By Geoff Percival
Independent News and Media (INM) shares have fallen almost 2% in reaction to the group saying rising costs, including a €1.5m payoff to former chief executive Robert Pitt, sent profits plunging last year.
The Irish Independent, Sunday Independent and Sunday World owner said pre-tax profits, for 2017, fell by nearly 32% to €28.5m, and revenue tumbled by 9.4% to €293m.
The latter fall was driven by declining advertising revenues, which were down 10.6%, and an 8.4% drop in circulation revenue, the knock-on effect of which was a near 10% fall in distribution revenue.
An increase in libel and legal costs included a €12.7m impairment charge related to The Belfast Telegraph, a €1.8m restructuring and redundancy bill and the aforementioned €1.5m in severance pay to Mr Pitt, who departed the company last October following a high-profile boardroom row with former chairman Leslie Buckley.
The resulting probe into that row, by the Office of the Director of Corporate Enforcement (ODCE), is ongoing and INM yesterday said it continues to comply with the ODCE’s requirements and is taking “all necessary steps to meet the ODCE’s requests”.
INM’s digital revenues increased 1% last year; growth primarily coming from the group’s classifieds business.
Other positives included a near 14% rise in net asset value to €76.1m and a €6.7m increase in cash balance to €91.5m; generated from INM’s earnings before interest, tax, depreciation, and amortisation performance.
However, the group has forecast “continued difficult trading conditions” for 2018 and said key revenues in advertising, circulation and distribution face further declines.
In response, INM has initiated a strategic plan in collaboration with professional services firm EY to provide what it calls “a roadmap for the future”.
“This plan will involve reshaping the business model to address the challenges faced by the industry,” INM said, adding that the initiative will involve investment in people and technology.
The group intends to make a significant investment to reshape the business and to deliver the strategic plan.
“The full-year results for 2017 clearly demonstrate the major challenges facing our group and our industry,” said INM chief executive Michael Doorly.
INM’s newly-announced chairman is industry veteran and former Telegraph Media Group boss Murdoch MacLennan.
He said “a robust development strategy is being put in place which will open a pathway for us to identify a successful future for our business”.