INL profit falls

Press, 29 July 1989, Page 23

INL profit falls

Independent Newspapers has posted a lower audited bottom-line profit of $15,211,000 for the 15 months ended June 30, despite lifting revenue 60 per cent. The result compares with the $16,613,000 profit reported for the 12 months ended March 31, 1988, and includes 12 months turnover from the former N.Z. Newscontrolled newspapers bought during the trading period. Interest on the bridging finance required for INL’s purchase last year of N.Z. News companies and assets amounted to SI.4M, the company said in a statement to the Stock Exchange. That was reflected in a before-tax profit of $28,005,000.

$17,048,000 distribution from New Zealand Press Association for the transfer of Reuter A shares. Advertising revenues were adversely influenced by the general economic downturn being experienced “somewhat belatedly” in the main metropolitan areas. All categories of advertising suffered a decline in the period, situations vacant volumes being severely affected. The improvement in profits now evident would be further assisted by efforts to improve the results of the “Auckland Star.” The reorganisation of the newspaper was beginning to show results. The complementary suburban newspaper publications in the Auckland community had produced some excellent returns thoroughly justifying the company’s strategic decision to enter the Auckland metropolitan market, INL said. Contributions from the Christchurch Press Company and from commercial printing had been outstanding during the period and again thoroughly justified the original investment decision. A star performer in circulation was the company’s newest publication.

The introduction of new technology to INL’s newspapers also affected profits. Redundancy and award recognition payments because of the introduction of direct editorial input (DEI) pulled profit from $20,604,000 to its bottom-line of $15.2M. “The direct costs of voluntary redundancy payments made to printers and readers displaced by DEI were substantial,” the company said. It estimated further redundancies would cost the company S6M in the 1989-90 year as it completed its introduction of new technology. Depreciation and interest charges on money used to fund the company’s technological changes would be more than offset by the benefits of direct editorial input, INL said. Other costs’ to affect profit included those connected with the rationalisation of printing and publishing of the “Auckland Star” and the closing earlier this year of the “Taranaki Herald.”

Extraordinary items including the $21,511,000 of redundancy payments and award recognition payments, and $2,137,000 of fringe benefit tax, was offset by a $3,430,000 profit from the sale of investments and a

“TV Guide,” which has reached 169,000 sales nationally after just two years., me company has on order two new lines of four-colour offset presses for installation at Auckland and Wellington, with new inserting and publishing equipment . utilising the latest available technology. “Profits for the last three months of the 15month period were especially strong, with the benefits of the major expenditure on new technology and acquisitions beginning to show through, along with signs of a recovery in the newspapers serving the rural areas,” the company said. The directors announced a second interim dividend on ordinary shares of 9.5 c, making total dividends 15.5 c for the 15-month period. The second dividend will be paid before October 1 so that shareholders will not have to pay the new withholding tax. But the directors will recommend to shareholders that a final dividend not be declared for the company’s financial period ended June 30. INL’s balance sheet showed shareholders’ funds increased to $273.1M (S2I3M last year).

INDEPENDENT NEWSPAPERS i 15mths to June 30, Previous 1989 12 mths ($000) ($000) Sales and other gross operating revenues 426,112 264,988 Profit before tax 28,005 25,003 Income tax (not including tax on extraordinary items) 7,986 9,984 Profit after tax 20,019 15,019 Minority interests . 133 (261) 20,152 14,758 Equity earnings. 452 ' 1,321 Profit before extraordinary 16,079 items 20,604 Extraordinary items (net of 5,393 534 Profit after extraordinary 16,613 V *g ms •••••■■• 15,211 .