Analyst and Institutional Briefing

1
2003 AustralasianInvestor Conference
Frederick G. Hilmer
October 2003
2
Fairfax today

• Outstanding mastheads and brands with strong AB
  demographic penetration
• Leading online news and classified business
• Current market capitalisation of A2.8 billion
• Annual revenues in excess of A1.6 billion
• Significant institutional investor presence with
  high liquidity

3
Financial history
A Millions
Total revenue
EBITDA
1,409
390
1,328
1,315
1,227
1,197
1,154
322
300
293
1,028
1,006
279
271
948
253
237
189
1995
1996
1997
1998
1999
2000
2001
2002
2003
1995
1996
1997
1998
1999
2000
2001
2002
2003
4
Strategy

• Strengthen existing franchises via sustained
  product and operational improvements and
  innovations
• Leverage existing franchise strengths and
  capabilities in both existing and new businesses

5
2003a year of significant achievement against
the strategy

• Strong profit growth in a tough market? Net
  profit after tax up 39? Advertising revenue up
  4? Costs reduced further? f2 internet business
  loss contained at lt10 million EBIT
• Business strengthened? New printing capacity on
  stream? Acquisition of leading New Zealand
  publishing business

6
Focus and investment are yielding benefits
A Millions
Publishing revenue
Publishing EBITDA
1,260
400
1,237
1,230
360
343
1,200
1,184
1,170
320
1,138
1,140
272
280
253
1,110
1,080
240
2001
2002
2003
2001
2002
2003

• New printing capacity on stream offering full
  colour
• New organisational structure focused on
  front-foot selling

7
Continuing reduction in costs
A Millions
1,050
1,000
981
963
Total
944
950
922
Publishing
894
894
900
885
870
850
2000
2001
2002
2003

• Group costs reduced further in 2003
• Increase in publishing costs contained at lt1.0
  CAGR over 3-year period despite underlying cost
  inflation ?34

• Costs excluding one-off asset writedowns,
  redundancy costs, Tullamarine dual-running costs

8
f2 internet business now trading profitably

• Strong EBITDA improvement during 2002/2003, with
  profitable trading at the EBITDA level in the
  current year-to-date
• Maintained news leadership with strong traffic
  growth
• Held No. 1 or No. 2 position in each of the
  classified sites in NSW and Victoria
• Gained market share in online classifieds and
  banner advertising
• Strong revenue growth from contact centre
  upselling, with only minor falls in conversion
  rates in spite of large price increases

Source Red Sheriff, July 2003 Source Audit
Bureau of Circulations
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Priorities
1. Revenue growth/franchise quality 2. Cost
containment 3. Delivering on Fairfax New Zealand
10
Current revenue mix2003
Percent
100 A1,210
100 A438
100 A1,648
Other classifieds
6.1
7.0
9.3
5.5
Real estate classifieds
11.9
10.2
2.7
5.4
6.4
Motors classifieds
9.5
11.5
Employment classifieds
12.2
40.9
43.0
Display
43.8
8.0
3.9
Other
2.5
24.0
19.0
Circulation
17.1
Australia
New Zealand
Total
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Our approach

• Product improvement
• Distribution
• Marketing and promotion
• Subscription pricing
• Cover price

Circulation

• Front-foot selling
• Product initiatives
• Colour

Display
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Approach to classified employment, real estate
and motoring

• Markets continually segmenting, for
  example? Daily metropolitan newspapers? Free
  weekly newspapers/magazines? Internet

• Our strategy? Have effective products in each
  segment (for example, in real estate, Domain
  in The Age, MPG and domain.com.au)

? Understand and emphasise the unique roles
of each product. For example, in
employment ? Daily metrosattract passive job
seekers, branding opportunities ? Suburbansloca
l focus ? Internetenhanced search capability
? Offer a suite of products with an advertiser
focus versus a product focus
13
Current downturn in employment appears more
cyclical than structural
Thousands of jobs per week
New South Wales
Victoria
Queensland
Western Australia
Source July Economic OutlookANZ Banking
Corporation
14
Priorities
1. Revenue growth/franchise quality 2. Cost
containment 3. Delivering on Fairfax New Zealand
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Cost containmentcontinuing opportunities

• 2004? Full impact of printing investments? Newsp
  rint pricing, waste, returns? Ongoing work
  process improvements? Australia/New Zealand
  purchasing
• Medium term? Further work restructuring? Optimis
  ing use of print capacity? Phase
  IIoverheads? Further newsprint usage
  efficiencies

16
Priorities
1. Revenue growth/franchise quality 2. Cost
containment 3. Delivering on Fairfax New Zealand
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Delivering on Fairfax New Zealand

• INL publishing assets acquired on 30 June 2003
  for NZ1.188 billion, representing a multiple of
  9.1 expected 2004 EBITDA of ?NZ130 million
• Strong 2003 results announced recentlyahead of
  independent experts report of NZ118.8 million
• Trading-to-date ahead of expectation. Confident
  of 2004 EBITDA of at least NZ130 million

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New Zealand represents almost a third of
Fairfaxs revenue and EBITDA
Revenue 2003
EBITDA 2003
100 A1,648m
100 A374m
New Zealand
New Zealand
27
28
73
72
Australia
Australia
19
Fairfax New Zealand business

• Attractive market structure? Two-player
  newspaper market with little overlap? New
  Zealand advertising market historically less
  cyclical and higher growth than Australia
• High-quality assets? Consistent revenue and
  earnings record? High-quality publications with
  good demographic profile? Good representation in
  key markets? Experienced management? Improvement
  program in its early stages
• Significantly EPS accretive from year 1
• Diversifies earnings base

20
A business mix compatible with Fairfaxs
Australian businesses
Fairfax New Zealand
Metropolitan dailies
National and Sunday weeklies
Regional dailies
Suburban community newspapers
Magazines
Other
The Dominion Post The Press
6 publications (including Sunday Star Times and
Sunday News)
7 newspapers
53 publications
13 magazines (including TV Guide)
Gordon Gotch NZ Ltd (distribution) Stuff
(online business)
Share of 2003 revenue
45
26
17
8
5
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Good representation in key markets
Suburban NewspapersAuckland Gordon and Gotch
(NZ) Waikato Times Taranaki Newspapers The
Manawatu Standard The Nelson Mail The
Christchurch Press The Southland Times
Sundays Independent CommunityNewspapers Magazin
es The Dominion Post Central CommunityNewspaper
s The Marlborough Express The Timaru Herald
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New Zealand strategy and focus for 2003/2004
July 2003
December 2003
June 2004

• Examples
• Purchasing
• Overheads/staffing
• Revenue initiatives
• IT/online

Smooth transition
Smooth transition
Identification of immediate synergies
Sustainable improvements
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Capital management

• Working capital? Continued strong cash
  management record
• Capital expenditure? Going forward, capex will
  be ?65 of depreciation for combined
  businesses
• Debt2003 financial year? Net debt of 1,200
  million as at 30 June 2003? Interest cover 11.5x
  EBITDA? Gearing (debt as debt equity) of 40
• Dividend policy through the cycle? Sustained
  rate of dividend in cents per share? Payout
  ratio of at least 70
• Opportunity remains for further capital
  management initiatives

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Longer-term strategy

• Organic growth
• Further media expansion in Australia and New
  Zealand
• ? Under current laws
• ? If cross media laws lifted in Australia
• Selective offshore media investments

All growth opportunities have to be superior to
the base case of returning funds to shareholders
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Summary

• Outstanding franchises
• Improved cost effectiveness and operating
  performance
• Stronger business mix and positioning
• Major benefits expected from upturn in
  advertising demand, especially in key categories