INM: Sale of Independent titles to Lebedev cost £13.6m

Independent News & Media returned to profit in the first half of the year despite losing a total of €16.6m (£13.6m) on the sale of The Independent and The Independent on Sunday, the Irish publishing company reported today.

INM said the sale of its London-based newspapers to Russian billionaire Alexander Lebedev in April had freed it of ‘all future trading liabilities and obligations’and would be ‘earning accretive’for the business.

Despite earlier reports of an agreement to pay £9.25m to Lebedev as part of the deal to take control of the titles and assume its liabilities, the total loss made on the disposal by INM of its London papers had not previously been known.

This payment and other exceptional losses were offset in the first half of the company’s financial year by gains made through the sale of holdings in Indian newspaper business Jagran Prakashan which brought INM £34.5m

The company reported net income of £7.9m from exceptional items during the first half of the year.

Overall INM today reported year-on-year gains in revenue and operating profit across the group as it returned to pre-tax profit of £51.6m in the period after having made a pre-tax loss of £39.7m in the same period last year.

In the period group revenue was £538.2m – a year-on-year increase of 7.8 per cent – while overall operating profit was £85.5m up from a loss of £11.2m in the same period last year.

Operating profit after exceptional items were taken into consideration increased by 29.2 per cent year-on-year, the company said.

Over the four months of INM’s ownership of the Independent and Independent on Sunday this year, the papers generated revenue of £17.1m and made a loss of £4.3m.

INM said group revenue was enhanced by progressive year-on-year improvements in ad sales through the first half of the year.

Net debt was reduced by £54m in the period with its total debt reduced by £295.4m since June last year to £802.8m, the company said.

Gavin O’Reilly, chief executive of INM, said: ‘After an extremely difficult 2009, we’ve had a very good start to 2010, achieving a number of important milestones in revenue growth, market share, profitability and further deleveraging.

‘As there have been a number of changes to our asset base, it is most pleasing to note an underlying one per cent increase in advertising and an improving trendline occurring in all of our markets, albeit at different speeds.

‘All of our segments have contributed positively to our strong operating performance in the first half, with substantial operating leverage delivering double-digit year-on-year improvements in operating profit…

‘Positive year-on-year advertising trends, as well as solid performances in circulation and other revenues, have continued to improve through the opening months of the second half.

‘Profits for the second half year to date continue to be well ahead of last year. This gives us confidence for the balance of 2010, and assuming a continuation of these positives, we are targeting an improved operating performance for the year, in line with current market expectations.’

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