The Irish Times Limited, the publisher of The Irish Times, has reported a loss of €21.7 million for the year to December 2001. The figure includes a one-off charge of €21 million to cover the cost of restructuring the business.
The operating loss, before restructuring charges, was €2.35 million, compared to an operating profit of €7.15 million in 2000. Turnover fell from €110.7 million in 2000 to €104 million in 2001, while operating costs rose from €103 .5 million to €106.3 million . The operating losses were partly offset by investment income of €1.7 million.
Turnover was down primarily because of reduced advertising revenue as the economy slowed last year, according to Ms Maeve Donovan, the managing director of The Irish Times.
A number of issues contributed to the rise in operating costs, the most significant of which was higher staff wages and related costs. Payroll costs rose from €45.38 million to €52.6 million during the period. This figure includes the 11 executive directors of The Irish Times who shared €3.05 million in remuneration, including pension contributions.
There were also increases in the cost of newsprint and project costs associated with the introduction by The Irish Times of a Saturday magazine and The Ticket listings supplement.
A number of cost savings were achieved in the last quarter of the year, according to Ms Donovan. But the bulk of the savings obtained through the rationalisation of the business will start to feed through in the last quarter of the current year. The company has budgeted for a modest loss this year and a return to profitability in 2003.
The group's performance during the first six months of the year was in line with budget. "Advertising and circulation are in good shape but we are conscious of the deteriorating economic situation," said Ms Donovan.
Revenue from recruitment advertising has been better than anticipated but there is uncertainty about the strength of the recovery. "The reorganisation will position us very well, even if there is not an improvement in the market," she said.
The company has received an unsolicited approach to sell The Irish Field Ms Donovan confirmed, but there was not a firm offer on the table, she added.
The Irish Times Limited remains committed to ireland.com, its online venture she said. "We are committed to maintaining a high-quality internet service, the core of which will be the online edition of The Irish Times, a breaking news service and an archive," she said. "The challenge is to do it at a manageable level of cost while everybody takes a breath to see where the internet train is going."
Ireland.com has recently started charging for access to premium content on its site and has 6,000 subscribers. This compares favourably with the Financial Times, which has 17,000 registered users.
The borrowings taken on by the company to fund the restructuring are not reflected in the 2001 accounts, as they were not put in place until this year. They are sufficient to cover the restructuring programme and current trading losses, according to Ms Donovan.
The bulk of the €21 million restructuring charge was to cover the cost of a voluntary redundancy scheme that will reduce the staff of The Irish Times by 250 to 470 by the end of the year. It also includes a provision of €3.05 million to cover compensation for loss of office of company executive directors.
Two executive directors have left the company since the start of 2001. Mr Nick Chapman, who was managing director of the company, resigned in November 2001, while Mr Derek McCullagh, the production director, left in July this year under the voluntary severance scheme.
Mr Conor Brady, the editor of The Irish Times, is also a director of the company and has indicated that he will step down from his position later this year. The company expects a number of other executive directors may depart under the restructuring programme and their compensation will be covered by the €3.05 million provision.
"It is a prudent provision and reflects some contractual obligations that have to be addressed," said Ms Donovan. She added that Major Thomas McDowell, who resigned as chairman of The Irish Times Trust Ltd - the parent company of The Irish Times Ltd - in December did not receive any compensation for loss of office.
The company also wrote off €686,000 in connection with a property it owned jointly with Mr Chapman. The money represents a loss incurred by the company on the sale of the property, which was Mr Chapman's Dublin home. The terms of Mr Chapman's departure are the subject of a confidential court settlement.
