journalist Fran O-Sullivan to assistant editor.

Mr Sanders said these strategic investments had all contributed to ensuring that the Herald continued to further develop New Zealand's best editorial talent and coverage.

In addition, the Herald invested heavily in a new circulation management database to further enhance its relationship with its growing home delivery customer base.

A major press investment of over $10 million was made last year to further increase colour capacity at the Ellerslie print centre, ensuring additional premium colour availability for advertisers, particularly in the real estate and retail sectors.

The staff of the Regional Newspapers division delivered an extremely strong performance in 2000.

The Wanganui Chronicle posted the strongest percentage lift in circulation of all newspapers in New Zealand, and Hawke's Bay Today posted the strongest percentage lift in circulation of all newspapers over 25,000 copies.

Improved results from the Auckland Communities and the Christchurch Star were also highlights, Mr Sanders said. W&H Print had had an excellent result.

During the year, the Security Plastics and Bankprint divisions became transtasman businesses, having been awarded the ANZ Bank cheque printing contract in Australia and acquiring NBS Pty Ltd and Cardcorp Pty Ltd, the expansion of which moved the Security Plastics operation into the fast-growing Smartcard arena.

Mr Sanders said that despite a weak domestic mass market magazine sector, the New Zealand Woman's Weekly continued to dominate, being the most widely read magazine in New Zealand with approximately one million readers each week.

Strong readership franchises for both the Woman's Weekly and the Listener produced very strong advertising revenues.

The UBD and Wises Map divisions continued to successfully exploit new opportunities in new media, internet and CD-Rom.

These innovations had helped UBD to post exceptional profit growth in 2000.

Mr Sanders said that following a year of prudent investment to build a leading internet presence, WHH took the lead in late 2000 in rationalising expenses.

This division would increasingly offer a dual online and offline service to all Wilson & Horton customers, he said.

Mr Sanders reported that trading for the first two months of this year had met expectations. The full year is expected to show meaningful profit growth on 2000.

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