I am writing
in response to the Crikey article
yesterday regarding the reporting of Fairfax’s
underlying and reported profits. We deserve a correction.

Glenn Dyer’s comment
that the 22% increase in “underlying” profit was the focus of our earnings release because the reported number showed a
fall of 6% is not only factually incorrect but makes an insinuation that Fairfax
intentionally tries to mislead its shareholders and the investment market. Some facts
which I believe Mr Dyer may have intentionally disregarded or just doesn’t
understand:

  • Our earnings
    media release issued on 26 August
    2004 clearly
    states that the “Underlying” EPS was up 48.5% and the “Underlying”
    NPAT of $207.6 million was up 65.4%. The
    release does not, until the third paragraph on Page 2, make any mention of the
    higher reported result.
  • Notes 4 and
    16 of the 2004 preliminary final report (Appendix 4E) clearly split out the “one
    off” nature of the significant items which were included in the reported
    result.
  • The major
    difference between the underlying and reported result in 2004 was an $88.9
    million tax gain due to the Federal Government process of tax
    simplification If Mr Dyer were to check
    his facts he would find that a large majority of Australian companies had this
    same tax adjustment in that year.
  • Our 2004
    analyst presentation, which was released to the ASX and posted
    onto our website on the same day, again highlights the underlying result and not
    the reported result.
  • The earnings
    media release issued yesterday was totally consistent with the 2004 media
    release, highlighting the underlying result and not taking into consideration
    over $7million in increased profits due to the sale of a business or a
    significant tax credit which is included in the reported result.
  • Our
    2005 analyst presentation, which was
    released to the ASX and posted
    onto our website yesterday, again highlights the underlying result and not the
    reported result.
  • Our 2005
    preliminary final report (Appendix 4E) clearly show the differences between the
    underlying and reported results.
  • The
    financial highlights page as well as the Chairman’s, CEO’s and CFO’s Reports in
    the 2004 Annual Report clearly states that all numbers are “pre significant
    items.”

Given these
facts I cannot fathom how Mr Dyer or anyone could come to the conclusion that we
try and somehow “hide” our results or try and put a “spin” on them. Fairfax has always
reported on the underlying trends of its profitability as this gives our
shareholders and the equity markets the most transparent view of how the company
is performing and this practice will
continue.