A LANDMARK YEAR FOR GMG
* Pre-tax profits up to £66.4m from £53.7m
* Turnover broadly flat at £700.3m
* Borrowing down to £394.4m from £412.2m
* Successful launch of the Guardian and Observer in full-colour "Berliner" format
"Very satisfactory financial results in what have been difficult trading conditions across the media sector" – Paul Myners, Chairman
Financials
Turnover from continuing operations was £700.3m, a reduction of 0.7% on the previous year. Pre-tax profits from continuing operations rose to £66.4m (2005 £53.7m), while operating profits, excluding exceptionals, were £116.4m (2005 £127.2m). Net interest payable and other investment income for the year was £17.4m compared with £30.0m last year, which also included refinancing charges. Statutory profit after taxation, exceptional items and discontinued operations was £45.9m, up from £44.1m. Total borrowings fell from £412.2m to £394.4m.
National Newspapers
A year of remarkable change and challenge for the National Newspaper division (GNL) culminated in the highly successful launches of the Guardian and the Observer in the full-colour "Berliner" format. Overall, the national newspaper market has continued to be intensively competitive, with advertising revenues adversely impacted by a relatively weak market. In a year of significant investment around format change, losses for GNL were £19.3m before exceptional items (2005 £18.6m) on a turnover 1.5% up at £237.4m. After exceptional items, primarily associated with the implementation of the new printing arrangements, total operating losses for the year were £49.9m. Guardian Unlimited had another record-breaking year for both traffic and revenues, reaching a record 12.9m unique users in March 2006. GNL's digital businesses enjoyed a 41% increase in total revenues. The site remains by far the most popular published by UK newspapers, with a 10% share of the online newspaper market.
Regional Newspapers
A static advertising market coupled with a defection of readers and advertisers to the internet have been reflected in a downturn in the overall financial performance of the division. Turnover was down 7% at £126.8m and operating profits were £21.6m before exceptional costs (2005 £34.4m). Advertising revenues were severely depressed during the year, but recovered in the first quarter of 2006 such that at the year-end revenue of £105.7m was down 8.4% on 2005. Recruitment revenues were the most seriously impacted, with a 17.8% decline year-on-year. The division is developing a more flexible range of media options for advertisers.
Trader Media
Trader Media had another outstanding year. It maintained its record of continuous profit growth, outperformed the competition and gained market share. Operating profit was up 2.8% to £119.5m, on a turnover of £303.3m (up 0.5% on 2005). Auto Trader remains the main engine for the business, with total profit for the brand (publishing and digital) up 6%. Like all motoring publications, the UK Auto Trader magazines came under circulation pressure, but Auto Trader Digital continued its remarkable growth, becoming a top 5 UK website. In the final months of the year, page impressions reached 357.5 million per month (2005 216.1 million) and unique users reached 6.57 million per month (2005 3.86 million). GMG has announced its intention to sell a minority shareholding in Trader Media Group through an Initial Public Offering on the London Stock Exchange during the 2006/2007 financial year, subject to market conditions.
GMG Radio
GMG Radio continues to move forward. In pure radio terms, revenue at £27.9m grew by 13.9% (with the final quarter showing 20% revenue growth) and operating profit was £2.7m, compared with £1.0m in the previous year. Overall, GMG Radio has outperformed the market, with revenue increases at a time of much debate about the decline in radio advertising. The start to the new financial year is looking positive.
Sir Robert Phillis, Chief Executive of GMG, said: "This has been a year in which the benefits of our diverse portfolio have enabled us to undertake a significant programme of renewal, underpinned by major long-term capital investment. The fact that this programme has been completed at a time of economic uncertainty, accompanied by further rapid technological developments across the communications sector, says much about the resilience of our strategic plans. It also, of course, reflects the value of the unwavering support of the Scott Trust, vividly demonstrated by its unstinting backing for the publication of the Guardian and the Observer in the new "Berliner" format."
Paul Myners, Chairman, said: "These are a very satisfactory set of financial results in what have been difficult trading conditions across the media sector in general, and the national and regional press in particular. It has also been a year of very considerable investment in both our traditional publishing activities and in the digital/electronic publishing future. This is a tangible manifestation of the Group's long-term vision, creativity, innovation and courage."
For further information please contact:
Colin Browne, Maitland -020 7379 5151
Sir Robert Phillis, Chief Executive, Guardian Media Group plc – 020 7713 4452
Nick Castro, Finance Director, Guardian Media Group plc – 020 7713 4452
Note for editors:
Guardian Media Group plc ("GMG") is the publisher of The Guardian and The Observer newspapers, Guardian Unlimited, the Manchester Evening News and a portfolio of other regional newspapers in the North West, Surrey and Berkshire. GMG owns Trader Media Group, one of Europe's largest specialist multi media groups and online media companies publishing some 70 publications with associated websites. GMG also owns five radio stations under the Real Radio and Smooth FM brands.
GMG's origins date back to 1821 and it is wholly owned by the Scott Trust, which was created in 1936 to secure the financial and editorial independence of The Guardian in perpetuity.