15 Oct 2013 07:00
INTERIM MANAGEMENT STATEMENT
Ticker: (Bloomberg) INM.ID/INM.LN and (Reuters) INME.I/INME.L
Dublin/London, 15 October 2013: Independent News & Media PLC ('INM' or the 'Group') today issued an Interim Management Statement ('IMS') which provides an update on INM's trading performance for the year-to-date (41 weeks to 11 October 2013).
- PERFORMANCE REVIEW-
The year-on-year performance (continuing group), for the 41 weeks to 11 October 2013 and for the period from 1 July 2013 to 11 October 2013, is set out below:
6 months 1 July YTD
to 30 June | to 11 October | to 11 October | |
Total Revenues | -8.2% | -5.6% | -7.3% |
Newspaper Advertising Revenues | -14.6% | -8.1% | -12.5% |
Circulation Revenues Online Revenues | -4.4% 8.2% | -5.1% 18.2% | -4.7% 11.9%
|
Operating Costs Reduction | 9.6% | 5.9% | 8.3% |
There has been a noticeable improvement in advertising revenue performance in the period since the beginning of June. The rate of decline in Newspaper advertising revenues slowed to 8.1% year on year in the period, compared to a decline of 14.6% in the first 6 months. Online revenues increased by 18.2% in the period since July compared to 8.2% in the first 6 months, resulting in 11.9% growth year to date. Circulation revenues were broadly unchanged with revenue reducing 5.1% in the period since 1 July, compared to a reduction of 4.4% in the first six months.
Although the Irish economy still has challenges ahead, consumer sentiment has improved, property prices are showing signs of stabilisation and consensus forecasts indicate Irish economic growth in 2014 and beyond. The improving outlook for the Irish economy should also benefit from the upcoming budget which is now expected to be less severe than originally forecast.
INM continued to deliver cost reductions with a 5.9% year on year cost reduction in the period since 1 July. Costs reduced by 8.3% year to date (helping to deliver a 3.8% increase in operating profits) and reflect INM's continued commitment to actively manage costs in all aspects of its business and to produce and deliver all of its market-leading products more efficiently. Notwithstanding INM has an increasingly efficient cost base, we intend to pursue further cost saving opportunities, through ongoing process review and improvement. Our strong operating leverage leaves us well positioned to convert any improvement in advertising revenues into improved bottom line performance.
- RESTRUCTURE -
INM has made substantial progress on its three stage debt restructuring agreement with its banks which was announced on 26 April 2013. The first stage of the Restructuring involved the sale of Independent News & Media South Africa ("INMSA") for 2 billion Rand. The sale of INMSA was successfully completed on 16 August 2013. The net disposal proceeds were applied to debt reduction. The second stage of the Restructuring was a restructuring of the Group's ROI defined benefit pension schemes, involving the reduction of members' accrued pension benefits. As announced on 11 September 2013, those reductions were approved by the Irish Pensions Board. Based on the estimated deficit on the Group's defined benefit pension schemes at 30 June 2013, the restructuring of the pension schemes achieved a reduction in the Group's pension deficit of approximately €110 million.
The third and final stage of the restructuring is an equity issue (the "Capital Raise Option"). The completion of this stage will provide the Group with financial stability and give it a firm platform to implement its business plan and strategic repositioning. Completion of the Capital Raise Option and a further debt repayment of €40 million will result in a material reduction in the Group's core debt to €118 million together with sufficient financial resources to finance the growth and development of the business. The completion of the Capital Raise Option will also significantly lower the Group's annual interest costs and extend INM's debt maturity profile.
- DIGITAL -
INM's digital strategy is to drive profitable growth by fully exploiting its existing core assets and building customer engagement online. These core assets include 1) ready made audience 2) trusted brands 3) advertising relationships and 4) capability.
Our strategy is evolving to capitalise on the dramatic upsurge in the number of global visitors and page impressions on independent.ie in the past year - up 78% (to over 5.9 million) and 59% (to over 64 million) respectively in the 12 months to August 2013 (Source: Google analytics).
INM is implementing a structured approach to product development and deployment to enable an agile, fast-moving product innovation environment. The development of new products and services, closely tied to customer demand and preferences, in order to drive revenue growth, will be delivered across multiple platforms with a particular focus on tablet and mobile.
- OUTLOOK-
Although the Irish economic outlook is not without challenges, the reduced rate of newspaper advertising revenue decline seen towards the end of the first half has generally continued into the second half; digital revenues continue to show positive momentum; and, circulation reductions largely continue at the levels seen in the first half. This revenue backdrop, together with the cost benefits from the Group's cost saving and efficiency initiatives has enabled the Group to deliver a 3.8% improvement in operating profit year to date compared to the prior year.
INM has a market leading franchise, an evolving digital strategy, an increasingly efficient cost base and strong operating leverage, positioning it to convert any improvement in advertising revenues into improved bottom line performance.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some statements in this announcement are forward-looking. They represent our expectations for our business and involve risks and uncertainties. We have based these forward-looking statements on our current expectations and projections about future events. We believe that our expectations and assumptions with respect to these forward-looking statements are reasonable. However, because they involve known and unknown risks, uncertainties and other factors, which are in some cases beyond our control, our actual results or performance may differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements speak only as of the date of this document and no obligation is undertaken, save as required by law or by the Listing Rules of the Irish Stock Exchange and/or the UK Listing Authority, to reflect new information, future events or otherwise.
- ENDS -
For further information, contact:
Pat Walsh Murray Consultants +353 1 498 0300 (office) +353 87 226 9345 (mobile) pwalsh@murrayconsult.ie | Vincent Crowley Group Chief Executive Independent News & Media PLC +353 1 466 3200 vincent.crowley@inmplc.com |
CORPORATE PROFILE
Independent News & Media PLC is a leading newspaper and media group across the island of Ireland. It also has a significant shareholding in APN News & Media, an Australasian publicly listed media company.
The Group has market-leading newspaper positions in Ireland and Northern Ireland, with a strong and growing digital presence, including market-leading digital positions with more than 35 editorial, classified and transactional sites. INM is the largest newspaper contract printer and wholesale newspaper distributor on the island of Ireland.
In Australasia, the Group has a 28.95% investment in APN News & Media Limited - which is quoted on the ASX (Sydney). APN is the largest newspaper publisher in New Zealand and a leading regional publisher in Australia.It is also Australasia's largest radio operator (50% owned) with over 140 stations and is in joint ventures in Australasia's largest outdoor advertising operators. APN also has a leading outdoor advertising position in Hong Kong.
In aggregate, INM manages gross assets of €322 million and employs approximately 1,000 people.