Ashford W. Meikle, Business ReporterBolstered by $309 million of credit from its Superannuation Fund, the Gleaner Company, publisher of The Gleaner newspaper, has posted 37 per cent increase in its net profit, which climbed to $256 million on the back of revenue growth.
The newspaper group's revenues were up by 10 per cent to $3.6 billion for the financial year ending December 31, 2006.
At the same time, management has acknowledged that its media operations in the United Kingdom has dragged down the group's profitability.
Owing to IFRS classification requirements a credit of $309 million from the Superannuation Fund - in the prior year it was $55 million - is accounted for in Gleaner's income statement.
But while the funds represent a portion of the surplus in the parent company's pension scheme, it is not realised profit.
Economic benefits
"It represents future economic benefits to be derived from the reduction in the company's contribution to the pension scheme," said the group.
Representing, as it does, the net present value of the reduction in the company's contribution to the pension fund until it is depleted, the surplus attracts deferred taxation.
But while the Gleaner group has returned a fairly creditable performance, its core operations (media services, comprising Gleaner newspaper publications, the Voice Newspaper and Independent Radio) was pressured by rising cost of sales and operating expenses. For example, while core revenues rose by 13 per cent, cost of goods increased by 15 per cent, dragging down gross profit, which moved 11 per cent, to just over $1 billion.
With administration, operating and other expenses increasing by 48 per cent over the 2005 financial year, the company's core operating revenue was flat - $207.8 million, compared to the prior period's $207.6 million - which the company's management attributed to the disappointing performance of its UK subsidiaries, GV Media Group and Vee Tee Ay Limited.
"The operations of the group's U.K. subsidiaries continue to be disappointing despite management's effort to restructure and improve their operating efficiency. The group's profit position for the year has been adversely affected by the performance of these companies."
Corporate reorganisation
However, management has said that it plans major corporate reorganisation to improve the profitability of the overseas companies.
During the year the company placed into liquidation the Voice Group, a non-operating subsidiary, which was acquired in 2004 and accounted for in the results.
ashford.meikle@gleanerjm.com
Gleaner Company
| Stock Symbol: | GLNR |
Price: | | $1.72 |
Market Cap: | $2.08 billion |
| Revenue: | $3.62 billion |
| Net Profit: | $256 million |
Net Profit Margin: 7.1% Current Ratio: | 1.6 |
