Growth at home boosts Independent's profits

Strong growth in profits in Irish newspaper operations and a first-time contribution from the Wilson & Horton subsidiary in New Zealand were the main factors in a 50 per cent rise in half-year profits to £39 million for Independent Newspapers. A 13 per cent increase in the half-year dividend to 7.58p per share has been declared.

The half-year figures came in comfortably ahead of market forecasts - especially the almost 25 per cent growth in Irish profits - and analysts believe the group can achieve full-year operating profits of more than £120 million and pre-tax profits in of more than £100 million.

Most of the interest in yesterday's figures related to Ireland and Britain, as Wilson & Horton, APN in Australia and Argus in South Africa have all announced financial results in the past few weeks. A strong performance from the Irish operations had been expected, but few in the market expected a 24.5 per cent growth in operating profits to £20.3 million, and operating margins of more than 21 per cent.

Chief executive Mr Liam Healy said that most of the improvement came from strong advertising revenues. He added that the trend in the first half had continued into July and August. "We're hopeful of maintaining that progress in the second half," he said. In Ireland, Independent's 50 per cent stake in cable operator Princes Holding, 50 per cent of the Star and 29.9 per cent of the Sunday Tribune, are all taken together under associates, where cumulative losses fell from £126,000 to a virtual break-even position.

Financial figures for the Star and the Sunday Tribune were not individually disclosed, but Princes - still severely affected by illegal deflector operators - lost £820,000 in the first half, with £415,000 of that loss accruing to Independent.

Industry sources believe that the share of profits from the Star was in the order of £700,000. This suggests that the Sunday Tribune, while increasing its circulation substantially in the most recent ABC figures, lost in the order of £1 million in the first half, with Independent taking about £300,000 of this loss on to its own profit and loss account in respect of its 29.9 per cent stake in the newspaper.

A lack of consumer confidence in Australia and New Zealand hit advertising revenues in both locations, but Mr Healy said that both APN and Wilson & Horton were seeing a turnaround in the second half. "We expect reasonable growth in 1998," he said.

In Britain, however, Independent continues to suffer from ongoing losses at Newspaper Publishing, publishers of the London Independent, where half-year losses were £2.6 million. Independent director, Mr Brendan Hopkins said that operating losses were around £2 million, with the daily title continuing to suffer from the price war being waged by News International's Times. In the first half of 1997, the Independent's circulation fell by more than 8 per cent, according to the Audit Bureau of Circulations.

Mr Healy emphasised, however, that Independent's 46.5 per cent stake in Newspaper Publishing was not for sale "and nor, as far as know, is the Mirror stake". There have been regular rumours that the Barclay brothers - owners of the Scotsman and the Sunday Business title - are interested in buying Newspaper Publishing as an entry into national newspaper publishing in Britain. With debt of £380 million, Independent has a comfortable gearing of little more than 50 per cent and interest charges covered five times by operating profits. Mr Healy emphasised that Independent could spend up to £200 million on an acquisition without calling on shareholders for funds.

Independent is currently making small acquisitions and expanding its commercial radio interests, which are currently centred on Australia and New Zealand. Last month, Independent went live in Johannesburg with its Kaya FM station, and has also lodged an application for two Hungarian radio licences with its Australian partner, Clear Channel Communications and the Hungarian bank Budapest Bank.

Independent has a 37 per stake in this consortium. "We are keen on developing more into radio," said Mr Healy. He added that Independent was also keen on expanding more into the Far East, and said that Buspak, the transport advertising subsidiary, could be used for expansion into other Far Eastern cities. Buspak has already expanded into Hong Kong.