Profits at Independent increase 33% to £50 million

STRONG growth in its Irish operations and first time contributions from acquisitions in South Africa and New Zealand have allowed Independent Newspapers boost its 1995 pre tax profits by 33 per cent to £50 million.

The results were at the upper end bf market forecasts and the shares jumped 26p to 490p in trading on the Dublin market. The dividend for the year was up 18 per cent to 8.5p per share.

Speculation that Independent might raise funds in the market in conjunction with its bumper results proved unfounded, although the markets believed that Independent would raise funds at some stage in the near future, probably linked to an acquisition or an increased stake in one of its overseas associates.

Operating profits were 21 per cent higher on £49 million, with operating profits from the Irish publishing operations increasing from £21.5 million to almost £26 million.

The chief executive, Mr Liam Healy, said that.the improvement in the operating profits reflected stronger advertising revenues in line with the stronger economy, although he conceded that that the absence of the Irish Press titles for eight months also contributed.

He declined to specify exactly what the absence of the Irish Press titles meant in terms of increased sales and profits, but Goodbody Stockbrokers bad already estimated that this is worth an additional £5 million in operating profits to Independent in a full year.

Overall, group turnover increased 36 per cent to £368 million, but Mr Healy said that this understated the size of Independent's business, as it did not include sales from assets under management such as the APN operations in Australia and Wilson & Horton in New Zealand.

When assets under management were taken into account, Independent's turnover was around £600 million - 26 per cent coming from Ireland, 25 per cent from New Zealand, 23 per cent from South Africa, 19 per cent from Australia, 4 per cent from Britain and 3 per cent from France.

Expansion overseas would further reduce the proportion of the overall business coming from Independent's Irish operations.

The performances of most of Independent's overseas operations have already been published, as all are public companies in Australia, New Zealand and South Africa. The accounts do, however, include a £4.5 million charge in respect of Independent's share of the losses in Newspaper Publishing, publishers of the London Independent.

Most attention has focused on the Irish publishing and cable television operations. The Middle Abbey Street operations have benefited from higher circulation and bumper advertising revenues, but Mr Healy said that rationalisation in Middle Abbey Street, where 700 are currently employed, was not yet complete.

"We haven't got an actual target employment level, but we would like to see a reduction," he said.

The Independent accounts showed the group took in a loss of £2 million in respect of its 50 per cent stake in the Princes Holdings cable television operation.

The Independent accounts showed a net exceptional gain of £5.2 million. This included an exceptional profit of £11 million on the sale of Buspak in Australia, less a £3.8 million exceptional loss on its investment in the Sunday Tribune and £2 million in respect of its investment in Irish Press plc.

Referring to the Sunday Tribune - which has been a consistent loss maker and which has been kept afloat in the past by loans from Independent - Mr Healy said: "We are still a supporter, we are confident it has a future."

On future spending, Mr Healy said that Independent was still considering whether to exercise its option to acquire the O'Reilly Trust's 22 per cent stake in APN.

At current prices, this would cost Independent around £50 million and could involve it in a cash call on the market, although current gearing is reasonably comfortable at 67 per cent.

In New Zealand, Independent was involved in a bid for the radio stations being sold off by the government through a joint venture between its 44 per cent associate Wilson & Horton and ARN, the Australian Radio Network, jointly owned by APN and Clear Channel Communications. A successful bid for the New Zealand licences would probably cost upwards of £25 million.

Mr Healy said Australia had five areas of opportunity - expansion into South East Asia, specialist publishing, newspapers, the Buspak concept and radio. Independent was continually on the look out for further expansion.

"We are always looking at something but it all takes time," he said. He added that cash would not be a constraint to expansion and said the group could consider spending up to £600 million if required.