Sky consolidation boosts INL

By Phil Boeyen, ShareChat Business News Editor

Wednesday 13th February 2002

A transfer of tax losses from its Sky TV (NZSE: SKY) subsidiary has helped media group Independent Newspapers Limited (NZSE: INL) to almost double its half-year net profit.

The publishing company has reported a bottom-line surplus of $27.08 million for the six months to the end of December, a 93% improvement on the prior year's $13.99 million result.

INL has owned 66% since June last year and the half-year accounts are the first to reflect the full consolidation.

As a result sales for the period climbed to $435.16 million from $264.72 million previously. Earnings before interest, tax, depreciation and amortisation fell slightly in the publishing business to $59.2 million but rose 43% at Sky to $52.1 million.

As a consequence of the consolidation of the two companies, the transfer of tax losses from Sky to INL allowed the company to its provision for tax to just $937,000 compared with $12.64 million previously.

INL chairman, Ken Cowley, says regional New Zealand newspapers, community newspapers and INL Magazines recorded strong profit growth for the publishing business.

However at the company's two largest divisions, The Christchurch Press was steady and Wellington Newspapers Limited was affected by a sharp decline in classified ad spend, especially on IT jobs.

INL's three regional Australian titles reported steady results and the company's internet business, stuff.co.nz, has cut its net losses by more than half to under $1 million.

The company reports that contrary to some expectations following the 11 September terror attacks on the United States, New Zealand advertising volumes have recovered from an inevitable short-term setback.

CEO Tom Mockridge says the publishing team responded quickly and effectively to the threat of a post 11 September downturn with across-the-board expense savings and continued revenue initiatives.

"Especially satisfying were gains in paid circulation in 11 of 16 daily and weekly newspapers during the half, with total newspaper circulation revenue rising 2.8%.

He says the company is also pleased with the positive results from Sky TV and that consolidation of Sky's results had directly assisted with INL's reported net profit through the transfer of tax losses and a depreciation benefit of $4.1 million relating to unutilised Sky UHF equipment values.

"As a result of these consolidation adjustments and of Sky's improved trading results, INL has effectively funded an increased ownership of Sky while increasing earnings-per-share from 3.6 cents to 6.4 cents."

INL's group net debt has increased significantly to $780 million, reflecting the consolidation of Sky's debt and the cost of the Sky acquisition.

The company has announced an interim dividend of 4 cents per share

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