Independent upbeat despite 30% fall in profits to £70m

Despite a 30 per cent fall in profits last year to £70 million (€88.9 million), Independent Newspapers is upbeat about the prospects in the current year and expects a strong turnaround in one of its key markets, New Zealand.

The results from Independent were largely as expected, with a strong performance in the Irish newspaper operations partly countering the weakness in New Zealand and South Africa.

The fall in pre-tax profits, however, understates the operating performance at Independent, where operating profits - excluding an exceptional charge of £42.5 million to cover restructuring costs - fell from £117 million to £112 million.

In Ireland, booming advertising revenues were the main factors behind a 12 per cent increase in turnover to £220 million and a rise in operating profits (pre-exceptionals) from £37.9 million to £42.5 million.

Independent chief executive Mr Liam Healy said the group's proposed new state-of-the-art printing plant is on track to begin production by the end of next year. He said a site had been selected and that selection of the print plant had been narrowed to a small number of suppliers.

Mr Healy was unable to state the extent of the job losses in the Irish newspaper operations that will form part of the group's worldwide restructuring. The restructuring programme in Ireland and changes in working practices in the newspaper operations were still being negotiated with the trade unions, he said.

The Princes Holdings cable television associate went into profits for the first time and boosted its subscriber numbers from 136,000 to 150,000. Princes has joined with TCI to bid for Cablelink, and this has "the potential to create a national broadband network for Ireland which would incorporate the second-largest telephony company in the country", said Mr Healy.

In New Zealand, where operating profits fell from £42.2 million to £34.7 million as the recession bit into advertising revenues, Mr Healy said the local economy's recovery should show through in this year's figures.

Given the fall in the value of the rand and the huge increase in interest rates last year, Independent did well to confine the fall in operating profits in South Africa from £23.6 million to £21.3 million. Mr Healy said he expected some recovery in South Africa to show through in the second quarter. "I expect the full-year return to be back to where we want them to be," he added.

In the UK, the London Independent titles continue to be a financial drain, with the newspapers showing operating losses of £3.9 million in the nine months since Independent bought out the other shareholders last April. Mr Healy insisted, however, that the Independent was on target to move into profit within the three-year period set for breakeven. He said the cover price war begun by News International was coming to an end with the cover price of the Saturday edition of the London Times having recently been increased.

Despite the fall in profits, Independent shareholders are to receive a 15 per cent increase in the dividend to 9p per share. This means that Dr Tony O'Reilly, who owns 28 per cent of the group, will receive another £4.2 million in second interim dividends on top of the £2.1 million he received in the first interim dividend.