IN&M reports 10.8% rise in interim profits

Independent News & Media (IN&M) chief executive Sir Anthony O'Reilly stands to receive €8.16 million in interim dividends after the group reported a 10.8 per cent rise to €114.1 million in profit before tax and exceptionals in the six months to June.

As Sir Anthony predicted "superior" earnings growth for 2006 in line with current market expectations, shares in the publisher of the Irish Independent lost three cent to close at €2.30 in a downbeat market. With South Africa the growth driver, traders were concerned about weak advertising in the British unit, which includes Northern Ireland operations.

Revenues rose 3.6 per cent to €796.7 million and pre-exceptional operating profits rose 4.9 per cent to €147.9 million. A 10.7 per cent rise in interim dividends to 4.15 cent per share was proposed.

Adjusted earnings per share rose 10.7 per cent in the first half to 7.43 cent. This strips out a €37.7 million once-off gain after a €62.7 million profit in 2005 on the sale of iTouch, the mobile content provider. Including exceptionals, pretax profits fell 22.8 per cent to €108.6 million.

Chief operating officer Gavin O'Reilly said no big acquisitions were imminent but that Independent would focus on non-English speaking markets for deal opportunities. After taking 20.8 per cent of Indian newspaper group Jagran Prakashan, Independent said a new joint venture in India will launch eight FM radio stations in the "Hindi belt" in the next year.

Mr O'Reilly declined to name any new market the group might enter but said it did not propose to do business in China. Russia was "interesting" but Independent would need the freedom to operate a media business there "in a way that we want".

There was but a 50-50 possibility that Australian government proposals to ease restrictions on cross-media ownership would pass, but the group had no specific deals in mind should the changes go ahead.

Revenues in Australasia - where it owns 41.8 per cent of APN News & Media - grew 0.6 per cent to €366 million and operating profits rose 2 per cent to €83.2 million. South African revenues rose 16.4 per cent to €121.8 million and operating profits rose 22 per cent to €18.3 million.

In Ireland, revenues grew 2.3 per cent to €201 million while operating profits rose 4.5 per cent to €46.7 million. "Advertising growth was in line with the market and circulation was ahead of last year, driven by good volumes and cover price increases," Independent said.

Asked about a dispute over plans to change pension arrangements for Irish staff, the head of the Irish unit, Vincent Crowley, said the proposals had been accepted by a majority of staff. The Pensions Board and Pensions Ombudsman were happy with the proposals, he said.

Mr O'Reilly would not say whether the group would bid for Irish property website Daft.ie if it came on the market. Control of PropertyNews.com would be sufficient for the group, he said.

He said there had been no contact with Denis O'Brien since the businessman, a long-time rival of Sir Anthony, took a 3 per cent stake in Independent in January.

British revenues rose 3.4 per cent to €107.8 million and operating profits rose 5.2 per cent to €6.1 million in spite of weak classified advertising market.

Circulation revenue growth was driven by cover price increases. Contract print revenues in Belfast also rose.

The loss-making Independent and Independent on Sunday were nearer break-even than at any time in the last two years and Mr O'Reilly was encouraged by cover price increases in the British market. Following a price rise on the Sunday title this week, the daily would increase in price at an appropriate time.