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Wang Jianwei

But a dividend is withheld in a bid to conserve cash for the firm's fledgling venture in Taiwan

Strong sales from its newspaper and magazine operations have seen Jimmy Lai Chee-ying's  Next Media beat expectations with a net profit of $367.55 million for the year  to March.

The result  contrasts with a net profit of $26.55 million for the previous year  and the $338 million forecast by analysts in a  Thomson Financial survey.

Turnover for the year surged 91.8 per cent to $2.15 billion.

Despite the strong earnings, Next Media did not pay a dividend.

'They want to save cash for emergency cash outflow for their Taiwan operation, which is expected to lose $300 million [in its first year of operation],'  UOB-Kay Hian Research analyst Tommy Ho said.

The strong earnings were mainly attributed to its Hong Kong-based Apple Daily, the city's second-most popular Chinese-language newspaper, and its best-selling  Next Magazine.

The result was also boosted by full-year contributions from the injection of Apple Daily, Next Magazine and a number of other publications, acquired from Mr Lai for $2.6 billion in October 2001.

During the year, Apple Daily's turnover increased 135.1 per cent to $1.28 billion,  59.4 per cent of Next Media's total revenue. The newspaper had advertising revenue of $851 million, circulation revenue of $463 million  and an operating profit of $380 million.

Sources said Apple Daily had rewarded its editorial staff with a  4.3-month year-end bonus on the back of the good results.

The management said advertising revenue had fallen substantially in April due to the Sars outbreak and had been down by nearly 10 per cent year on year last month. However, it said advertising sales in the first week of this month had recovered to normal levels.

Turnover from books and magazine publications rose 72.5 per cent during the year to $715.6 million.

Analysts were told  sales of Next Magazine had more than doubled after the closure of rival magazine Eastweek. It recorded advertising sales of $184 million, $114 million in circulation revenue and an operating profit of $54 million.

The group's Internet operation posted a $3.6 million profit on revenue of $14 million. It recorded seven million page views per day.

The company has cash reserves of $496 million and $250 million in debt.

Analysts said they were concerned heavy start-up investments in publications in Taiwan would eat into Next Media's current-year earnings.

While Taiwan Next Magazine  narrowed its loss by 57.3 per cent to $49 million during the year and broke even last month, Next Media  invested as much as $708 million over the year to prepare for the launch of Taiwan Apple Daily. After having captured a circulation of 500,000 since its May 2 launch, the newspaper has raised its cover price from NT$5 (HK$1.12) to $10.

Shares in Next Media rose by 20.48 per cent or 42.5 HK cents yesterday to close at $2.50, their highest level since November 2000. The counter was heavily traded, with 21.34 million shares changing hands.

'Its share price has been overhung by the large quantity of convertible bonds owned by Jimmy Lai,' said Jimmy Lam at Kim Eng Securities.

'If Jimmy Lai converts [them] all,  it will lift his interest in the firm from 59 per cent to 79 per cent.'



Next Media posts sharp rise