INM shares drop for a second day to value publishing firm at €129m

Selling of shares in Independent News & Media extended for the second day after warning about profits and the costs of board room corporate governance reviews.

On top of a 14% slide, INM shares fell a further 13.5%, amid institutional selling of the stock. The media firm is now worth €129m, having dropped over a quarter of its stock market value since the start of the year, and 30% since last summer.

In this week’s trading update, it had warned of “a material reduction” in full-year profits, citing a decline in ad revenue, as well as the costs associated with libel cases and corporate governance investigations — undertaken following a high-profile board level row about the group’s proposed bid for radio station Newstalk.

INM hosts its annual shareholders’ meeting next month. Brian Devitt, analyst at Goodbody, said the company could boost confidence in the short term by briefing the market on progress over its review into corporate governance and pension disputes.

Long-standing issues facing the company have been tackled well by management, he said, as the media industry faces the “headwinds” of relying on revenues from digital.

Updates for stock market investors over the investigation by the Office of the Director of Corporate Enforcement and the company’s own review following reports of the boardroom dispute last autumn involving the possible acquisition of Newstalk would be “very welcome”, said Mr Devitt.

Market uncertainty about the outcome of the reviews will undermine demand for the stock, he said.

He said the corporate governance reviews and the separate issue of the company’s pension dispute “are material”, as far as the market is concerned.

Davy Stockbrokers said its forecast for 2017 underlying earnings before interest and taxation had dropped to €29m, when all costs are accounted for.

“INM points to ongoing industry challenges plus significant libel costs as the main reasons for the change. In addition, INM has said that it will put M&A on hold until its independent review is concluded,” said the broker.

“The question shareholders will ask is whether, with external M&A on hold, the group will be more inclined to return excess cash to shareholders.”


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