INM expected to confirm sale of UK titles

DUBLIN-BASED Independent News & Media (INM) is expected to confirm today the sale of its loss-making London newspaper titles to wealthy Russian businessman Alexander Lebedev.

The former KGB agent is expected to pay only a token sum for the daily Independentand Independent on Sundaytitles but will assume certain liabilities attaching to the papers.

One source said the deal would be “earnings enhancing” for INM.

At a briefing yesterday to announce the company’s annual results, INM chief executive Gavin O’Reilly said: “It [the sale] has been very, very complex. I think that it will be well received by INM shareholders as being very beneficial for shareholders.”

INM’s full-year 2009 results, published yesterday, showed that savings of £20 million (€22.3 million) at the London Independent titles were achieved last year.

INM yesterday reported an after-tax loss of €41.1 million for 2009 after booking €145.8 million in exceptional charges.

These one-off costs related to its major financial restructuring last year, reorganisation expenses and a non-cash impairment charge on group assets.

INM’s revenues declined by 14.9 per cent to €1.25 billion while its operating profit was 39 per cent down at €177 million.

Mr O’Reilly said the company’s profits were good given the difficult economic backdrop that faced its various media operations in Ireland, the UK, Australia, New Zealand and South Africa last year.

“We still remain a highly profitable company with rock-solid margins that have only one way to go,” he added.

Mr O’Reilly said advertising income had stabilised in recent months but he did not expect to see “any advertising growth in Ireland in 2010”.

In Ireland, INM’s revenues fell by 14.9 per cent to €357.5 million, while its operating profit before exceptional costs was down 42.5 per cent at €44.3 million.

Revenues at its South African business fell by 1.4 per cent to €209.5 million while its operating profit was down 33.8 per cent at €47.8 million.

The UK business, which includes the London newspapers and the Belfast Telegraph,reported a loss of €6.9 million in 2009, more than six times the deficit reported in the previous year. UK revenues declined by 29 per cent to €122.7 million.

In terms of outlook, INM said its revenues in the year to date were ahead of last year by 5.8 per cent. Its operating costs, however, had increased by 3.5 per cent “solely due to foreign exchange rate movements”.

“While it is still very early in the year, if these current trends continue, we would target an improvement in operating profit for 2010,” INM added.

INM has announced plans to reduce the number of shares in issue to stimulate liquidity. There are currently 3.5 billion INM shares in the market.

This move will require shareholder consent at its annual meeting on June 2nd.

The company’s share price rose by 14 per cent in Dublin yesterday to 10.5 cents.