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£100m investments to secure GMG’s future

Thursday, August 4, 2005

Capital projects amounting to more than £100m and their related exceptional costs have impacted on Guardian Media Group’s 2004-5 profits, but the Chairman, Paul Myners, said today that GMG believes in “managing with a longer view”. Group turnover, including share of joint venture and associates, increased by 18 per cent to £751.9m, while pre-tax profits fell to £22.9m from £43.6m. GMG’s total operating profit, excluding amortisation of intangibles and exceptionals, rose to £122.4m (£84.5m).

Mr. Myners said that the group was on the brink of revolutionary format changes to its national newspapers with an £80m project involving three new all-colour presses. A further £24m had been committed to new all-colour presses for GMG’s northern local titles, while benefits from a further £9m capital project were already flowing through Trader Media Group. New premises for both Guardian Newspapers and the Manchester Evening News were being developed.

Net interest payable including refinancing costs and other investment income was £33.4m compared with £18.5m in the previous year, largely due to the full year effect of the ownership of Trader Media Group, which had delivered its best ever year-on-year growth in its first year as a wholly-owned part of GMG, delivering operating profits of £116.6m. Mr. Myners said that this performance and the fact that the amount borrowed for the acquisition had already fallen from £479.8m in October 2003 to £398.5m had made it possible to secure significant improvements to the borrowing facilities that will lead to a substantial fall in interest expense in the coming year.

In what he described as “a very competitive marketplace”, the Group’s national newspapers had continued to perform vigorously, with the Guardian securing a 17 per cent market share and the Observer rising to nearly 17 per cent. Operating losses for the national newspapers were £18.6m before amortisation and exceptional items, though turnover was up by 3 per cent and the division was working towards clear targets to enable it to achieve profitability in the longer term.

GMG’s Regional Newspapers achieved a six per cent growth in operating profits to a new high of £32.6m, while GMG Radio returned its first operational profit after deducting digital costs.

Mr Myners drew attention to the continuing investment in online developments across the Group. He highlighted the success of GuardianUnlimited, attracting the largest audience of any UK online newspaper with over 10 million unique users and 100 million page impressions each month, and the Autotrader website delivering over 40 million searches and more than 200 million page impressions each month.

The Chief Executive of GMG, Sir Robert Phillis, said the Group was now stronger and more financially secure than at any time in its history, enabling it to take the kind of bold development projects which were now underway. The landmark decision to move towards publication of the new Berliner mid-size European format would allow its national newspapers to leap ahead of the rest of the market and publish the first of a new generation of full-colour papers.