Indo group reports 10.2% fall in profits

INDEPENDENT News & Media (INM) is to increase dividends to shareholders by 5.5% despite reporting a 10.2% decline in profits for the first sixth months of the year.

INM's executive chairman, Tony O'Reilly, holding 26.8% of INM shares, will be the single biggest beneficiary of the decision to increase dividends.

In a statement accompanying yesterday's results the board said the increased dividend reflected it's confidence in the strength of the group's operations.

With the Australian Government preparing to introduce a change in media ownership laws INM's long-term goal of acquiring Sydney Morning Herald owners, John Fairfax Holdings, could soon become technically possible.

However, with INM capitalised at close to 850 million euro and Fairfax at 1.3 billion euro this might be a very big pill for INM to swallow with the massive debts it is currently shouldering.

"Despite the unusual and we believe once-off devaluation of the South African Rand, we are pleased that each of the individual operations have performed as well as they have. Though aggregate advertising receipts were down due to the tighter global market and adverse currency movements, market share was up, and our titles continued to show good increases in both circulation and readership.

"We remain confident that our brands will continue to outperform their peer group. Assuming that the advertising market exceeds industry expectations in the second half, we are hopeful of showing an improvement on 2001," said Mr O'Reilly.

Chief operating officer Gavin O'Reilly also dismissed reports that INM may be planning to sell off some non-core assets to pay down bank debts which stand at 1.3 billion euro.

"We have no plans to sell anything," he said. "We're comfortable with our debt levels - our core debt last year came down by over 550m euro."

The company said a 39% depreciation of the Rand - mainly in the fourth quarter of 2001 impacted severely on the group's performance in euro terms, contributing to a reduction of 23% (or 2.1m euro) in operating profits.

In Ireland company turnover of 172.7 million euro in the first six months of 2002 was just 100,000 euro up on the same period in 2001 and it is clear that, but for a 3% drop in operating costs across the group, profits would have fallen by more that 10%.

INM said in a tough advertising market the UK group performed significantly better than the majority of its competitors, recording an improved profit margin of 8.6%.

Overall profits were £6.4 million, only 4.7% lower than 2001, despite the fact that revenues were 7.0% lower at Stg£73.8m.

Shares in INM were up more than 7% to 1.50 by early afternoon trade in Dublin - a gain of 10c which held until the close of business.