Independent set to continue its share buyback


Independent News & Media is likely to continue its sporadic share buyback in an effort to combat the company's flagging share price, chief operating officer Mr Gavin O'Reilly has intimated.

Mr O'Reilly said yesterday that the group's shares, which hit an all-time low of €1.40 in Dublin last Friday, were "well overdone" amid generally negative sentiment surrounding media stocks.

He added that the company "may well" adopt strategies aimed at easing pressure on the price. It has been buying back shares at intervals in recent months.

Independent's shares gained 10 cents to close at €1.50 last night after it unveiled a mixed set of results for the first half. Turnover across the group declined by 3.2 per cent to €635.1 million, while pre-tax profits fell by 10.2 per cent to €51.7 million.

Operating profit after exceptionals, such as losses at technology arm iTouch and redundancy charges, fell from €109.3 million to €102.7 million.

The company said, however, that, if an unexpected devaluation of the South African rand was excluded, turnover was "in line" with the same period last year.

Irish operations contributed 35 per cent to group turnover in the first half, with operating profit after exceptionals in the Republic declining by 2.8 per cent on last year to €38.9 million. Turnover was flat at €172.7 million.

Mr O'Reilly said the first six months had provided "a very difficult economic backdrop" for the group's overall operations but noted that the group's aggregate market share in newspaper sales had risen by 0.5 per cent, while aggregate advertising market share had risen by 1 per cent.

Newspaper advertising revenue across the group's titles declined by 6.8 per cent, a fall partly offset by a decrease in newsprint prices in the first half. The group achieved an operating margin of 16.3 per cent over the period, down from 16.5 per cent last year.

Mr O'Reilly said that he was hopeful of a "seasonal uplift" in advertising towards the end of the year but that the area was currently "a mixed bag".

The group will pay an interim dividend of 2.9 cents per share, up 5.5 per cent on the same point last year, a move that Mr O'Reilly said reflected the board's "belief" in operational strength.

In Britain, where assets include the Belfast Telegraph and Sunday Life in Northern Ireland, turnover fell by 7 per cent to €118.6 million, while operating profit before exceptionals was steady at €10.8 million.

In South Africa, turnover rose by 6.7 per cent to €65.7 million, with operating profit after exceptionals increasing by 4.4 per cent to reach €7.1 million.

Mr O'Reilly said that Independent would focus on cost reduction, now that a period of substantial capital expenditure had drawn to a close. Operating costs were cut by 3 per cent in the first half.

Net debt at the group stands at almost €1.3 billion, just €18.5 million below the same point last year, and is thought to be weighing heavily on share performance.

Analysts suggest this debt level, which equates to a 4.9 per cent net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) ratio, could make it difficult for Independent to engage in ambitious expansion.

It has been rumoured in the past that the company could be interested in growing its interests in Australia, with expected changes in media ownership laws in the country likely to facilitate that.

Mr O'Reilly refused to be drawn on such rumours yesterday, noting simply that the group would be looking at various "opportunities", regardless of the legislative position in Australia.