Tax issues mask a solid INL result

By Nick Stride

Friday 15th February 2002

Tax and accounting issues related to Sky Network Television muddied a solid operating result for Independent Newspapers Ltd.

INL's December first-half earnings before interest, tax, depreciation and amortisation lifted 16% to $111.3 million as Sky reported a reduced $13.2 million loss and newspaper earnings held steady.

Bottom-line profit almost doubled, to $27.1 million, mostly because INL consolidated Sky's result for the first time after lifting its stake from 47% to 66%.

Some $32 million of Sky's losses transferred to INL, reducing INL's tax liability by $10.6 million.

As a result it paid just $900,000 tax.

However, INL will have to repay that amount when Sky starts turning in taxable bottom-line profits and has exhausted its credits from previous losses. INL chief executive Tom Mockridge said Sky was expected to break even in the second half of next year.

A difference in the way the two companies treat depreciation contributed a further $4 million to INL's earnings.

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