The chief executive of Independent News & Media, Robert Pitt, has failed to back the re-election to the board of company chairman Leslie Buckley at a remarkable annual general meeting in Dublin.
In an unprecedented development for an Irish public company, Mr Pitt did not raise his hand to vote for his chairman when a resolution for his re-election was put to the shareholder meeting.
Mr Pitt formally abstained on the vote for Mr Buckley, but he did vote for the re-election of all the other directors at the meeting.
The AGM was overshadowed by the ongoing, bitter row between INM’s chief executive and chairman over corporate governance matters.
Mr Pitt and Mr Buckley clashed last year over a proposal for INM to acquire Newstalk, the national radio station owned by Denis O’Brien, INM’s largest single shareholder. The row was over the price tag, with Mr Pitt understood to have argued that the price sought by Mr O’Brien was too high.
Mr Pitt later made a protected whistleblower complaint to the Office of the Director of Corporate Enforcement (ODCE) about the row.
In response to a question from the floor, Mr Buckley insisted the board was “working night and day” to resolve the issues at the heart of the row.
‘Leaks’
He indicated that he plans to remain on as chairman in comments about his expected presence next year’s AGM, and Mr Buckley also hit out at what he termed as “leaks” surrounding INM.
Mr Pitt declined to comment on the row. Beyond a short address on the company’s operational performance he said very little at the meeting.
Mr Pitt sat far removed from Mr Buckley at the table of directors, and the two men appeared to not speak to each other at any stage during the meeting.
Earlier, INM announced that its pretax profit fell by almost 20 per cent during the first half of 2017 compared with the same period last year.
The media group’s interim results showed that its pretax profit declined by 19.5 per cent to €14.9 million primarily due to “continued revenue challenges”.
The company said directors were not proposing a dividend for 2017.
INM said the drop in profit before tax was “somewhat mitigated” by cost saving plans put in place. Earnings per share decreased during the period by 0.2 cent to 1 cent.
Total revenue at the media group was also down 8.4 per cent to €148.1 million during the period.
INM said the fall was primarily driven by a decline in distribution revenue of 9 per cent and a decline in total advertising revenue of 7.8 per cent.
Within total advertising, publishing advertising revenue declined by 10.9 per cent, partially offset by digital advertising revenue growth of 6.3 per cent. Circulation revenue at the company declined by 7.5 per cent.
Operating costs were negatively impacted by the level of recent awards in libel cases, particularly those relating to historic Sunday World cases.
This, coupled with costs associated with the independent review into the proposed bid for Newstalk, as well as meeting the requirements of the ODCE, impacted operating costs by about €2.5 million.
Pre-distribution operating costs, excluding the libel and legal costs, decreased by 7.2 per cent to €6.7 million due to cost saving plans that have been put in place throughout the group in order to mitigate the forecast revenue declines.
INM said that despite "strong growth" in its CarsIreland. ie operation, digital revenue had grown at a "lower rate than previously envisaged".
“Growth has primarily come from programmatic advertising and INM’s classified businesses as digital advertising yield continues to be impacted by growth in mobile traffic and the move away from direct transactional selling,” the results noted.
Underlying operating profit, which excludes libel and legal costs, decreased by 2.8 per cent during the period.
‘Challenging’
As part of the company’s half-year results, Mr Buckley said the operating environment in the media industry “remains challenging”.
"We believe that issues need to be addressed, such as consolidation in the industry, the high level of libel awards and the need for traditional publishers to pursue stronger rights to demand payment for the use of their content from digital giants Google and Facebook, " he said.
“I am pleased to report that during the period under review the group and the trustees of two of INM’s Republic of Ireland defined-benefit pension schemes reached agreement to commence the wind-up of the schemes. This agreement will bring certainty for the future for both the scheme members and the group.
“In spite of the numerous challenges facing INM, the group’s balance sheet has been further strengthened. This is a testament to the hard work of each employee in INM, for which I sincerely thank them. Their commitment is essential for the group to lead in what is a challenged sector.”
Mr Pitt said the “continued challenging trading conditions” from the decline in circulation and publishing advertising had been “magnified by the impact of a very punitive defamation regime and legal costs”.
“Whilst digital revenues have grown, the growth is at a lower rate than previously envisaged,” he said. “Despite this, the group still operates a strong underlying business with profit before tax of €14.9 million and strong cash generation.
“The success of the group is in no small part due to the hard work and dedication of its people, to whom I am very grateful for their continued commitment.”
The continued revenue decline was mitigated due to cost saving plans and the diversification from low margin newspaper deliveries to higher margin non-news items in the distribution business. The company’s operating margin decreased by 1.1 per cent to 9.8 per cent.
Net assets
The group ended the period with increased net assets of €80.1 million (+€42.8 million year on year).
This was driven by an increased cash balance of €95.7 million, up €33.3 million year on year, primarily from ebitda performance and the sale of property, plant and equipment, somewhat offset by outflows relating to provisions/working capital, capital expenditure, income tax and exceptional expenditure outflow.
Additionally, the group and the trustees of two of its Republic of Ireland defined-benefit pension schemes have reached an agreement to commence the wind-up of the schemes.
In terms of outlook, INM said the media industry “continues to face challenging trading conditions” across publishing advertising and circulation revenue along with the “slow down” in digital revenue growth.
“However, despite ongoing challenges facing INM, the group anticipates an ebit performance in 2017 in line with revised market expectations following the trading statement issued in July 2017.”
