Fast-growing regions drive 11 per cent rise in profits at Independent News & Media

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The Independent Online

Independent News & Media, the media group which publishes The Independent, reported double-digit growth in profits yesterday on the back of an 8 per cent rise in revenues.

The company, which has newspapers in more countries than any rival media business, said that it had benefited from having operations in some of the fastest-growing economies in the world.

Group revenues were up by 7.5 per cent in 2005, to €1.6bn (£1.1bn). Operating profits, before one-off items, were 11 per cent higher at €311.6m. At the pre-tax level, profits gained 42 per cent to €272.5m. The company's geographic spread includes operations in New Zealand, South Africa, Australia, India, UK and Ireland. Revenues grew in each of these countries.

South Africa, where IN&M is the biggest newspaper publisher, with 15 titles, was the best performer for the second year running. Operating profits jumped 35 per cent to €41.8m, as margins expanded by 320 basis points to 18.8 per cent. The company said the result rode on the back of continuing buoyancy in the South African economy, which was the strongest for the past 40 years.

Ivan Fallon, a member of the IN&M board and head of the company's UK operations, said that South Africa could be expected to be the strongest performer again in 2006.

In the UK, where titles include The Independent, The Independent on Sunday and the Belfast Telegraph, revenues grew 4 per cent to €209.1m. Operating profit was 11 per cent ahead at €15.1m.

Mr Fallon said that the company had hoped to halve losses at the two Independent titles in 2005 but the figure had remained broadly unchanged with a loss of £10m. Among the reasons for not being able to reduce the loss was having to spend "several million" in marketing expenses to counter the relaunch last year of The Guardian in a "Berliner" format.

'The target of breaking even [for the Independent papers] is going further and further out. We would have to see a much, much, better advertising environment to achieve that," Mr Fallon said.

Advertising revenues at the Independent papers grew 11 per cent last year, though that included a relatively slower performance in the second half after a 17 per cent gain in the first six months. This compared to a fall in the broader advertising market for papers.

Reducing the Independent loss in 2006 would need the advertising market to turn up, Mr Fallon said. "We have a substantially higher promotional budget, which will keep the paper in losses [this year]. But we believe in the product," he said.

Net widens to take in stake in online gamer

Independent News & Media announced yesterday it had taken a 20 per cent interest in Cashcade, a UK online gaming company which owns the getminted.com gaming portal.

The amount paid for the stake in the company, which provides services ranging from casino and bingo to poker, was not disclosed.

Cashcade, which launched in 2001, has more than 400,000 registered users and it is now profitable.

Ivan Fallon, the chief executive of Independent News & Media (UK) said that if the investment worked out well, IN&M might increase its holding and take Cashcade to other parts of the world.

He said IN&M was developing its internet interests, with a 23 per cent rise in online revenues last year to €16m (£11m). The company operates 70 websites around the world, including activities in online dating and web auctions.

Mr Fallon said IN&M's strategy was to become the leading classified advertising internet business in every country in which it operated, an ambition already achieved in South Africa and New Zealand.

Referring to the difficulties faced by the newspaper industry, Mr Fallon said: "We need to find new revenue streams as traditional streams come under pressure."

IN&M launched a recruitment portal for the "island of Ireland", LoadzaJobs.co.uk, six months ago. It is already the second most popular jobs site in the republic and the market leader in Northern Ireland.

The company plans to launch into the online property sector in Ireland shortly.

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