INL consolidated net profit more than doubles

INL consolidated net profit more than doubles to record $77.3 million

For release, 28 August 2003

Independent Newspapers Limited (INL) announced today a record consolidated net profit after tax of $77.3 million, before the profit on sale of the New Zealand publishing business. The previous highest net tax paid profit was $50.4 million in 1997.

The result includes both INL’s New Zealand and Australian publishing businesses and its approximately 66 percent shareholding in SKY Network Television Limited (SKY). The New Zealand publishing business was sold to John Fairfax Holdings Limited on 30 June for $1.188 billion.

The company will pay a final dividend of 5 cents a share, after paying an interim of 4.5 cents a share in March 2003. Full imputation credits attach to these dividends.

INL Executive Chairman Mr Ken Cowley said the result was simply outstanding across every division of the company.

“The result is a product of having the right competitive strategy, sustained strong management performance and excellent trading conditions,” Mr Cowley said.

The 2003 profit on sale was $292.4 million after including redundancy costs of $1.6 million, close-out costs for interest hedging of $16.8 million and a write-off of unamortized up-front debt raising fees of $1.9 million.

Other sale profits included in a total of $294.0 million were $1.13 million from the Bendigo/Horsham sale in Australia and $456,000 from the sale of the Te Puke Times.

INL publishing’s operating EBITDA rose 14 percent to $136.1 million compared to $119.5 million in 2002.

INL’s 2003 publishing business revenue grew to $537.3 million ($528.9 million, 2002) and television business revenue grew to $391.3 million ($344.6 million, 2002).

SKY, an INL subsidiary returned to profit in the year with a reported surplus of $671,000 which is further enhanced in INL’s books due to lower depreciation charges on consolidation of SKY.

Mr Cowley said that INL’s strategy of building a fully integrated media company had been fully realized in 2003, not only in the record profit but also in the value paid by Fairfax for the New Zealand publishing business.

“Apart from the strength of the SKY result, the major operational achievement in 2003 was the successful completion of the merger of the Wellington dailies to create The Dominion Post which exceeded expectations in terms of cost savings, circulation and earnings,” Mr Cowley said.

“The successful relaunching of the Sunday Star Times, the purchase of Cuisine magazine and the sale of Te Puke Times and complete purchase of the Taupo Times were also important achievements.”

“These achievements still cannot over-shadow the focused performance of all of INL’s businesses in 2003, where reduction in cost, increases in circulation and improving advertising yields were the norm.”

“This is to the credit of our chief executive Peter Wylie, his senior management team and the management and editorial and production staff of all INL businesses,” he said.

Mr Cowley said INL’s focus is now on restructuring its assets, namely the 66.21 percent of shares in SKY and the cash held from the sale of the New Zealand publishing business and ensuring that this restructuring balances the interests of all INL shareholders and maximizes the value of INL shares.

Funds held by the non-SKY operations at the end of the financial year were $770.4 million ($753 million in short term investments and $17.4 million in cash). Fairfax provided $6 million on 1 July (post balance date) as a contribution to sale-linked redundancy costs.

A tax loss offset of $51.8 million has been anticipated between INL and SKY within the accounts. SKY has taken into account the utilization by INL of $52 million of SKY’s tax losses in their 2003 accounts.

Accumulated tax loss transfers from SKY to INL after this 2003 year’s transfers amount to $103.1 million representing tax of $34 million. This is a contingent compensation payment from INL to SKY timed around SKY’s future tax payment, if any, after utilization by SKY of any carry forward tax losses.

Books close for the dividend payment on 12 September and will be paid on 26 September 2003.

[Ends]

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