Fairfax does massive writedown

The Herald reports:

Media, which is currently in talks to merge its New Zealand business with NZME, has written down the value of its NZ assets by A$95.3 million (NZ$100 million).

ASX-listed Fairfax, which owns the Stuff website and regional titles around the country, is currently in talks with NZX-listed NZME to merge in a deal that is being considered by the Commerce Commission. NZME owns the Auckland-based NZ Herald and the Newstalk ZB radio station, as well as the Grab-one deals website.

ASX-listed APN News & Media demerged its NZ assets and listed them on the NZX earlier this year after abandoning plans for an initial public offering.

In its 2015 annual report, Fairfax Media valued its New Zealand non-current assets at A$242.6 million ($255 million).

That is a 35% writedown which is huge.

The New Zealand write-down is part of a package of A$989 million in pretax impairment charges announced to the Australian stock market this afternoon.

It includes an impairment of A$484.9 million in its Australian metro media division and an impairment of A$408.8 million in its Australian community media section. It has created a separate division to cover its Domain group segment, which will house the real estate website of the same name.

Re-stated historical results by segment show its New Zealand division saw revenues fall to A$166 million from A$179.5 million in the first half of 2016, a decline of 7.6 per cent.

Earnings before interest, tax, depreciation and amortisation fell 11.7 per cent to A$27.6 million from A$31.3 million. Only Fairfax’s radio and real estate division saw increased revenues and sales.

In a statement, chief executive Greg Hywood said: “Our New Zealand publishing business faces similar issues to those in Australia. This impairment has been calculated on a stand-alone basis and does not take into account any potential benefit from the proposed merger with NZME. The impairment has no bearing on the proposed transaction or its structure.”

Fairfax Media shares fell 1.4 per cent on the ASX to A$1.035 cents.

Their shares were once trading at $6.

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