Annual Report to Shareholders 1997

Review of Operations

Allen Williams, General Manager

A break after several years of drought conditions in Eastern Australia restored some confidence in the Australian rural sector. With the assistance of improved trading in the US operations, the Agricultural Publishing division achieved increased profits.

The improved seasonal conditions helped the agricultural weekly publications maintain their market share. However, the network of free monthly agricultural publications came under some pressure, although their links with industry bodies and local communities proved to be a positive factor.

Advertising volumes increased over the previous year. Strong local commercial and classified volumes assisted The Land, Queensland Country Life, Farm Weekly, North Queensland Register, Stock Journal, and Stock & Land.

The Farm Weekly in Western Australia again set a new pagination record, publishing a 216 quarterfold page issue that also included a 36 page inserted tabloid section. Much of this outstanding performance was due to strong classified volumes, reflecting the good seasonal conditions that Western Australia has enjoyed over the past few years.

A number of nationally distributed, state-based niche publications assisted in revenue growth and added value to readers of the rural weekly publications.

Throughout the year a number of changes were made to several of the Division's publications to maintain market share and readership. In Queensland, the launch of a Town and Country section in Queensland Country Life was well received by readers while a redesign of the classified section strengthened the publication. In South Australia, the launch of Hills Farmer as an onsert to Stock Journal, led to new readership and revenue streams in a growing area of the State. The Farmer & Stockowner in South Australia was redesigned and changed to a monthly publication to better meet the needs of members of the South Australian Farmers Federation.

The Victorian agricultural publishing marketplace continued to be competitive, with Stock & Land maintaining its position as the major livestock publication. A number of key sponsorship opportunities in the livestock sector such as Beef Week were retained by the publication.

In New South Wales, The Land maintained its strength in editorial quality, winning the highly competitive Media Award for best overall media coverage of Sydney's Royal Easter Show.

National advertising revenues were above the previous year, due to the energetic efforts of the national sales team. Particular attention was paid to revenue opportunities with four colour advertising and inserts.

The Agricultural Publishing division continued its policy of maintaining close relationships with industry bodies.

In New South Wales, NSW Agriculture Today maintained its link with the Department of Agriculture, while the Gippsland Farmer strengthened its ties to the local region with a new editorial and sales focus. In Queensland, the competitive publishing market made it a difficult year for the Queensland Farmer and Queensland Farmer and Grazier, while the Cattleman maintained its links with the Cattleman's Union during difficult market conditions and industry restructure. The publishing arrangement with the Australian Dairy Industry Council for Australian Dairyfarmer continued.

Using the strength of the customer database, the Division published a number of custom publications for agricultural industry bodies. Opportunities linked to industry bodies such as Grains Research and Development Corporation, International Wool Secretariat, and the Rural Industry Research Development Corporation were all part of initiatives that saw revenue and readership potential maximised.

The specialist magazines of the Agricultural Publishing division again had a solid year. The Australian Farm Journal performed strongly but found the national advertising market challenging. Pleasingly, its combination with the targeted industry magazines Wool, Beef and Crops achieved an increase in subscriber numbers.

Australian Horticulture, Good Fruit & Vegetables and Turfcraft made gains in advertising revenues. The Hoofs and Horns magazine was redesigned and refocussed in a competitive marketplace. A new initiative for the cut flower industry, Australasian Flowers was launched during the year.

The Division's Customer Care Centre located in Melbourne, had an outstanding year. The Centre was able to service a number of the rural weeklies with national editorial surveys while at the same time canvassing subscription sales for the magazines.

BAL Marketing had another successful year with an increase in both the number of visitors and the number of exhibitors compared to last year's Ag-Quip. The record number of exhibitors encouraged the Company to make a number of improvements to the Gunnedah field days site. The BAL Marketing group expanded their activities to include a Turf Show in Sydney in conjunction with the group's Turfcraft magazine, the regional Motor Show for Tamworth and an Alternate Farming Expo in conjunction with the Dubbo City Development Corporation.

In New Zealand, Rural Press endured a year marked by major downturns in the rural economy, and the level of business activity. Other factors included a change in the political environment and lower prices particularly for wool, beef and fruit. However, the Group's publications continued to maintain their share of a smaller market. Our New Zealand publications are well positioned to take advantage of future improved agricultural markets.

In the United States, favourable market conditions resulted in revenue growth in the State and specialist publications. Rural Press USA had its best year's trading since the initial investment in the United States some eight years earlier. The result in a highly competitive market was a credit to all staff.

During the year F@RMING OnLine, the Company's first step into the world-wide web, was established delivering agricultural information and services, and a multitude of links to other agriculturally-related Internet sites.

The F@RMING OnLine service not only grew its revenues, but provided an additional marketing service to major clients. Current survey information would indicate that about 40 percent of farm businesses are now equipped with an Internet capable computer but less than 10 percent have access to a modem. This potential for growth in the number of farmers accessing the Internet places F@RMING OnLine in a good position in the market.

List of agricultural publications