GWR sees profits rise by 55%

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The Independent Online
GWR, the acquisitive commercial radio group, yesterday shrugged off disappointment over its failed New Zealand growth strategy, unveiling sharply higher full-year profits and a 20 per cent hike in the dividend to 2.6p a share.

Commenting on pre-tax profits ahead 55 per cent to pounds 8.2m, on turnover of pounds 52m, Patrick Taylor, the deputy chief executive, conceded GWR's failure to win Radio New Zealand (RNZ) earlier this year "had certainly been a disappointment". He added: "But we have performed very well in our core businesses, and have plenty left still to do."

The market rewarded the robust results with a modest 2.5p gain in the shares to 179p.

Significant earnings growth came from acquisitions in the period, as well as from commercial radio's rising share of total advertising spend in the UK. GWR bought East Anglia in April and is just weeks away from securing control of Classic FM, the national radio station, for which it has offered pounds 71.5m. Ralph Bernard, the company's chief executive, said: "Once we realised we would not win the Radio New Zealand [auction], I realised we should be concentrating on our businesses here. Classic FM reaches 4.6 million people every week, and that's more than the total listening audience in New Zealand."

Following the failure to win the RNZ licence, GWR agreed to sell its smaller New Zealand radio company, Prospect, to RNZ's new owners, Tony O'Reilly's Independent Newspapers. The sale gave GWR a profit of pounds 3.8m after only eight months of ownership.

The core English radio licences performed in line with expectations, with strong profit growth coming from the Chiltern and mid-Anglia regions. Some licences, particularly in the South, performed less well, for which management has blamed the "distractions" of the acquisition strategy.

The company's investment in London News Radio, a joint venture with Daily Mail & General Trust, ITN and Reuters, has benefited from a turnaround at LBC, the FM station, which saw its audience figures climb by 88 per cent since it was relaunched earlier this year.

With the acquisition of Classic FM, GWR would have exceeded the ceilings set on licence ownership, and so has agreed to sell a 11 per cent stake in LNR. It also plans to reduce its holdings in small, low-margin local radio, the company confirmed yesterday.

Despite the experience in New Zealand, Mr Bernard said GWR would continue to explore opportunities outside Britain, due to the ceilings on expansion in its home market.

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