Independent News & Media has reported a sharp drop in profits in the first six months of the year as its advertising revenue fell by almost 20%.
INM also said it had agreed to sell its stake in South African outdoor advertising company INM Outdoor to a private equity group led by Helios Investment Partners.
It said the deal - part of its strategy to cut debt - would raise €98m. It will require approval from shareholders and from INM's banks and bondholders. Chief executive Gavin O'Reilly later told reporters he was confident shareholders would back the sale, despite reported opposition from major shareholder Denis O'Brien.
The group last night announced that it had secured another agreement with banks and bondholders, giving it more time to hammer out a deal on a €200m bond which was due for repayment in May. The so-called 'standstill' agreement has been extended until September 25.
INM's H1 results show that total revenue fell by 22% to €608.8m, while operating profits more than halved to €73.2m. Adjusted earnings per share fell from 7.5 cent a year earlier to 1.4 cent.
Exceptional costs of €86.8m - mainly due a writedown of the value of its newspaper titles as a result of the economic downturn - led to a pre-tax loss of €48.5m. INM's net debt rose to just over €1.3 billion in the period.
INM said its circulation revenue was flat, as the group increased prices of some of its titles. It said it partly compensated for advertising weakness by reducing costs by 14.5%, or €91m. This included a reduction of 900 in staff numbers.
Revenue at INM's Irish business fell 18.6% to €162.3m, while trading profits dropped 56% to €20.6m. Advertising revenue fell 36.6%, with property and recruitment particularly hard hit.
Profits in South Africa were almost 21% lower at €20.8m. In the UK, revenue fell 28.5% to €82.6m and there was a loss of €3.8m. Advertising revenue at its London Independent titles fell by a third.
INM management quizzed on examinership option
Chief executive Gavin O'Reilly said it was difficult to forecast a full-year result with certainty, due to the advertising downturn, but at the moment it expected operating profit before once-off items to be at the lower end of the €180m to €210m range it indicated in June. He said its forecast was assuming that advertising markets would remain poor until the end of the year.
Mr O'Reilly later told reporters Ireland was 'a very tough market'. He said the group was happy with its circulation, and its share of the advertising market, but this did not compensate for the decline in advertising revenues.
'We are not presuming any major improvement in the advertising market,' he said. 'We think things are going to bump along as they are. Our focus is to extend our market share in circulation and advertising,' he added.
INM finance chief Donal Buggy was asked about suggestions by major shareholder Denis O'Brien that examinership was an option for the company. He said management was focusing on running the business as a going concern, rather than through a court-led process.
Asked about the length of time talks with bondholders were taking, Mr Buggy said this was not a long period for those familiar with financial restructurings. He said the talks were 'making good progress'.
Shares in INM were up three cent to 32 cent this morning.
