Newspaper purchase to strengthen INL

Press, 15 July 1987, Page 40

Newspaper purchase to strengthen INL

The most significant expansion of Independent Newspapers, Ltd, happened after the balance date, said the chairman, Mr J. A. Burnet, in the annual report. The purchase of the Christchurch Press Company, Ltd, in May would greatly strengthen INL.

The two-for-seven cash issue, which closed yesterday, was made to assist in financing the purchase of the Christchurch Press Company, and to offset costs of refurbishing properties, he said.

A placement of 5,654,000 ordinary shares would also be made with big institutions to reduce the amount to be financed by smaller shareholders and ensure that an appropriate debt-equity ratio was maintained.

The acquisition of “The Press” would create the largest equity and debt funding programme un-

dertaken by INL. The cost of more than SII7M would be funded by S7OM from the cash issue and S47M from overseas borrowing. The low net cost of overseas borrowing would mean that the current year’s earnings of the new consolidated group would be largely unaffected by the sizeable debt programme. The directors confidently expected the earnings a share to increase on the 1987 figure. Because the Press Company would become a substantial part of INL’s trading, it was felt that a seat on the board should be made for a Canterburybased person. For this reason, it was necessary to amend the company’s articles to increase the maximum number of directors from 11 to 12. Approval would be sought at the annual meeting.

Mr Burnet said that the shares in Reuters Holdings, pic, remained the biggest diversification by INL. The market value of the investment rose from $25.1M to $37.8M, and there was potential for further substantial appreciation.

INL was now the largest print media organisation in New Zealand, with a diverse range of newspapers and other interests.

The group had started well in the new financial year. It appeared that this

would be maintained even though there were a number of uncertainties because of changes in the economy.

As reported, the total group net profit rose 24.3 per cent to 521.4 M in the year to March 31, compared with the previous corresponding period. Included in the result were goodwill written off of $770,000 ($40,000) a distribution from NZPA Investments, Ltd, of $9.5M ($6.4M) capital profits of $227,000 ($812,000) extraordinary profits from associated companies of $1,019,000 ($75,000) and extraordinary losses of $535,000 ($55,000).

Sales rose 19 per cent to $195.9M, but expenses jumped 20.9 per cent to $177.2M. After including

dividend and interest income the pre-tax profit was up 4.3 per cent to $19.6M. The final result was after providing $440,000 less for tax at $8,255,000, but $1,535,000 more for depreciation at $5.4M. Minority interests took $13,000 ($357,000).

Also included in the result were earnings from associated companies of $671,000 ($307,000). If these are excluded, the group net trading profit is ahead 16.3 per cent to SU.3M. A recommended final dividend of 6.5 c a share increased the annual rate from 12c to 12.5 c a share (25 per cent). The dividend requirement is $9,008,000, and it is covered 2.4 times by the profit.