Annual Report to Shareholders 1996

Review of Operations

Against the backdrop of low commodity prices in the key areas of wool and beef and the continuing drought in many regions, rural activity in Australia has faced another challenging year. However, solid grain prices gave a much needed boost to market confidence.

This confidence reflected in the trading result for the Australian Agricultural Publishing Division's newspapers and magazines throughout the year. Special publications in niche agricultural markets assisted greatly in adding value to the rural weekly publications in terms of both readership and advertising revenues.

Classified advertising volumes were strong, even in areas affected by poor seasonal conditions. Good growth in publications such as The Land, Queensland Country Life, Stock Journal and Farm Weekly was achieved. National advertising revenues greatly improved over the previous year reflecting our increased ability to offer colour advertising.

Paid circulation gains were made by Farm Weekly, New Zealand Farmer and Stock and Land, with The Land, Stock Journal, Queensland Country Life and North Queensland Register maintaining pleasing circulation levels.

In Queensland, the division launched a new publication, Australian Cotton Outlook, with great success and has established a niche market for the publication across the New South Wales and Queensland cotton growing regions.

In the highly competitive Victorian market, the company's commitment to the Stock and Land publication continued, with improved gloss printing enhancing the publication's reputation as the key livestock publication in the state.

The Farm Weekly package in Western Australia continued its strong dominance of the market with further advertising and circulation growth. A record 212 page issue of the Farm Weekly quarterfold publication was achieved during the year, with the tabloid Farm Weekly also finding acceptance with national advertisers and readers.

The overall strength of the rural weeklies continued to put pressure on the free farming newspapers in the market. The drought in Queensland made it a difficult year for the Queensland Farmer and Queensland Farmer and Grazier, while the drought also affected NSW Agriculture Today. The economic conditions in the respective states made it a difficult year for Farmer & Stockowner (South Australia) and Gippsland Farmer (Victoria).

The specialist magazines and national publications had an excellent year. The national publications' flagship, Australian Farm Journal, performed strongly, with its combination of targeted industry magazines - Wool, Beef and Crops, - which added value for both the reader and advertiser, and maintained the circulation of the publication.

The national database was further developed and will offer the division long term publishing and revenue opportunities.

The specialist magazines Australian Horticulture, Good Fruit and Vegetables, Australian Dairyfarmer, Lotfeeding and Turfcraft all made strong gains in advertising, while Hoofs & Horns struggled to maintain revenues.

BAL Marketing, which operates Australia's biggest agricultural field day Ag-Quip at Gunnedah, New South Wales, had an outstanding year with a record number of exhibitors and visitors to the site over the three days of the event. BAL Marketing was also involved in a number of other events including Turf Shows in Sydney and Brisbane in conjunction with our Turfcraft magazine, and a regional motor show in Tamworth, New South Wales. The monthly country music newspaper, Capital News, published by BAL Marketing, was redesigned to target circulation growth.

In New Zealand, the rural economy was depressed by low meat and wool prices, and rural servicing companies struggled for growth. Fortunately, farmers had a good growing season, resulting in the increased market share achieved by our publications. The New Zealand Farmer continued to lift its audited circulation and readership profile through the telemarketing sales operation and held its position as the leading paid national rural weekly. Similarly, Horticulture News maintained its paid circulation base, while our free distribution publications, Farm Equipment News, Southerner, and AgTrader maintained market dominance. The Dairyman produced an excellent result, matching the prevailing confidence in the dairy industry sector. The launch of a new free circulating rural community newspaper, Rural Waikato, in the central North Island strengthened our profile and revenue base in this key agricultural region.

In the United States, our 16 state and specialist industry newspapers and magazines suffered from a flat economic environment and a lack of market confidence due to U.S. Farm Bill changes. Our result was solid, based on these conditions and the very competitive farm publishing market.

In the area of technology, the division continues to advance with pre-press technology at its key sites. Torrens River Typesetters, a commercial typesetting production facility, has now been operational for a full twelve month period. In addition to producing internal publications it also produces publications electronically for a major suburban publishing group. Other technology upgrades have been installed at Farm Weekly in Perth, Stock Journal in Adelaide and Queensland Country Life in Ormiston.

Rural Press Agricultural Division publications are listed below.

State Newspapers

NEW SOUTH WALES

• The Land
• NSW Ag Today
• Horse Monthly
• Farm Equipment Trader
• Alternate Farmer

QUEENSLAND

• Queensland Country Life
• North Queensland Register
• The Queensland Farmer
• Queensland Farmer & Grazier
• Cattleman
• Australian Cotton Outlook
• Country Life Machinery Trader

SOUTH AUSTRALIA

• Stock Journal
• Farmer & Stockowner
• The Grower
• Grape Growers

VICTORIA

• Stock & Land
• Gippsland Farmer

WESTERN AUSTRALIA

• Farm Weekly

NATIONAL PUBLICATIONS

• Australian Farm Journal
• Australian Horticulture
• Hoofs & Horns
• Good Fruit & Vegetables
• The Australian Dairy Farmer
• Turfcraft
• Lotfeeding
• Beef
• Wool
• Crops
• Australasian Flowers
• Capital News

OVERSEAS PUBLICATIONS

USA

• Alabama Farmer
• Arkansas Farmer
• North Carolina Farmer
• South Carolina Farmer
• Georgia Farmer
• Kentucky Farmer
• Louisiana Farmer
• Maryland Farmer
• Mississippi Farmer
• New England Farmer
• New York Farmer
• Tennessee Farmer
• Virginia Farmer
• Southern Dairy
• Southern Hogs
• Southern Cattle

NEW ZEALAND

• New Zealand Farmer
• Farm Equipment News
• Ag Trader
• The Dairyman
• Southerner
• Horticulture News
• Rural Waikato

EVENTS

Ag Quip